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| The Tax Publishers2019 TaxPub(DT) 5496 (Bang-Trib) INCOME TAX ACT, 1961
Section 10A
Interest rate prevalent in country in which loan was received, had to be considered for determining the ALP of transaction of interest received matter was remanded back to AO to consider EURIBOR + 2% as arm's length rate of interest to be applied on loan advanced by the assessee to AE in Germany. In case EURIBOR + 2% turned out to be lower than 4.42% as directed to be applied by CIT(A) on the understanding of the same being EURIBOR simplicitor, then addition had to be restricted with reference to 4.42% rate of interest.
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Transfer pricing - Determination of ALP - Interest on loan advanced to AE -
Assessee advanced loan to its AE in Germany. TPO determined arm's length rate interest at 14% being, the interest earned on BBB bonds in India.Held: Interest rate prevalent in the country in which loan was received, had to be considered for determining the ALP of transaction of interest received matter was remanded back to AO to consider EURIBOR + 2% as arm's length rate of interest to be applied on loan advanced by the assessee to AE in Germany. In case EURIBOR + 2% turned out to be lower than 4.42% as directed to be applied by CIT(A) on the understanding of the same being EURIBOR simplicitor, then addition had to be restricted with reference to 4.42% rate of interest.
Relied:CIT v. Tata Autocomp Systems Ltd. (2015) 374 ITR 516 (Bom.) : 2015 TaxPub(DT) 2023 (Bom-HC), CIT v. Cotton Naturals (I) Pvt. Ltd. (2015) 276 CTR 445 (Del) : 2015 TaxPub(DT) 1361 (Del-HC) and CIT v. The Great Eastern Shipping Company Ltd. (2018) 301 CTR 642 (Bom.) : 2018 TaxPub(DT) 2087 (Bom-HC).
REFERRED :
FAVOUR : Matter remanded.
A.Y. : 2007-08
INCOME TAX ACT, 1961
Section 10A
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