Notional Corporate Guarantee rate for AE by Bombay HC

The Bombay High Court declined to entertain most of the questions raised by the Revenue against Zee Entertainment Enterprises Ltd., holding that the issues were already covered by binding judicial precedents. 

The Court reaffirmed that disallowance under Section 40(a)(ia) cannot be made merely on account of short deduction of tax at source, upheld the Transfer Pricing Tribunal’s adoption of a 0.5% corporate guarantee commission rate, and accepted the principle that no interest disallowance under Section 14A can be made where sufficient interest-free funds are available. 

The appeal was admitted only on the limited issue relating to the computation of disallowance under Rule 8D(2)(iii).