AI Overview...
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Bank Guarantee Charges - These are fees levied by banks for issuing guarantees, often including guarantee fees, commission charges, and related expenses. For example, Chari reports guarantee charges of ₹25,000 and ₹93,024, along with interest on export credits Testeels Ltd. VS Commissioner of Income-Tax - Gujarat.
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Interest on Export Credits and Guarantee-Related Loans - Banks charge interest on export credits and loans secured through guarantees. In some cases, interest paid on borrowed funds for machinery or exports is considered a deductible expense, though its deductibility depends on specific tax provisions Testeels Ltd. VS Commissioner of Income-Tax - Gujarat, C. I. T. VS Mohan Enterprises - Rajasthan.
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Legal and Miscellaneous Charges - Expenses such as legal fees associated with guarantees or bank charges related to guarantees are generally scrutinized for their nature—whether revenue or capital expenditure. Courts have held that such charges are typically not allowable as revenue expenses unless directly related to business operations Commissioner of Income-tax VS Mohan Enterprises - Rajasthan.
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Guarantee Fees under Transfer Pricing - Corporate guarantee fees are subject to transfer pricing regulations in India. The rates applied (e.g., 1.90%) are contested, and authorities may adjust these charges based on arm’s length principles CYIENT LIMITED HYDERABAD vs DCIT. CIRCLE-1(1) HYDERABAD - Income Tax Appellate Tribunal.
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Guarantee Charges in Court Cases - Courts have examined guarantees furnished as security for license fees or other obligations. They have discharged guarantees when conditions such as unreasonableness or arbitrariness of fee increases are established, or when guarantees are used as security rather than income earning assets J. T. MOBILES LIMITED VS DEUTSCHE BANK LIMITED - Delhi, Sanmukh D. Makhija & another VS State of Maharashtra & others - Bombay.
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Regulatory and Scheme-Related Charges - Under schemes like the Small Loans Guarantee Scheme, borrowers are contractually obligated to pay guarantee fees as per bank rules, which are considered part of the charges for guarantee services RAM ESTATE VS CORPORATION BANK - Karnataka.
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Substitution of Bank Guarantees - Courts have considered substituting bank guarantees with cash deposits or solvency certificates, affecting the calculation and validity of guarantee charges KURIEN VS STATE OF KERALA - Kerala.
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International Guarantee Fees - International transactions, such as guarantees by EXIM Bank of the USA, involve charges like commission and commitment fees, which are scrutinized under transfer pricing and tax laws Commissioner of Income Tax, Mumbai VS Everest Kento Cylinders Ltd. - Bombay.
Analysis and Conclusion
Bank guarantee charges in India encompass various fees, including guarantee fees, legal fees, and interest on related loans. While these charges are integral to securing financial and contractual obligations, their tax treatment varies—some are deductible as revenue expenses, while others are scrutinized under transfer pricing or considered capital in nature. Courts and regulatory authorities emphasize the importance of arm’s length pricing and the actual nature of charges. Overall, guarantee fees are a significant aspect of banking transactions, with specific rules governing their application, calculation, and taxation in India.
Search Results for "Bank Guarantee Charges and Fees in India"
1992 0 Supreme(Guj) 373 • India - Gujarat
R.C.MANKAD, R.K.ABICHANDANI
Chari * Bank guarantee charges * Interest on export credits * Membership fees (for institutions out of India) * Interest paid to ... Chari * Bank guarantee charges * Interest on export credits * Membership fees (for institutions out of India) * Interest paid to ... Chari - ₹ 25,000 - Bank guarantee charges - ₹ 93,024 - Interest on export credits - ₹ 10,98,881 - ....
1993 0 Supreme(Raj) 192 • India - Rajasthan
K.C.AGRAWAL, V.K.SINGHAL
Income Tax Act, 1961 - Sec. 36 (1) (Hi), Sec. 37 and Sec. 28 -In order to determine as to whether the bank charges, legal fee and ... Expenses of Rs, 9,075/- were incurred as bank charges which were paid to the Bank as commission for guarantee given by it to the Govt. of India for import of machinery. Rs. 30,787/- were incurred as interest paid on money borrowed for the purpose of machinery. ... It is undisputed that the commercial charges by #HL_STA....
