DCIT 9(1)(1), MUMBAI vs. AFCONS INFRASTRUCTURE LTD, MUMBAI
Facts
The Revenue appealed the CIT(A)'s order granting partial relief on TP adjustment related to corporate guarantee, disallowance of interest on loans to joint ventures, depreciation on a speed boat, and disallowance of professional fees for arbitration. The assessee, part of Shapoorji Pallonji Group, engaged in infrastructure projects, filed its return with a total income of Rs. 54,61,68,234/-, later revised to Rs. 23,92,94,596/-.
Held
The Tribunal, following a co-ordinate bench decision for AY 2009-10, held that no TP adjustment was required for the corporate guarantee as the benefit accrued to the assessee. Similarly, no disallowance for interest on loans to joint ventures was warranted as the assessee had sufficient own funds and prior year precedents supported this. The depreciation claim on the speed boat was also allowed based on previous rulings, and the disallowance of professional fees was deleted as it was incurred for business purposes.
Key Issues
Whether TP adjustment for corporate guarantee is warranted; Whether disallowance of interest on loans to joint ventures is justified; Whether depreciation on speed boat is allowable; Whether professional fees for arbitration are deductible.
Sections Cited
36(1)(iii), 92B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “K” BENCH, MUMBAI
Per Padmavathy S, AM: This appeal by the Revenue and the Cross Objections by the assessee are against the order of the Commissioner of Income Tax (Appeals)-55, Mumbai [for short 'the CIT(A)] dated 30.03.2015 for the AY 2010-11. The issues contended by the Revenue through various grounds are listed as under: (i) Adjustment in respect of corporate guarantee to Afcons Construction Mideast LLC – Ground No. 1 to 4 (ii) Disallowance of interest under section 36(1)(iii) in respect of loans to Afcons Pauling JV, Afcons Strabag AG, and Afcons Gunanusa JV – Ground Nos. 5 & 6. (iii) Disallowance of depreciation of Rs. 0.64 lacs on the written down value of Speed Boat of Rs. 4.27 lacs – Ground No. 7 (iv) Disallowance of Professional Fee of Rs. 64.33 lacs paid for Arbitration Award – Ground No.8 2. The assessee is part of Shapoorji Pallonji Group which is the third largest construction group in India. The assessee is engaged in the business of executing a large and complex civil engineering projects in the infrastructure sector for construction of roads, bridges, railways, jetties, transport terminals, tunnels, dams, etc. in India and abroad. For the year under consideration, the assessee filed the return of income on 25.09.2010 declaring a total income of Rs. 54,61,68,234/- which was subsequently revised to Rs. 23,92,94,596/- and a book profit under section 115JB of the Income Tax Act, 1961 (the Act) of Rs. 76,40,58,837/-. The case was selected for scrutiny and the statutory notices were duly served on the assessee. Since the assessee had international transactions a reference was made to Transfer Pricing Officer (TPO) to determine the Arm's Length Price (ALP) of the international transactions, the assessee has entered into with its Associated Enterprises (AE). The TPO proposed a TP Adjustment of Rs. 1,49,91,287/-. The
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Assessing Officer (AO) passed an assessment order wherein besides the TP Adjustment the AO made various other additions/disallowances and assessed the income of the assessee at Rs. 29,63,66,311/-. Aggrieved the assessee filed appeal before the CIT(A). The CIT(A) gave partial relief to the assessee towards the TP Adjustment and deleted most of the other disallowances made by the AO. The Revenue is in appeal before the Tribunal against the order of the CIT(A).
