SRF Limited Vs ACIT (ITAT Delhi)
In a detailed ruling concerning Assessment Year 2020-21, the Income Tax Appellate Tribunal (ITAT), Delhi, partly allowed the assessee’s appeal against the assessment order passed under Sections 143(3), 144C(3), and 144B of the Income Tax Act. The dispute involved multiple transfer pricing adjustments, disallowances, and levy of interest.
The assessee had originally filed a return declaring income of Rs. 194.99 crore. The case was selected for complete scrutiny on various issues including transfer pricing, stock valuation, deductions under Section 80-IA, expenditure relating to exempt income, foreign remittances, and other matters. The Assessing Officer ultimately determined the total income at Rs. 1162.74 crore after several additions and transfer pricing adjustments.
One major issue related to the corporate guarantee fee charged to Associated Enterprises (AEs). The Transfer Pricing Officer (TPO) had adopted a guarantee fee rate of 0.50% instead of the 0.25% charged by the assessee, resulting in an adjustment of Rs. 2.74 crore. The assessee argued that the 0.25% rate was supported by quotations obtained from HDFC Bank and Yes Bank and had already been accepted in earlier assessment years by the ITAT. The Tribunal noted that identical issues had been decided in favour of the assessee in earlier years and accepted the 0.25% rate as arm’s length. Accordingly, the adjustment was deleted.
