Greatship (India) Ltd. Vs DCIT (ITAT Mumbai)
The assessee has further assailed the disallowance worked out by the A.O under Sec. 1 4A r.w Rule 8D, on the ground that there was no recording of an objective satisfaction by the A.O that the suo-motto disallowance offered by the assessee under Sec. 14A was not correct. Succinctly stated, the assessee company which during the year in question was in receipt of exempt dividend income of Rs. 1,05,08,214/- had on a pro-rata basis i.e percentage of exempt income to total income from investments suo-motto worked out the disallowance under Sec.14A at Rs.10,68,219/-. Observing that the aforesaid disallowance was worked out by the assessee de hors the methodology contemplated in Rule 8D of the Income tax Rules, 1962, the A.O reworked out the disallowance under Sec. 1 4A r.w. Rule 8D at Rs. 25,28,937/-. Accordingly, the A.O considering the suo moto disallowance that was already offered by the assessee in its return of income, therein made a further disallowance of Rs.14,60,718/- [Rs.25,28,937/- (-) Rs.10,68,219/-]. We have given a thoughtful consideration to the aforesaid issue pertaining to sustainability of the disallowance worked out by the A.O under Sec. 14A r.w Rule 8D at Rs. 25,28,937/-, which as observed by us hereinabove had been assailed by the assessee on the ground that the A.O while dislodging the suo-motto disallowance that was offered by the assessee under Sec. 1 4A in its return of income for the year in question had principally erred in not recording an objective satisfaction that the disallowance offered by the assessee was not correct. As a similar claim had been raised by the assessee in its appeal for the immediately preceding year i.e A.Y 2012-13 before us thus, in terms of our reasoning and observations therein recorded, we on the same terms restore the issue to the file of the A.O for fresh adjudication.
FULL TEXT OF THE ITAT JUDGEMENT
The captioned appeals filed by the assessee are directed against the respective orders passed by the A.O under Sec.143(3) r.w.s 144C(13) of the Income Tax Act, 1961 (for short „Act‟), dated 06.01.2017 and 28.08.2018 for A.Y 2012-13 & A.Y 2014-15, respectively. As common issues are involved in the captioned appeals, the same, thus, are being taken up and disposed off by way of a consolidated order. We shall first take up the appeal of the assessee for A.Y. 2012-13 wherein the impugned order has been assailed on the following grounds of appeal before us:
“This Appeal is filed against the order u/s. 143(3) r.w.s. 144C(13) of the Income-tax Act, 1961 passed by the Deputy Commissioner of Income Tax, Range 5(1)(1), Mumbai (‘hereinafter referred to as Assessing Officer7) and relates to the Assessment Year 2012-201 3.
(1) The Assessing Officer (AO) / Transfer Pricing Officer (TPO) / Dispute Resolution Panel (DRP) erred in holding that the transaction of giving financial guarantee by the Appellant on behalf of its Associated Enterprises (AEs) was an “international transaction” under Section 92B of the Act.
(2) The AO / TPO / DRP erred in determining the Arm’s Length Price of the financial guarantees given by the Appellant on behalf of its AEs @ 2% per annum.
(3) The AO / TPO / DRP erred in making a transfer pricing adjustment of Rs.28,69,70,745/-on account of guarantee commission.
(4) The AO /TPO / DRP failed to appreciate that giving of financial guarantees by the Appellant on behalf of its subsidiaries was a shareholder activity for which no charge is required.
(5) The AO / TPO / DRP erred in law and in facts in rejecting the benchmarking analysis undertaken by the Appellant in respect of guarantee commission in its transfer pricing documentation.
(6) Without prejudice to Ground Nos. 1 to 5, the Assessing Officer / Transfer Pricing Officer erred in computing the arm’s length price of the financial guarantees given by the Appellant in an arbitrary manner.
(7) Without prejudice to Ground Nos. 1 to 6, the Appellant submits it should be granted the benefit of +/-5% range as per the proviso to section 92CA(2) of the Income-tax Act.
(8) The AO / TPO / DRP erred in holding that the interest charged by the Appellant at the rate of LIBOR + 2.9% per annum in respect of loan of USD 71.5 million given to Greatship Global Holdings Ltd., Mauritius, was not at arm’s length
(9) The AO / TPO / DRP erred in making a transfer pricing adjustment of Rs.97,39,903/- in respect of loan of USD 71.5 million given by the Appellant to its AE Greatship Global Holdings Ltd., Mauritius by holding that the arm’s length price of the loan was LIBOR + 3.32% p.a.