Adjustment in respect of corporate guarantee to Afcons Construction Mideast LLC – Ground No. 1 to 4 3. During the year under consideration the TPO noticed that the assessee has extended existing guarantee to First Gulf Bank in respect of the banking facilities availed by its AE and called on the assessee to furnish reasons for not charging any fee from the AE towards the same. The assessee submitted that the AE was awarded a contract by Road and Transport Authority (RTA), Government of Dubai for construction of a bridge for a total value of AED 1.09 billion. In connection of the execution of the contract, the AE had availed banking facilities from First Gulf Bank in respect of which the assessee had given a counter guarantee up to AED 580 million. The details of the bank guarantee are as tabulated below: S.No. Banking Facilities AED 1 Letters of Guarantee (Bid Bond) 50,000,000 2 Overdraft 100,000,000 3 Letters of Credit 200,000,000 4 Letters of Guarantee Performance Bond 110,000,000 5 Letters of Guarantee Advance Payment Guarantee 120,000,000 6 Labour Guarantee 15,00,000
The assessee submitted before the TPO that First Gulf Bank has fixed card rate for giving loan and guarantee which is 1.5% and since the assessee has given the counter guarantee the bank has charged 1% towards a guarantee to the AE. The
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assessee also made the below submissions as the reason for not charging any guarantee fee by the assessee to the AE. “(a). The assessee has 49% interest in Afcons Mideast and 51% shares of Afcons Mideast were held by a local sponsor as due to the restrictions placed by the local regulations, AIL could not invest more than 49%. The whole intention of giving guarantee to FGB on behalf of Afcons Mideast was to facilitate the Afcons Mideast to avail the banking facilities by from FGB andto execute the contract awarded by RTA in which AlL has significant interest, and in order to achieve its own interest of earning a profit from the said contract. (b). Though the ownership structure is 49:51 but the profit sharing ratio is 80: 20 respectively between assessee and the JV partner due to technical and financial support provided by the assessee. The profit earned by the assessee vis-a vis the AE is as under. FY Afcon India JV/AE Afcon India JV/AE Amount in crores % age of profit 2008-09 31.19 0.30 99.05% 0.95% 2009-10 89.89 9.56 90.39% 9.61% (c). The AE has awarded contract to the AFCONS India for a total amount of AED 14,80,00,000. As the assessee himself was executing part contract, therefore assessee is not required to charge performance guarantee from the ΑΕ. 5. The TPO after considering the submissions of the assessee held that in a third party scenario the guarantor would expect a return for the risk undertaken by the third party and in the given case since the First Gulf Bank has charged the lesser rate of interest only because of the guarantee given by the assessee, the benefit accruing to the assessee should be added as TP Adjustment. The TPO further held that the First Gulf Bank has charged 0.5% lesser interest based on the guarantee given by the assessee and therefore, 0.5% is the benefit derived by the AE. Accordingly, the TPO applied 0.5% on the various guarantees given by the assessee to make a TP Adjustment of Rs. 1,48,64,959/-.
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Before the CIT(A) the assessee reiterated the submissions made before the TPO justifying why no fees should be charged towards the guarantee given by the assessee to the AE. The assessee made an alternate plea before the CIT(A) to submit that an average guarantee fee rate of 23 basis points was determined as the ALP from the perspective of Indian Transfer Pricing Regulations and the same could be adopted for the purpose of charging fees towards guarantee given by the assessee instead of 0.5% as considered by the TPO. The CIT(A) gave partial relief to the assessee and reduced the rate of guarantee fee to 0.23%. The Revenue is in appeal before the Tribunal against the partial relief given by the CIT(A).
The ld. Authorized Representative (AR) submitted that the issues is covered by the decision of the Co-ordinate Bench in assessee's own case for AY 2009-10 (ITA No. 1135/Mum/2014 dated 09.11.2023) wherein the Tribunal has deleted the TP Adjustment made by the TPO. The ld. AR further submitted that the same guarantee as in AY 2009-10 continued for the year under consideration also and therefore, the decision of the Tribunal for AY 2009-10 is applicable for the year under consideration also on this issue.
The ld. Departmental Representative (DR) on the other hand submitted that the assessee has given guarantee due to which the AE was charged lesser rate and therefore, there should be an adjustment towards the benefit derived by the AE. Accordingly, the ld. DR supported the order of the TPO.
