Matrix Clothing Pvt. Ltd. Vs ACIT (ITAT Delhi)
TPO’s CUP Theory Collapses — ITAT Deletes SBLC TP Adjustment; Corporate Guarantee ≠ Bank Guarantee- Loan from RBI-Registered NBFC Is Genuine — Section 68 Addition of ₹3 Cr Deleted
Delhi ITAT adjudicated multiple TP and non-TP issues arising from DRP-based assessments u/s 143(3) r.w.s. 144C.
1. TP Adjustment on SBLC / Corporate Guarantee — Deleted
TPO assumed that Assessee did not recover SBLC charges from its AE and applied CUP using bank-guarantee commission rates. ITAT found that Assessee had recovered ₹99.10 lakh on cost-to-cost basis and held that bank guarantee ≠ corporate guarantee, relying on Glenmark (398 ITR 439 Bom), affirmed by SC. “Other Method” used by Assessee accepted as correct. TP addition of ₹4.41 lakh deleted.
2. Interest on AE Loan — ALP Accepted at 3.55%
Assessee charged LIBOR + 1.75% (3.55%) on loan to its Jordan AE. ITAT held that Jordan Central Bank rate of 3.5% is the correct internal CUP. TPO’s uplift to 5.23% rejected. TP addition deleted.
3. Section 68 Addition — ₹3 Crore Loan from NBFC Held Genuine
Loan received from Avail Financial Services Pvt Ltd, an RBI-registered NBFC, was supported by PAN, confirmations, bank statements, audited accounts, affidavits . AO relied on an incorrect Inspector’s report. ITAT held that Assessee proved identity, creditworthiness & genuineness; hence, section 68 addition deleted, along with interest disallowance.
Want to Read the Complete Judgment?
You have read the free case summary. Unlock the full judgment, the detailed judicial reasoning and the downloadable PDF, along with every other premium judgment on TaxGuru.
Already subscribed? Log in
One subscription covers the entire premium judgment library, not just this case.
