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| The Tax Publishers2020 TaxPub(DT) 3389 (Del-Trib) INCOME TAX ACT, 1961
Section 92C
Interest rate to be paid on FCCDs issued to AEs was to be benchmarked using interest rate applicable to the currency concerned in which loan was to be repaid.
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Transfer pricing - Determination of ALP - Interest on FCCDs denominated in Indian Rupees issued to AE - TPO used LIBOR based interest rate
Assessee-company issued FCCDs denominated in Indian Rupees to its AE abroad @ 17.75% per annum being SBI Prime lending rate + 300 basis points. However, TPO used SBI Prime lending rate + 300 basis points and accordingly, suggested ALP adjustment. Held: Interest to be paid on FCCDs denominated in Indian rupees was to be benchmarked using interest rate applicable to the currency concerned in which loan was to be repaid. As SBI lending rate at the time of investment was 14.75% plus 300 basis point was 17.75%, no adjustment was called for and thus, TPO was not correct in using LIBOR based interest for the purpose.
REFERRED : Cotton Naturals India (P) Ltd. (2015) 55 Taxman.com 523 (Delhi) : 2015 TaxPub(DT) 1361 (Del-HC)
FAVOUR : In assessee's favour.
A.Y. : 2012-13
IN THE ITAT, DELHI 'I-1' NEW DELHI BENCH
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