We heard the parties and perused the material on record. We noticed that the Co-ordinate Bench while considering the issue of guarantee fee for AY 2009-10 in assessee's own case has held that
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“13. We have heard rival submissions and perused the relevant finding given in the impugned order as well as material referred to before us. As noted above, assessee is in the business of construction of infrastructure projects and in order to secure the contract for construction of a bridge in Dubai with Road Transport Authority in Dubai, it had found limited liability Company in Dubai called as Afcons Mideast LLC. As per the UAE regulation assessee could not hold more than 49% in Afcons Mideast as 51% shareholding was to be held by local sponsorer. Despite the shareholding structure, the share capital of Afcons Mideast stood at Rs.42,62,400/- and it was agreed that the shareholders of the assessee company would be entitled to 80% of the profits of Afcons Mideast. Afcons Mideast was awarded contract amounting to Rs. 1,546.56 Crores and part of the work amounting to Rs.210.28 Crores was sub-contracted to the assessee company. The balance work has been performed by Afcons Midcast solely relying on the infrastructure in the form of the man-power, machines, technology, project management skills and organisational support provided by the assessee. In effect contract work performed by Afcons Midcast was done by assessee through its own support services. That is the reason, the assessee has earned profits at Rs.31.19 crores whereas Afcons Mideast has only earned Rs.30 lakhs. The entire profit earned by the assessee as a sub-contractor and for providing support services was Rs. 130.05 crores while Afcons Mideast earned only Rs. 10.86 crores from execution of the said project. Thus, 92.29% of the profits had accrued to the assessee as a sub-contractor and for the support services. Even for the balance 7.71% of the profits accruing to Afcons Mideast, then again 80% of such profits belonged to the assessee company as its share of profit. In substance, the assessee company has earned 99.10% of the profits. This factual background is very important to understand the impugned transaction of performance guarantee on which adjustment has been made by the ld. TPO, because while determining the arm’s length price where is the real benefit arisen or accrued is very crucial and FAR analysis of the transaction. 14. As noted above, for the performance of the entire contract work, guarantee was provided by FGB for provision of banking facilities to Afcons Mideast which in the F.Y. 2008-09 was of Rs. 824 Crores. During the year four types of facilities were provided as noted above which mostly consist of letters of credit, letters of guarantee and letters of advance payment, performance bond and letter. By way of security for providing these facilities FGB required the assessee to execute irrevocable and unconditional corporate guarantee and accordingly, performance guarantee was given by FGB in favour of Road Transport Authority, Dubai. It was only a guarantee that Afcons Mideast would not suspend or delay repayment of the advance of AED 108 million. The assessee had not charged any guarantee fee from Afcons Mideast on the ground that effectively guarantee has been given for its own performance of the contract or a guarantee
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given for repayment of advance which would also only arise in the case of a non- performance of the contract by the assessee. Thus, we agree with the contention of the ld. Senior Counsel that giving the performance of the corporate guarantee was to execute the work which in effect was carried out by the assessee itself for which the majority of the profit and the benefit went to the assessee. Even it is to be treated as international transaction, then also under the scope and meaning of international transaction as defined in Section 92B- “92B. (1) For the purposes of this section and sections 92, 92C, 92D and 92E, "international transaction" means a transaction between two or more associated enterprises, either or both of whom are non-residents, in the nature of purchase, sale or lease of tangible or intangible property, or provision of services, or lending or borrowing money, or any other transaction having a bearing on the profits, income, losses or assets of such enterprises, and shall include a mutual agreement or arrangement between two or more associated enterprises for the allocation or apportionment of, or any contribution to, any cost or expense incurred or to be incurred in connection with a benefit, service or facility provided or to be provided to any one or more of such enterprises.” 15. Ergo, it is to be seen whether such transaction is having a bearing on the profits, income, losses or assets or any kind of a mutual agreement or arrangement for the allocation or apportionment or contribution to any cost or expense incurred or to be incurred in connection with a benefit, service or facility provided or to be provided. Thus, the transaction or the arrangement should have the bearing of profit or income or any kind of benefit or facility. Here providing of performance guarantee or corporate guarantee did not gave benefit to the AE, albeit on the facts of the case the entire benefit for giving such guarantee is only to the assessee because the guarantee was given to carry out the work which was done de-facto by assessee. Even the work performed by the Afcons Mideast was totally done by the support service through infrastructure and man power and the organizational support of the assessee company only and that’s the reason why the entire reward and profit went to the assessee Once, the entire benefit and the profits belong to the assessee, and then it cannot be held that assessee has given any kind of benefit by providing corporate guarantee to Afcons Mideast. Here, in this case what has to be seen that the entire functions to carry out the work either in the form of sub-contract or executing the contract work by providing entire support services through its own infrastructure, man power, management, technological support, organizational support, etc. all has been done by the assessee. The function of the AE in the execution of work was only on paper and as a legal entity to comply with the domestic laws. In substance there is negligible function performed by the AE. Apart from that, even the assets deployed belonged to the assessee. The entire risk lied upon the assessee that is the risk assumed for executing the contract and carrying out the
