Harisankar V. Menon, J.
This appeal, at the instance of the assessee, seeks to
challenge the order of the Income Tax Appellate Tribunal with
reference to the assessment year 2018-19 relevant to the
financial year 2017-18.
2. Admittedly, the appellant-assessee had some
international transactions on account of which the Transfer
Pricing Officer (TPO) passed an order under Section 92CA of
the Income Tax Act, 1961 (hereinafter referred to as “Act”),
noticing that the appellant had provided a corporate
guarantee to an Associated Enterprise (AE). The appellant
assessee took up the contention that it had only recovered
an amount of Rs.44,63,740/- from its subsidiary,
representing the guarantee commission paid to Axis Bank,
which provided the guarantee. However, the TPO by his order
made reference to the bank guarantee rates for the financial
year 2017-18 from five different banks and the average of
ITA No.41 of 2024 2025:KER:61180
the same – 2.56% – was adopted for computing the Arms
Length Price (ALP) and thereby arrived at the ALP at
Rs.3,93,38,672/- and after deducting the fee charged as
noticed above at Rs.44,63,740/- arrived at the short fall on
account of corporate guarantee at Rs.3,48,74,932/-.
Similarly, an amount of Rs.78,297/- was also found to be the
interest to be charged on trade receivables, which was
required to be added even though the appellant had
contended that it had not charged any interest on belated
receivables. On the basis of the order issued as above by the
TPO, since the provisions of Section 144C of the Act was
applicable, the draft order thereunder was issued by the
National Faceless Assessment Centre (NFAC). Apart from the
afore two amounts, the draft order also made reference to
the provisions of Section 14A of the Act seeking to disallow
Rs.3,51,55,880/-, since the appellant-assessee had various
income, which were exempted from taxation, requiring the
application of the provisions of Section 14A of the Act and
ITA No.41 of 2024 2025:KER:61180
the disallowance of expenditure incurred in relation to
income not includible in total income. As against the three
additions/variations proposed under the draft order under
Section 144C of the Act, the appellant-assessee filed an
objection before the Dispute Resolution Panel (DRP), and by
Annexure D order dated 21.06.2022, the DRP issued various
directions, on the basis of which assessment had also been
finalised pursuant to Annexure E order dated 25.07.2022.