Shapoorji Pallonji and Company Private Limited Vs DCIT (ITAT Mumbai)
ITAT Mumbai held that transfer pricing addition made in respect of Letter of Comfort rightly deleted since Letter of Comfort didn’t constitute an International Transaction. Accordingly, order passed by CIT(A) upheld to that extent.
Facts- The Assessee is a domestic company primarily engaged in the business of civil construction, real estate, trading of construction materials and construction related services. The case of the Assessee was selected for scrutiny. During the course of assessment proceeding, the Assessing Officer noted that the Assessee had entered into International Transactions with its Associated Enterprises (AEs) Therefore, reference was made u/s. 92CA(1) of the Act to the Transfer Pricing Officer (TPO) for determination of the Arm’s Length Price (ALP) in relation to the International Transaction with its AE.
The TPO, after considered the submissions made by the Assessee, concluded that the LOC/Guarantees given by the Assessee fell within the definition of term ‘International Transactions’ as contained in Section 92B of the Act read with Explanation thereto (inserted with retrospective effect from 01/04/2002). Thereafter, AO passed the Assessment Order, dated 07/02/2017 under Section 143(3) read with Section 144C(3) of the Act making (a) Transfer Pricing Addition of INR.5,67,32,905/- and (b) Disallowance of INR.12,95,04,995/- as per Section 35DD of the Act.