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entire work solely belonged to the assessee. Ergo the rewards of the risks were also entirely reaped by the assessee in the form of 99% profit. Thus, even if one does FAR analysis of the performance guarantee given by the assessee to FGB for execution of the contract where entire risk and rewards and the benefit was of the assessee only, then where is the question of making any adjustment of ALP in the hands of the assessee that any benefit has been passed on to the AE. 16. Even if it is reckoned as international transaction, then also on FAR analysis and looking to fact that the reward or profit to the AE is almost negligible, i.e. the ultimate profit is not even 1%, the adjustment if at all would also be negligible on the facts of the present case. Thus, on the facts of the present case we hold that no transfer pricing adjustment can be made on account of corporate guarantee. Accordingly, the addition made by the ld.TPO / ld. AO is deleted.” 10. We noticed that during the year under consideration also the assessee has given the same set of guarantees to First Gulf Bank and that the facts for the year consideration are similar to the facts of AY 2009-10. Therefore, respectfully following the above decision of the Co-ordinate bench we hold that no TP Adjustment is required to be made in assessee's case towards corporate guarantee. These grounds raised by the Revenue are dismissed accordingly. Disallowance of interest under section 36(1)(iii) in respect of loans to Afcons Pauling JV, Afcons Strabag AG, and Afcons Gunanusa JV – Ground Nos. 5&6. 11. On perusal of Schedules 3 & 4 to the balance-sheet as on 21.03.2010 the AO noticed that the assessee has shown interest bearing secured loans at Rs. 23644.36 lacs and unsecured loans as Rs. 30232.08 lacs. The AO further noticed that the assessee has disclosed the following under the head Loans & Advances to its Joint Ventures
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Name of the party Rs. In lakh Afcons Pauling Joint Venture 699.57 Afcons Pauling Joint Venture 127.24 Afcons Pauling Joint Venture 1724.47 Total 2551.28
The AO held that the assessee is paying interest at an average rate of 12.41% and on the other hand the assessee has not charged any interest on the advances given to the Joint Ventures. Therefore, the AO made a disallowance under section 36(1)(iii) towards interest paid by the assessee to the tune of Rs.316.61 by applying 12.41% on the advances given by the assessee to the Joint Ventures. The CIT(A) deleted the disallowance by holding that
“12. I have considered the A.O's order as well as the Appellant A.R's submissions. I have also taken note of the judicial pronouncements cited by the appellant's A.R. in its submissions extracted as above. Besides this, I have also taken note to the judgment of the Bombay High Court in the appellant's own case for A.Yrs. 1998-99, 1999-2000 and 2000-01 wherein the Hon'ble Bombay High Court has decided the issue in the appellant's case taking note of the decision of Apex Court in the case of SA Builders. After taking note of the various aspects of the appellant's case wherein the appellant has advanced sum to its sister concern wherein the appellant co. Itself is a partner, I find that there is no justification in making the said disallowance on account of interest on loan advanced. It is also evident from the appellant's submission that the appellant's own fund is much more than the fund advanced by the appellant to its business associate. Besides this, it is also a fact on record that the A.O. has not proved nexus of the borrowed fund to the advanced sum of the sister concern. Even it is also evident that the appellant company has borrowed fund with a specific purpose which has been elaborated in detail in the appellant's submission. In view of these facts and taking note of the judicial pronouncements cited by the appellant's A.R. in his submissions, specially the decision of the Apex Court in the case of S.A. Builders and various decisions of Bombay High Court especially in the case of CIT vs. Reliance Communications Infrastructure Ltd., I consider it proper and appropriate to hold that the A.O. was not justified in its action in making the said
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disallowance. Accordingly, the addition so made by the appellant stands deleted. In the result, the appellant's this ground of appeal is allowed.” 13. The ld. AR submitted that the advance was given to Afcons Pauling JV during the Financial Year end 31.03.1996 and the outstanding balances YoY has been reducing which would substante that no new advance is given to the said JV by the assessee during the year under consideration. The ld. AR in this connection drew our attention to the following table submitted before the CIT(A) (Rs. In lakhs) Particulars 31-3-96 31-3-07 31-3-08 31-3-09 31-3-10 Incremental advance on 31-3- 10 as compared to 31-3-96 Afcons Pauling 1355.60 701.69 700.95 700.37 699.57 NIL Joint Venture
The ld. AR submitted that the Co-ordinate Bench in assessee's own case for AY 2009-10 has considered the disallowance of interest towards advance given to the joint ventures and deleted the disallowance made by the AO. Since the loan is a continuation from previous year the ld. AR submitted that the ratio laid down by the Tribunal in assessee's own case for AY 2009-10 would be applicable for year under consideration also. With regard to the additional advances given during the year under consideration to Afcons Starbag AG and Afcons Gunanusa Joint Venture as detailed below, the ld. AR submitted that the own funds for year ended 31.03.2010 is more than sufficient to cover these advances and therefore no disallowance is warranted.
