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.
