ITAT held that guarantee fees received by KIA Corporation from its Indian subsidiary to be not taxable in India by virtue of Article 22 of IndiaKorea DTAA; Corporate-guarantee was given to enable Indian company to obtain a loan from a bank; Revenue held the same to be taxable income under Section 5(2) and Section 9(1)(i); As per ITAT, Revenue did not bring any material on record to establish that the transaction constituted business profits or interest income and residual clause of Article 22 squarely applied to the assessee.

High Court (HC) set aside ITAT order noting that the payments made in the usual course of business by the Assessee to its parent company would not tantamount to ‘Deemed Dividend’; Tribunal had remanded the matter back to the AO as it was of the opinion that the AO was required to compute accumulated profit on each date whenever the payment was made; HC placed reliance on Punjab and Haryana HC decision in Amrik Singh wherein it was held that the money transferred in the normal course of business, as a matter of fact of business expediency, would not amount to deemed dividend; CBDT Circular No. 19 of 2017 dated June 12, 2017 also referred to by the HC.