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Particulars Advance given Advance given Balance as on during the during the 31 March 2010 financial year financial year (Rs. In lakhs) 2008-09 (Rs. In 2009-10 (Rs. In (A+B) lakhs) (A) lakhs) (B) i. Afcons Starbag AG 17.62 109.62 127.24 ii. Afcons Gunanusa 53.77 1,670.70 1,724.47 Joint Venture Total 71.39 1,780.32 1,851.71
We heard the parties and perused the material on record. We noticed that the Co-ordinate Bench while considering the disallowance of interest under section 36(1)(iii) towards interest free advance given to JV has held that
“21. In Revenue’s appeal, the first issue is disallowance of interest u/s. 36(1)(iii) in respect of loans to Afcons Pauling Joint Venture. The ld. AO from the perusal of the balance sheet as on 31/03/2009 revealed that assessee had shown interest bearing secured loans at Rs.31923.68 lakhs and unsecured loans of Rs.37127.72 lakhs. On the interest bearing funds, assessee had paid interest of 8566.26 lakhs which resulted in average rate of 12.40%. The ld. AO noted that assessee has advanced loans to its joint ventures on which no interest has been charged for sums aggregating to Rs.771.76 lakhs. Accordingly, ld. AO made disallowance @12% which worked out to Rs.8.57 lakhs. The ld. DRP had given following directions to the ld. AO. “We have considered the facts of the case, the objections of the assessee and the evidences placed on record. The assessee has relied upon the decision of honourable Mumbai ITAT in its own case for the assessment year 1997-98, wherein it was directed to exclude the loans as on 1 April 1996 while computing the disallowance of interest. This direction was given on the fact that in the assessment years prior to Ay 97-98, there is no finding that any interest-bearing or funds were utilised for making such advances and no disallowance of interest was made in the earlier years. The assessee has also made a statement before us that against such finding of the Tribunal, the revenue has not preferred any further appeal before the High Court, In view of the above stated position, the AO is directed to restrict the disallowance of interest only to the extent as it relates to incremental advance party wise as compared to balance outstanding as on 31st of March 1996. As regards the interest on the balance amount, we
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uphold the action of the AO and the rate of interest 12% applied by him. The AO is directed to modify his order accordingly.” 22. It has been informed that the issue stands covered by the decision of the ITAT from A.Y.2001-02 to 2008-09. Since, the ld. DRP has followed the initial order of the Tribunal in A.Y.1997-98 which has been followed in subsequent years wherein it was held that interest disallowed should be in respect of incremental loans given from 31/03/1996. Once the position from the earlier years has been settled that the opening balance of the loan is to be excluded for making the loans, then we do not find any infirmity in the directions of the ld. DRP which is in accordance with the direction of the Tribunal in earlier year. Therefore, the ground raised by the Revenue is dismissed.” 16. From the above findings it is clear that with regard to loans which have been continued from earlier years the Tribunal has held that no disallowance under section 36(1)(iii) is warranted. With respect to the loans extended during the year to the tune of Rs. 1780.32 lacs as tabulated above, we noticed that the own funds of the assessee for year ended 31.03.2010 is Rs. 60833.05 lacs and therefore, there is merit in the submission of the ld. AR that when own funds are available for extending advances no disallowance under section 36(1)(iii) is warranted. In view of these discussion and considering the decision of the Co-ordinate Bench, we hold that no disallowance towards interest under section 36(1)(iii) is warranted for the year under consideration and accordingly we see no reason to interfere with the decision of the CIT(A). Ground No.5 & 6 raised by the Revenue in this regard are dismissed.
