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| The Tax Publishers2021 TaxPub(DT) 4564 (Mum-Trib) INCOME TAX ACT, 1961
Section 92C
Only LIBOR rate was to be taken for the purpose of adding notional interest income on account of interest-free loan given to foreign AE and, therefore, TPO was directed to consider only LIIBOR rate @ 1.5% as arm's length price for benchmarking interest-free loan given by assessee to its AE and recompute the transfer pricing adjustment accordingly.
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Transfer pricing - Determination of ALP - Interest free loan given to overseas AE -
Assessee extended interest-free loan to its AE abroad. TPO arrived at the notional interest rate of 3.52%, i.e., LIBOR 1.5% plus spread of 2% and applied the same on the loans given by assessee to AE and thus, proposed ALP adjustment. Held: Only LIBOR rate was to be taken for the purpose of adding notional interest income on account of interest free loan given to foreign AE and, therefore, TPO was directed to consider only LIIBOR rate @ 1.5% as arm's length price for benchmarking interest free loan given by assessee to its AE and recompute the transfer pricing adjustment accordingly.
REFERRED :
FAVOUR : Partly in assessee's favour.
A.Y. : 2013-14
INCOME TAX ACT, 1961
Section 92C
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