ITAT Delhi Dismisses Revenue’s Appeal in Havells India Ltd. Case

Corporate Guarantee Adjustment Restricted to 0.5 Percent

The Delhi Bench of the Income Tax Appellate Tribunal dismissed the Revenue’s appeal against Havells India Ltd., upholding the Commissioner (Appeals)’ order restricting the arm’s length rate on corporate guarantees to 0.5 percent. The Tribunal noted that in the assessee’s own earlier assessment years, identical transfer pricing issues had already been examined in detail and consistently decided in favour of Havells. It reiterated that a modest guarantee commission was sufficient and that higher rates adopted by the Transfer Pricing Officer based on banking data were unjustified in light of settled judicial precedents. Since the CIT(A) had merely followed binding Tribunal rulings, no interference was warranted.

Shahenshah Scheme Provision and Section 80IC Deduction Upheld

On the disallowance relating to the Shahenshah sales incentive scheme, the Tribunal observed that coordinate benches had previously held such provisions to be scientifically computed business liabilities and not contingent in nature. As the Revenue failed to point out any distinguishing facts or contrary legal developments, deletion of the addition was sustained. The Bench also affirmed relief granted on deduction under Section 80IC in respect of interest income from fixed deposits maintained for statutory and business purposes, holding such income to be inextricably linked with business operations. With all issues squarely covered by earlier decisions in the assessee’s own case, the Revenue’s appeal was dismissed in full.