Disallowance of depreciation of Rs. 0.64 lacs on the written down value of Speed Boat of Rs. 4.27 lacs – Ground No. 7
We heard the parties. We notice that this is a recurring issue and that Co- ordinate Bench in assessee's case for AY 2009-10 while considering the issues has held that
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“23. In so far as disallowance of depreciation of Rs.25,000/- and written down value of speed boat, it has been submitted that the issue is in favour of the assessee by ITAT in assessee’s own case for the A.Y. 2001-02, A.Yrs. 2002-03 to 2005-06 and A.Yrs 2006- 07 to 2008-09. As per the Tribunal order, it was held that:- (i) As per the facts on record, machinery was purchased by the principal but the assessee had been vested with the possession of them and utilized them for its business. (ii) It is not disputed that the principal has debited the cost of machinery to the assessee's account and the assessee has capitalized it in its books of account. (iii) The Tribunal applying the ratio laid down in the decisions of Mysore Minerals Ltd (SC), Dilip Singh Sardarsingh Bagga (Bom.) Varanasi Auto Sales (All.), dismissed the department's ground. 24. Accordingly, ground raised by the Revenue is dismissed.” 18. The assessee has claimed depreciation on the written down value of the same asset during the year under consideration and therefore, the above decision of the Co-ordinate Bench is clearly applicable for the year under consideration also. Accordingly, we see no infirmity in the order of the CIT(A).
Disallowance of Professional Fee of Rs. 64.33 lacs paid for Arbitration Award – Ground No.8 19. During the year under consideration the assessee has incurred Professional Fee of Rs. 64,26,858/- for Arbitration. The AO disallowed the said expenditure by following the earlier years for the reason that the assessee has not offered the corresponding arbitration award income for taxation. The relevant observations of the AO are extracted below:
“5. Professional Fees for Arbitration Awards:
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5.1 During the year, the assessee company has incurred professional fees of Rs.64,26,858/- for arbitration. In earlier A.Yrs, such expenses were disallowed as the assessee had not offered the corresponding arbitration award income for taxation. The assessee had got relief from the first Appellate Authority. However, second appeal on this issue has been pending before Hon'ble ITAT for earlier years. Hence, to keep the issue alive, addition of Rs 64,26,858/- is disallowed and added to the income of the assessee.” 20. We heard the rival submissions and perused the material on record. We notice that the similar issue has been considered by the Tribunal for AY 2009-10 where it has been held that
“27. The Tribunal in A.Y.2005-06 has held that, firstly, the professional fees was incurred in respect of arbitration award and therefore, same was for the business of the assessee. Secondly, assessee was justified in claiming the said amount as expenditure in its profit and loss account and lastly, the Tribunal declined the observation of the ld. AO that since the income from arbitration award is excluded from the total income, therefore, professional fees incurred in this should be disallowed. This exact observation of the ld. AO as made in the present assessment year also has been rejected and accordingly, the ground raised by the Revenue is dismissed.”
We notice from the above extracted observations of AO that the reason for disallowance during the year under consideration is simply to follow the earlier year disallowance and to keep the issue alive. The AO for the year under consideration also has not disputed the fact that the professional fee is incurred for the purposes of business. Therefore, respectfully following the decision of the Co- ordinate Bench, we hold that the CIT(A) has rightly deleted the disallowance made by the AO. Accordingly this ground raised by the Revenue is dismissed.
C.O. No. 1/Mum/2024
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The assessee has raised cross objections with regard to the decision of the CIT(A)'s decision to reduce the rate charged towards guarantee fee @0.23%. We notice that the CO is filed with a delay of 3052 days. The ld. AR submitted that the assessee filed the cross objection as a matter of abundant caution since the Tribunal for in the order passed for AY 2009-10(supra) has deleted the entire TP adjustment and the rate confirmed by the CIT(A) @ 0.23% towards guarantee fee should also be deleted
We heard the parties. We while adjudicating Ground No.1 of the revenue against the CIT(A)'s decision to reduce the rate of guarantee from 0.50% charged by the AO to 0.23%, we have held that no TP adjustment is required to be made towards guarantee commission. In this regard we have followed the decision of the coordinate bench in the earlier AY 2009-10. Therefore in our considered view, the CO filed by the assessee has become infructous and not admitted for any adjudication. At the same time we direct the AO to delete the entire TP adjustment i.e. even the TP adjustment confirmed by the CIT(A) while passing the order giving effect, as per the directions given in this order that no TP adjustment is warranted with respect to the guarantee given by the assessee. It is ordered accordingly.
In the result, the appeal of the Revenue and the C.O. of the assessee are dismissed.
Order pronounced in the open court on 21-06-2024. Sd/- Sd/- (PAVAN KUMAR GADALE) (PADMAVATHY S) Judicial Member Accountant Member *SK, Sr. PS
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Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT BY ORDER,
(Dy./Asstt. Registrar) ITAT, Mumbai
