Tata Projects Limited vs Commissioner of Income Tax
Parties Involved
Facts Summary
Tata Projects Limited, an engineering procurement and construction contracting company, filed a return for the year 2020-21 declaring total income of Rs.174,06,88,920/-. The return was selected for scrutiny and statutory notices were issued. The assessee has international transactions with AEs, including NESMA Tata Projects Ltd. (NESMA TPL) based in Saudi Arabia. The Tax Payer Office (TPO) proposed an adjustment of 1.80% on the corporate guarantee provided by the assessee to its AE. The assessee objected to this adjustment, but the objections were dismissed by the Disciplinary Review Panel (DRP). The assessee appealed to the Income Tax Appellate Tribunal (ITAT), which considered the matter and found that the bank rates adopted by the TPO were not applicable. The ITAT referred to several precedents where the guarantee fee charged was in the range of 0.25% to 0.50%. The ITAT directed the Assessing Officer (AO) to restrict the adjustment to 0.5%.…
Decision in favour of
Assessee
Legal Issues
- 1. Adjustment of corporate guarantee fee
Judgment Outcome
Decided in favour of Assessee.
Precedents Relied Upon
3 precedents cited in this judgement.