1. These two Appeals Section 260-A of the Income Tax Act, 1961 (the Act), challenges the order dated 31 May, 2016 passed by the Income Tax Appellate Tribunal (the Tribunal). The common impugned order dated 31 May, 2016 is in respect of Assessment Year 2009-10 and 2010-11 respectively. Thus, the two appeals.
2. Revenue urges only the following questions of law, for our consideration:
“(a) Whether on the facts and in the circumstance of the case and in law, the Tribunal erred in law in deleting, in principle, transfer pricing adjustment made by the Assessing Officer (AO)/Transfer Pricing Officer (TPO) in respect of expenditure incurred on Advertising, Marketing and Promotion Expenses (‘AMP Expenses’ for short)
(b) Whether on the facts and circumstances of the case and in law, the Tribunal fall into error in determining 0.5% per annum as arm's length corporate guarantee fee?”
3. Re. Question (b):—
(i) The impugned order of the Tribunal allowed the Respondent-Assessee's appeal while holding that 0.5% would be the Arms Length Price (ALP) of the fees for grant of corporate guarantees. This by following the decision dated 29 April, 2016 of its coordinate bench in respect of the same Respondent-Assessee. In fact, the impugned order extracts substantially from the order dated 29 April, 2016. The Revenue has not been able to show any challenge to the above order dated 29 April, 2016 of the Tribunal before this Court;
(ii) We find that the impugned order has allowed the Respondent-Assessee's appeal while holding that the rate of 3% taken as ALP for the fee to grant corporate guarantee to its Associated Enterprises, is not appropriate. This as on identical facts, this Court in the case of CIT v. Everest Kento Cylinders Ltd., 378 ITR 57 held that corporate guarantee, cannot be compared with the guarantee provided by the commercial banks. In the above view, this Court held that the adoption of 0.50% as ALP for the fee for grant of corporate guarantee, would be the appropriate ALP;
(iii) In view of the fact that the impugned order has followed the decision of this Court in Everest Kento Cylinders Ltd., (supra), no substantial question of law arises for our consideration. Thus, not entertained.
4. Appeal admitted on the substantial question of law at (a).
5. Registry is directed to communicate copy of this order to the Tribunal. This would enable the Tribunal to keep papers and proceedings relating to the present appeal available, to be produced when sought for by the Court.
6. To be heard along with Income Tax Appeal Nos. 475 and 482 of 2017.
7. Mr. Agarwal, learned Counsel waives service for the Respondent.