(10) The AO / TPO / DRP erred in not following the order of the DRP for the Assessment Year 2011-2012 wherein this very loan given to Greatship Global Holdings Ltd. at interest rate of LIBOR + 2.9% was held to be at arm’s length.
(11) Without prejudice to Ground Nos. 8 to 10, the Appellant submits it should be granted the benefit of +/-5% range as per the proviso to section 92CA(2) of the Income-tax Act.
(12) The AO / TPO / DRP erred in making a transfer pricing adjustment of Rs.62,23,256/- in respect of sale of under construction vessel “Greatship Vimla” by Appellant to its AE, Greatship Global Offshore Services Pte. Ltd., Singapore.
(13) The AO / TPO / DRP erred in reclassifying the transaction of sale of the under construction
vessel as a loan given by the Appellant to its AE.
(14) Without prejudice to Ground Nos. 12 and 13, the Appellant submits that the transfer pricing adjustment of Rs.62,23,256/- in respect of the transaction of transfer of under construction vessel “Greatship Vimla” to its AE is highly arbitrary and excessive and needs to be reduced substantially.
(15) The AO / DRP erred in invoking Rule 8D without recording an objective satisfaction that having regard to the accounts of the Appellant, that the suo moto disallowance of expenses of Rs.22,63,129/- by the Appellant under section 14A was incorrect.
(16) The AO / DRP erred in disallowing further expenses of Rs.20,37,871/- under Section 14A read with Rule 8D(2)(iii).
(17) The AO erred in levying interest under section 234C of Rs.1,51,62,514/-. The interest under section 234C should be restricted to Rs. 11,74,709/-.
The Appellant craves leave to add to, amend, alter, modify or withdraw any or all the Grounds of Appeal before or at the time of hearing of the Appeal, as they may be advised from time to time.”
2. Briefly stated, the assessee company which is engaged in the business of owning, operating and charter hiring of supply vessels, tugs, barges, rigs and all types of vessels related to offshore services and undertaking activities related to drilling including deep water drilling and shipping related activities had e-filed its return of income for A.Y 2012-13 on 28.11.2012, declaring a total income of Rs.1 02,21,04,981/-. The return of income filed by the assessee was processed as such under Sec. 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2) of the Act.
3. Observing that the assessee during the year in question had entered into international transactions with its associated enterprises (for short “AEs”) exceeding the prescribed limit of Rs.15 crore, the A.O, thus made a reference to the Transfer Pricing Officer (for short „TPO‟) for determining the Arm‟s Length Price (for short “ALP”) of the said transactions. TPO vide his order passed under Sec. 92CA(3), dated 29.01.2016 made an upward adjustment of Rs.30,29,33,904/- which included adjustments on account of viz. (a) corporate guarantee commission: Rs.28,69,70,745/-; (b) interest on loan: Rs.97,39,903/- ; and (c) sale of under construction vessel: Rs.62,23,256/-.
4. After receiving the order passed by the TPO under Sec. 92CA(3), dated 29.01.2016 the A.O passed a draft assessment order under Sec. 144C(1) r.w.s 143(3), dated 11.03.2016, wherein he proposed to make a transfer pricing addition of Rs. 30,29,33,904/-. It was further observed by the A.O that the assessee which during the year in question was in receipt of exempt dividend income of Rs.8,28,16,193/- had as per a self-devised method i.e percentage of exempt income to total income from investments offered a suo motto disallowance of Rs.22,63,129/- under Sec. 14A of the Act. Backed by the aforesaid facts, the A.O called upon the assessee to explain as to why the expenses attributable to earning of the exempt dividend income may not be computed as per the methodology prescribed in Sec. 14A r.w. Rule 8D. In reply, the assessee tried to impress upon the A.O that as it had rightly attributed and therein disallowed the expenses relating to earning of the exempt dividend income, the same, thus, was not required to be interfered with. However, the A.O not finding favour with the claim of the assessee worked out the disallowance under Sec. 14A r.w. Rule 8D at Rs.43,01,000/- and after considering the suo motto disallowance of Rs. 22,003,129/- that was already offered in the return of income proposed a further disallowance of Rs.20,37,871/- [Rs.43,01,000/- (-) Rs. 22,63,129/-]. Accordingly, the A.O on the basis of his aforesaid observations proposed to assess the income of the assessee vide his draft assessment order under Sec.144C(1) r.w.s 143(3), dated 11.03.2016 at Rs.132,70,76,760/-.