1993 0 Supreme(Raj) 191 • India - Rajasthan
K.C.AGRAWAL, V.K.SINGHAL
INCOME TAX - Deduction - Bank charges, legal fees, and interest - Whether allowable as revenue expenditure - Held, no - Expenditure ... Fact of the Case: The assessee-company, which was running a cinema, incurred expenses for bank charges, legal fees, ... Issues: Whether the bank charges, legal fees, and interest incurred by the assessee in connection with the new project were ... The amount of bank ch....
2013 0 Supreme(Gau) 96 • India - Gauhati
S.R.SEN
Writ petition – Tender - Demurrage, costs, damages, registration fees, charges and expenses - Directed against ... , charges and expenses allegedly suffered or incurred by Corporation due to contractors negligence and un-workmen like performance ... respondent authorities in deducting amounts from running bills of petitioners towards alleged demurrage, costs, damages, registration fees ... fees, charges and expenses etc., which is illegal. ... (C) (SH) No. 03 of 2013 had deposited secu....
1999 0 Supreme(Del) 214 • India - Delhi
DALVEER BHANDARI
In the instant case the bank guarantee was furnished as a security to meet the exigency of non-payment of license fees by the plaintiff ... invocation of bank guarantee, fraudulent — In the absence of any proof of fraud, stay of bank guarantee is not called for. ... guarantee. ... ... ( 4 ) THE bank guarantee was primarily furnished by way of security for payment of the licence fees as well as su....
1983 0 Supreme(Bom) 69 • India - Bombay
P.S.SHAH, S.N.KHATRI
The Court also discharged the Bank guarantees furnished by the petitioners as a condition of the interim stay granted at the time ... The Court held that the increase in license fees was not arbitrary or unreasonable. ... Whether the increase in license fees could be applied retrospectively to the petitioners' licenses? 3. ... At the time of the admission of these petitions, the petitioners were granted interim stay of recovery of difference in the amount on condition that they had to furnish Bank #HL_....
2025 Supreme(Online)(ITAT) 1100 • India - Income Tax Appellate Tribunal (Hyderabad Bench)
SHRI LALIET KUMAR, SHRI G. MANJUNATHA, JJ
fees and to restrict the charges to the actual period of guarantees issued. ... (A) Income Tax Act, 1961 - Sections 92B and 133(6) - Transfer Pricing - Corporate guarantee fees - The appeal concerns the characterization ... The TPO's adjustment of Rs. 8,13,50,422/- for corporate guarantee fees was based on a rate of 1.90%, which the assessee contested ... Now coming to the second issue, i.e., at what rate the corporate guarantee charges#HL....
1996 0 Supreme(Kar) 365 • India - Karnataka
T.S.THAKUR
that the borrower was contractually obligated to pay all charges as per the bank's rules of business, including the guarantee fee ... of the Small Loans Guarantee Scheme, 1971 to the loan transaction, the Reserve Bank of India's directives on passing on the guarantee ... fee to borrowers and that the borrower was contractually obligated to pay all charges as per the bank's rules of business, including ... The borrowers agree to pay service charges, incidental #HL_STAR....
1986 0 Supreme(Ker) 437 • India - Kerala
PARIPOORNAN, V.SIVARAMAN NAIR
The court also considered the substitution of cash deposit for solvency certificate or bank guarantee, and the impact of the changes ... , as well as the substitution of cash deposit for solvency certificate or bank guarantee. ... F & P., which revised the fees and charges for registration and renewal of contractors. ... The petitioners obtained registration by furnishing solvency certificate or Bank guarantee and are carrying on th....
2015 0 Supreme(Bom) 800 • India - Bombay
S.C.DHARMADHIKARI, A.K.MENON
Issues: The issues included the disallowance of interest under section 14A and the adjustment made under section 92CA for guarantee ... Furthermore, he submitted that EXIM Bank of USA has provided guarantee to Boeing Company of USA against the Hire Purchase Agreement for purchase of aircrafts by Jet Airways India. The EXIM bank has charged a commission of 3% plus commitment charges from Jet Airways as consideration for guarantee. ... The TPO found th....
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