The Tax Publishers2019 TaxPub(DT) 6866 (Mum-Trib)

INCOME TAX ACT, 1961

Section 92C

LIBOR rates had to be adopted to benchmark receipt of interest by assessee from its AEs. In the case under consideration after adding 300 bps the rate would come to 5.49%, whereas assessee had charged at the rate of 6% and 7.5% interest per annum from its AE accordingly, there was no justification for TPO who had charged interest @ 14.3%, i.e., SBI prime lending rate.

Transfer pricing - Determination of ALP - Interest on loan given to AE -

Assessee extended loan to its AE abroad. TPO adopted prime lending rate (PLR) of State Bank of India (SBI) for benchmarking interest received from AEs by assessee for determination of ALP.Held: LIBOR rates had to be adopted to benchmark receipt of interest by assessee from its AEs. In the case under consideration after adding 300 bps the rate would come to 5.49%, whereas assessee had charged at the rate of 6% and 7.5% interest per annum from its AE accordingly, there was no justification for TPO who had charged interest @ 14.3%.

Followed:Autocomp Systems Ltd. (2015) 56 Taxmann.com 206 (Bom) : 2015 TaxPub(DT) 2023 (Bom-HC) and Cotton Naturals (I) (P) Ltd. (2015) 55 Taxmann.com 523 (Del) : 2015 TaxPub(DT) 1361 (Del-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2010-11


INCOME TAX ACT, 1961

Section 14A Section 115JB

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