5. Objecting to the additions/disallowances as were proposed by the A.O vide his order passed under Sec. 1 44C(1) r.w.s 143(3), dated 11.03.2016, the assessee carried the matter before the Dispute Resolution Panel-1, Mumbai (for short „DRP‟). Before the panel the assessee objected both to the transfer pricing adjustments as well as the additional disallowance under Sec. 14A r.w. Rule 8D(2)(iii) that was proposed by the A.O. However, the DRP not finding favour with the contentions advanced by the assessee dismissed the respective objections as were raised before it.
6. After receiving the order passed by the DRP under Sec. 144C(5), dated 29.12.201 6, the A.O taking cognizance of the fact that pursuant to rejection of all the objections that were raised by the assessee before the DRP the draft assessment order passed by him had remained undisturbed, therein assessed the income of the assessee company vide his order passed under Sec. 143(3) r.w.s 144C(13), dated 06.01 .2017 at Rs.132,70,76,760/-.
7. Aggrieved, the assessee has assailed the assessment framed by the A.O under Sec. 143(3) r.w.s 1 44C(1 3), dated 06.01.2017 in appeal before us. The Ld. Authorised Representative (for short “A.R”) for the assessee at the very outset of the hearing of the appeal took us through the respective issues which were being assailed in the present appeal. Ld. A.R had challenged the TP adjustment of Rs. 28,69,70,745/- that was made by the A.O/TPO as regards the corporate guarantee that was given by the assessee to foreign banks on behalf of its AEs. Elaborating on the facts therein involved, it was submitted by the ld. A.R that financial guarantees given by the assessee company to the foreign banks on behalf of its two AEs, viz. (i). Greatship Global Energy Services Pte. Ltd (for short “GGES”); and (ii). Greatship Offshore Services Pte. Ltd. (for short “GGOS”), both incorporated in Singapore had continued during the year in question. It was submitted by the ld. A.R that the guarantees were given by the assessee company for facilitating raising of loans from DnB Nor Bank, Singapore; Bank Of Nova Scotia, Singapore and ABN Amro Bank by its aforesaid AEs. It was submitted by the ld. A.R that though the assessee had not charged any guarantee fees as per its books of accounts, however, in Form 3CEB it had taken the ALP of the financial guarantee given to the banks on behalf of its AEs, viz. GGOS and GGES at 0.43% of the loan amount and had therein computed the same at Rs. 2,57,96,937/- and Rs. 5,38,48,438/-, respectively. Accordingly, the assessee had on a suo motto basis made an adjustment towards financial guarantee given to banks on behalf of its AEs amounting to Rs. 7,96,45,375/-. It was submitted by the ld. A.R that the assessee had benchmarked the guarantee fees on the basis of an Internal CUP i.e as per the average of the guarantee fees that was paid by it to certain banks, viz. RBS (formerly known as ABN Amro Bank); Kotak Mahindra Bank and Yes Bank, for guarantees stood by them on behalf of the assessee in case of third parties, viz. ONGC, BG Exploration, etc. It was submitted by the ld. A.R that the Internal CUP adopted by the assessee for benchmarking the transaction of providing guarantee fees was rejected by the TPO for the reasons, viz. (i). that for the multiple facilities provided to the assessee the banks had taken security; (ii). that the credit rating of the assessee was higher than its AEs; (iii). that for computing the ALP the assessee had taken only the guarantee fee rate charged by the bank and had not considered other fees and charges; (iv). that details gathered from the banks revealed that guarantee fee ranging from 1.08% to 3% was being charged by them and a discount or concession below these rates was given only where there was cash margin or security, or the credit rating of the company was sovereign. It was submitted by the ld. A.R that the TPO was of the view that the fee for the corporate guarantee given by the assessee to a foreign bank would be higher than the bank guarantee fee charged by the banks. Accordingly, the TPO backed by his aforesaid conviction, in substance, without adopting any specified method for benchmarking the transaction of providing of guarantee by the assessee to its foreign AEs had on an ad hoc basis took the ALP of the guarantee fees at 2% p.a and determined the same at Rs. 36,66,16,120/-. As the assessee had made a suo motto adjustment of Rs. 7,96,45,375/- i.e @0.43% thus, the TPO made an upward adjustment of Rs. 28,69,70,745/- [Rs. 36,66,16,120/- (-) Rs. 7,96,45,375/-]. Ld. A.R assailed the determination of the ALP of the financial guarantee that was provided by the assessee to the banks in order to facilitate raising of loans by its AEs. It was submitted by the ld. A.R that the TPO had grossly erred in law in rejecting the Internal CUP that was adopted