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2014 (1) TMI 1365 - AT - Income TaxArm's length price in relation to loan transactions with Associated enterprise - Held that:- Decision of co-ordinate bench in Cotton Naturals (I) Pvt. Ltd. Versus vs. DCIT, Circle 3(1), New Delhi [2013 (6) TMI 174 - ITAT DELHI] followed - CUP method is the most appropriate method in order to ascertain arms length price of the international transaction as that of the assessee - Where the transaction was of lending money in foreign currency to its foreign subsidiaries the comparable transactions was of foreign currency lended by unrelated parties - The financial position and credit rating of the subsidiaries will be broadly the same as the holding company - In such a situation, domestic prime lending rate would have no applicability and the international rate fixed being LIBOR should be taken as the benchmark rate for international transactions – Decision in Siva Industries and Holding Ltd. vs. ACIT [2012 (10) TMI 890 - ITAT CHENNAI] followed - Assessee's profits are exempt u/s. 10B - There is no case that assessee would benefit by shifting profits outside India - In this case the loan agreement was for fixed rate of interest - The LIBOR has been accepted as the most suitable bench mark for judging Arms' length price in case for foreign currency loan – The adjustment made by TPO is not correct – Decided in favour of assessee.Decided against assessee.
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