Priya Soparkar 1 16 itxa 1144-17-o IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (IT) NO.1144 OF 2017 Pr.Commissioner of Income-Tax-8 Appellant V/s. RBS Financial Services (India) P. Ltd. (Formerly known as ABN Amro Securities(India) Pvt. Ltd.) Respondent --- Mr.Suresh Kumar with Mr.Sham Walve, Advocate for Appellant. Mr.P.J.Pardiwalla with Mr.Niraj Sheth i/by Mr.A.K.Jasani, Advocate for Respondent. --- CORAM : UJJAL BHUYAN & MILIND N. JADHAV, JJ. DATE : JANUARY 20, 2020 P.C.:- 1. Heard Mr.Suresh Kumar, learned standing counsel, Revenue for appellant and Mr.P.J.Pardiwalla, learned senior counsel for respondent/assessee. 2. This appeal has been preferred by Revenue under Section 260A of Income Tax Act, 1961 (briefly Act hereinafter) assailing legality and correctness of order dated 24th June, 2016 passed by ::: Uploaded on - 23/01/2020 ::: Downloaded on - 01/02/2020 10:40:21 ::: Priya Soparkar 2 16 itxa 1144-17-o Income Tax Appellate Tribunal (ITAT), Mumbai in ITA No.3260/Mum/2012 for assessment year 2007-08. 3. appeal has been preferred on following questions, projected as substantial questions of law:- (i) Whether on facts and circumstances of case and in law, ITAT was correct in directing Assessing Officer to follow ratio of decision in case of M/s Credit Lyonnais (ITA No.1935/Mum/2007 dated 30.09.2013) and M/s Calyon Bank (ITA No.4474/M/2009 dated 21.03.2014) when facts of those cases are not similar to facts of assessee and hence cannot be considered as valid comparable under Rule 10B of I.T.Rules, 1962 so as to adopt rates as adopted in those cases? (ii) Whether on facts and circumstances of case and in law, ITAT was correct in directing Assessing Officer to decide issue by applying rate of 20% in violation of provision of section 92(3) of I.T.Act, 1961 when assessee itself had considered rate of 50%? 4. In course of assessment proceeding Transfer Pricing Officer passed order dated 26 th October, 2010 under Section 92CA (3) of Act determining arms length price of syndication fee at 100%. He held that entire amount of Rs.5,99,84,604/- was received by assessee. ::: Uploaded on - 23/01/2020 ::: Downloaded on - 01/02/2020 10:40:21 ::: Priya Soparkar 3 16 itxa 1144-17-o 5. In assessment order dated 8th February, 2011 which followed, same was incorporated whereafter addition of Rs.7,15,60,236.00 was made to income of assessee. 6. On appeal before first appellate authority, Commissioner of Income Tax (Appeals) by his order dated 14th March, 2012 upheld findings of Assessing Officer and dismissed appeal. 7. Assessee thereafter preferred further appeal before Tribunal. Tribunal by impugned order dated 24 th June, 2016 remanded matter back to file of Assessing Officer to decide issue afresh by considering decisions relied upon by Tribunal for allocation of non-syndication fee between assessee and associated enterprise after giving opportunity of being heard to assessee. 8. While passing said order, Tribunal relied upon decision of Coordinated Bench of Tribunal in case of M/s Credit Lyonnais Vs. ADIT decided on 30th September, 2012 where it was held as under:- ::: Uploaded on - 23/01/2020 ::: Downloaded on - 01/02/2020 10:40:21 ::: Priya Soparkar 4 16 itxa 1144-17-o 8.8 Having held that para 4 of Protocol does not apply to case of assessee, now, question arises as to whether adjustment made by authorities below is justified. For making adjustment, authorities below have taken into consideration, income towards interest as well as fee charged by foreign branch from clients. It is pertinent to note that when loan is provided by syndicate and assessee has not contributed to loan amount then as regards income of interest, same cannot be attributed to assessee for providing services of financial analysis of borrowers, market condition and regulatory environment in India. Since assessee has provided certain services for that arms length charges can be determined as per provisions of transfer pricing regulation. TPO as well as CIT(A) has not brought out any comparable for determination of arms length price but took total income comprising interest as well as other fees charged by foreign branches for allocation/ attribution to assessee. In this case, ALP has not been determined by taking into consideration uncontrolled similar transaction. In our view, interest cannot be taken into account for attribution of income towards service charges/fees and, therefore, in facts and circumstances of case only fee charged by foreign branches can be taken into consideration for making adjustment under transfer pricing provisions. Accordingly, we direct AO/TPO to make adjustment in respect of services performed by assessee for foreign currency loan arranged for its existing clients by taking into account only fee and other charges received by foreign branches from borrowers in question. Since none of ::: Uploaded on - 23/01/2020 ::: Downloaded on - 01/02/2020 10:40:21 ::: Priya Soparkar 5 16 itxa 1144-17-o parties have come out with suitable comparables, therefore, we find that estimation made by CIT(A) at rate of 20% is just and proper, however, same would be only in respect of fee and charges other than interest received by foreign branches. Thus, these grounds of assessee are partly allowed. 9. Further reference was made to another decision of Coordinated Bench of Tribunal in case of Calyon Bank Vs. DDIT decided on 21st March, 2014 wherein decision in M/s Credit Lyonnais was relied upon. 10. Following above decisions, Tribunal restored issue to file of Assessing Officer for fresh decision in accordance with law. 11. In facts and circumstances of case, we do not find any error or infirmity in view taken by Tribunal in remanding matter back to file of Assessing Officer for fresh decision in accordance with law. 12. On thorough consideration, we are of opinion that proposed questions of law does not arise out of impugned order of Tribunal. ::: Uploaded on - 23/01/2020 ::: Downloaded on - 01/02/2020 10:40:21 ::: Priya Soparkar 6 16 itxa 1144-17-o 13. In above view, Appeal is dismissed, but without any order as to costs. (MILIND N. JADHAV, J.) (UJJAL BHUYAN, J.) . ::: Uploaded on - 23/01/2020 ::: Downloaded on - 01/02/2020 10:40:21 ::: Pr. Commissioner of Income-tax-8 v. RBS Financial Services (India) P. Ltd. (Formerly known as ABN Amro Securities(India) Pvt. Ltd.)