by the assessee for benchmarking the transaction of providing of financial guarantee by the assessee to the foreign banks for facilitating raising of loans by its foreign AEs. It was further submitted by the ld. A.R that the TPO had erred in law by taking the ALP of the transaction of providing financial guarantees to the banks on an ad hoc basis at 2% p.a i.e without adopting any of the specified method contemplated in 92C(1) of the Act. It was submitted by the ld. A.R that the Tribunal in the assessee‟s own case for A.Y 2008-09, ITA No. 7673/Mum/201 2 and A.Y 2009-10, ITA NO. 1 703/Mum/201 4 wherein identical facts were involved, had for the purpose of benchmarking its transaction of providing corporate guarantee to a foreign bank in order to facilitate raising of loan by its AE, vide its consolidated order dated 21.06.2019 had approved the Internal CUP i.e guarantee commission paid by the assessee to a bank for standing guarantee on its behalf for a third party. It was submitted by the ld. A.R that the Tribunal in its aforesaid order had after relying on the order of the Hon‟ble High Court of Bombay in the case of CIT Vs. Everest Kanto Cylinders Ltd. (2015) 378 ITR 57 (Bom), had upheld the ALP of the financial guarantee that was given by the assessee to the bank for facilitating raising of loan by its AE. It was submitted by the ld. A.R that as the assessee by rightly adopting an Internal CUP had taken the ALP of guarantee fees at 0.43% of the loan amount thus, the substitution of the same on an ad hoc basis by 2% by the TPO could not be sustained and was liable to be vacated. As regards the adequacy of guarantee fees of 0.43% of the loan amount the ld. A.R had drawn support from certain judicial pronouncements.
8. Per contra, the ld. Departmental representative (for short “D.R”) relied on the orders of the lower authorities. It was submitted by the ld. D.R that the A.O/TPO had rightly taken the ALP of the guarantee fees at 2%. It was averred by the ld. D.R that as the provision of corporate guarantee was a business facility on the basis of which the AEs had raised loans from the banks thus the assessee company was to be compensated adequately. It was submitted by the ld. D.R that as observed by the TPO/DRP, as the credit rating of the AEs was lower than that of the assessee therefore the AE could raise funds from the market at a comparatively higher rate of interest. It was, thus, submitted by the ld. D.R that the lower authorities had rightly taken the ALP of the corporate guarantee provided by the assessee to the foreign banks in order to facilitate raising of the loans by its AEs at 2% p.a.
9. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the assessee‟s counsel to drive home his claim. As is discernible from the orders of the lower authorities, corporate guarantees were given by the assessee company to the foreign banks in order to facilitate raising of loans by its AEs viz, Greatship Global Energy Services Pte. Ltd; and Greatship Offshore Services Pte. Ltd., both Singapore based concerns; from DnB Nor Bank, Singapore; Bank Of Nova Scotia, Singapore; and ABN Amro Bank. Although the assessee had not charged any guarantee fees as per its books of accounts, however, in Form 3CEB it had taken the ALP of guarantee fees at 0.43% of the amount of loan and had computed the ALP of the corporate guarantee given to the banks on behalf of its AEs, viz. GGOS and GGES at Rs. 2,57,96,937/- and Rs. 5,38,48,438/-, respectively. Accordingly, the assessee had made a suo-motto adjustment of Rs. 7,96,45,375/- w.r.t the transaction of providing corporate guarantee to the banks in order to facilitate raising of loans by its AEs. As noticed by us hereinabove, the assessee had benchmarked the transaction of providing guarantee fees on the basis of an Internal CUP i.e as per the average of the guarantee fees that was paid by it to certain banks, viz. RBS (formerly known as ABN Amro Bank); Kotak Mahindra Bank; and Yes Bank, for the respective guarantees stood by them on behalf of the assessee in case of third parties, viz. ONGC; BG Exploration, etc. However, the Internal CUP that was adopted by the assessee for determining the ALP of the transaction of providing corporate guarantee was rejected by the TPO for the reasons, viz. (i). that for the multiple facilities provided to the assessee the banks had taken security; (ii). that the credit rating of the assessee was higher than its AEs; (iii). that for computing the ALP the assessee had taken only the guarantee fee rate charged by the bank and had not considered other fees and charges; (iv). that details gathered from the banks revealed that guarantee fee ranging from 1.08% to 3% was being charged by them and a discount or concession below these rates was given only where there was cash margin or security, or the credit rating of the company was