Transactions having contingent impact on profit/ losses are not international transactions

Brief of the case:

• The ITAT bench of Mumbai in the above cited case law held that any contingent impact on profit/loss would not take the transaction to fall within the purview of international transaction. In the present case , giving of corporate guarantee on behalf of loans given to overseas subsidiaries there can be a hypothetical situation in which a guarantee default takes place making  the enterprise liable to  pay  the guarantee amounts but such a situation, even if that be so, is only a hypothetical situation
• Therefore, such transactions cannot be treated as having bearing on profit/losses and consequently cannot be included in the definition of international transaction.
  

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