sovereign. On a perusal of the order of the TPO, we find that he had determined the ALP of guarantee transaction on the basis of the guarantee fees rates that were being charged by the banks to Indian companies varying in the range of 1.10% to 3%, depending upon various factors. It was in the aforesaid backdrop that the TPO had thereafter concluded that as corporate guarantee rate would be normally higher than the bank guarantee rate, and further, as the corporate guarantee rate for a guarantee given to a foreign bank for foreign based companies would normally be higher than the corporate guarantee rate charged to an Indian entity thus, the same would conservatively be in the range of 1.5% to 3.5%. Backed by his said general observations, de hors adoption of any prescribed method contemplated in Sec. 92C(1) of the Act, the TPO had therein concluded that as the loans were being raised by the AEs for acquiring a vessel thus, the corporate guarantee could be estimated at 2% of the actual borrowed capital. We have deliberated at length on the observations of the lower authorities and are unable to persuade ourselves to subscribe to either the reasoning or the manner adopted by them for determining/sustaining the ALP of the transaction of provision of corporate guarantee by the assessee to the foreign banks for facilitating raising of loans by its AEs. Observing, that the guarantee fees rates charged by the banks to Indian companies varied from 1.10% to 3%, the TPO had adopted the same as a yard stick and had concluded that the range of corporate guarantee fee for foreign based transactions would conservatively be in the range of 1.5% to 3.5%. As such, in the backdrop of his aforesaid observations that the TPO had estimated the corporate guarantee fee at 2% of the actual borrowed capital. In our considered view the very basis adopted by the TPO for determining the ALP of the corporate guarantee i.e guarantee fees rates charged by the banks to Indian companies is inconsistent with the ratio laid down by the Hon’ble High Court of Bombay in the case of CIT Vs. Everest Kanto Cylinders Ltd. (2015) 378 ITR 57 (Bom). In its aforesaid order, it was held by the Hon‟ble High Court that the considerations which apply for issuance of corporate guarantee were distinct and separate from that of guarantee provided by the banks and, therefore, the two transactions were incomparable. In fact, involving identical facts the Tribunal in the assessee‟s own case for A.Y 2008- 09, ITA No. 7673/Mum/2012 and A.Y 2009-10, ITA No. 1703/Mum/2014, vide a consolidated order dated 21.06.2019 had approved the determination of ALP of corporate guarantee provided by the assessee to a foreign bank for facilitating raising of loans by its foreign AE on the basis of the Internal CUP i.e guarantee commission that was paid by the assessee to a bank for standing guarantee on its behalf for a third party. Further, the Tribunal after drawing support from the order of the Hon‟ble High Court of Bombay in the case of CIT Vs. Everest Kanto Cylinders Ltd. (2015) 378 ITR 57 (Bom), had approved the determination of ALP of the corporate guarantee given by the assessee to the bank in order to facilitate raising of loan by its AE i.e on the basis of the aforesaid Internal CUP applied by the assessee. In its aforesaid order the Tribunal had observed as under:
“17. We have carefully considered the rival submissions. In the present case, the assessee has made a suo-motto transfer pricing adjustment on Corporate Guarantee fee @0.55% from its AE , and such transaction has been considered as an „international transaction‟ within the meaning of Sec. 92B of the Act. Accordingly, the arm‟s length price of such transaction has been determined by the TPO at 3.00% which has resulted in enhancement of assessee‟s income, and the same was restricted by the DRP at 1.50%. The issue before us is restricted to whether the arm‟s length rate of the Corporate Guarantee is to be taken at 0.55%, which has been suo-motto taken as transfer pricing adjustment by the assessee, or the rate of 1.50% determined by the income-tax authorities. Notably, the TPO has benchmarked the instant transaction of provision of Corporate Guarantee on the basis of respective abilities of the assessee and AE to raise Bonds in the Indian domestic market. The TPO asserted that based on the debt-equity ratio, the credit rating of the assessee company was higher in comparison to that of the AE and, therefore, the rate of interest payable by the AE to raise bonds in the Indian market would be higher than the rate payable by the assessee-company. Such differential has been used to determine the Corporate Guarantee fee that should have been charged by the assessee company from its AE so as to determine the arm‟s length price of the instant transaction. In our considered opinion, the aforesaid approach of the TPO is clearly inconsistent with the ratio laid down by the Hon‟ble Bombay High Court in the case of Everest Kanto Cylinder Ltd. (supra). Notably, in the case of Everest Kanto Cylinder Ltd. (supra), the dispute was relating to the adjustment made by the TPO in the matter of Guarantee commission earned for providing a Corporate Guarantee to the Bank in connection with the borrowings made by the AE of the assessee therein. The TPO determined the arm‟s length price of such transaction based on the instance of commercial banks providing Guarantee on behalf of their clients. The Hon‟ble High Court held that the considerations which apply for issuance of Corporate Guarantee were distinct and separate from that of Guarantee provided by the banks and, therefore, the two transactions were incomparable. In our considered opinion, similar parity of reasoning is applicable in the present case too because the considerations which weigh for raising of bonds, that too in Indian market, are quite distinct and incomparable with the instance of providing of Corporate Guarantee to a bank abroad in connection with raising of loan from such bank by the AE of assessee outside India. Therefore, in our considered opinion, the exercise carried out by the TPO to arrive at the impugned arm‟s length rate suffers from an inherent misconception as the benchmarking has been done between two incomparable situations. Therefore, we are unable to uphold the stand of the income-tax authorities.
18. Insofar as the adequacy of 0.55% rate charged by the assessee is concerned, we find enough reasonableness in the same. In this context, the learned representative for the assessee referred to various decisions of the Tribunal, viz. Hindalco Industries Ltd. (supra), Thomas Cook (India) Ltd. (supra) and Godrej Consumer Products Ltd. (supra), wherein the arm‟ length rate of 0.5% has been approved in the matter of benchmarking Guarantee commission fee chargeable from AE. Thus. considering the entirety of the facts and circumstances of the case, in our view, Corporate Guarantee fee charged by the assessee @0.55% is well-founded and does not require any Transfer Pricing Adjustment. Thus, we set-aside the order of the CIT(A) and direct the Assessing Officer to delete the addition of Rs. 42,97,821/-. Thus, Ground of appeal nos. 6 to 9 are allowed.”
As the Tribunal in its aforesaid order passed in the assessee‟s own case for the preceding years had approved the determining of ALP of corporate guarantee provided by the assessee to a foreign bank for facilitating raising of loan by its AE by applying of Internal CUP by the assessee i.e the guarantee commission paid by the assessee to a bank for guarantee stood by it on behalf of the assessee for a third party thus, we respectfully follow the view therein taken. Accordingly, we find no infirmity in the adoption of internal CUP i.e the average guarantee fees that was paid by the assessee to, viz. RBS (formerly known as ABN Amro Bank); Kotak Mahindra Bank and Yes Bank, for standing guarantee on its behalf of the assessee in case of third parties, viz. ONGC, BG Exploration etc.
10. Insofar the adequacy of the ALP of the corporate guarantee fees determined by the assessee at 0.43% of the amount of loan is concerned, the same, as observed by us hereinabove is the average of the guarantee fees that was paid by the assessee to various banks for standing guarantees on its behalf for certain third parties. As observed by the Hon‟ble High Court in the case of Everest Kento Cylinders Ltd. (supra), higher commission is to be paid for obtaining bank guarantee, as they are easily encashable in the event of default as in comparison to corporate guarantee provided by an assessee company to a bank for facilitating raising of loan by its AE. Accordingly, we are of the considered view that insofar the adequacy of the ALP of the corporate guarantee fees determined by the assessee at 0.43% is concerned, the same in the backdrop of the aforesaid facts cannot be called in question. Apart from that, we find that it was also the claim of the assessee before the lower authorities that Kotak Mahindra Bank (as per its sanction letter) had expressed its willingness to give guarantee on behalf of the AEs at a commission rate of 0.40% p.a/0.50% p.a. In the backdrop of the aforesaid fact, we find substantial force in the claim of the ld. A.R that the aforesaid credit sanction letter too would constitute a CUP for benchmarking the transaction of providing of corporate guarantee by the assessee to the banks for facilitating raising of loans by its AEs. Be that as it may, the adequacy of the ALP of corporate guarantee fee at 0.43% can also safely be gathered by drawing support from the following judicial pronouncements as had been relied upon by the assessee before the lower authorities as well as before us :
