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2014 (4) TMI 930 - AT - Income TaxDetermination of ALP u/s 92C of the Act - Transfer pricing adjustment - Addition on interest – Held that:- Junk bond rate canot accepted while analyzing loans advanced internationally – Relying upon Siva Industries & Holdings Ltd. Versus Assistant Commissioner of Income-tax, Company Circle-VI(4), Chennai [2011 (5) TMI 451 - ITAT, CHENNAI] - assessee has advanced a loan of USD$150,000 to CES, USA @ 6% interest per annum - Another loan of USD$ 6,80,000 was converted into equity share capital and the value of interest received up to the date of conversion was at Rs. 15,56,833/-, for which rate of interest calculated at Libor Plus 157 basis points - Assessee has adopted Libor + 1.57% base points, there was no reason to restore the matter to the TPO as the rate of Libor + can be considered as ALP – Decided in favour of Assessee. Exclusion of communication expenses – Held that:- The decision in ITO v. Saksoft Ltd. [2009 (3) TMI 243 - ITAT MADRAS-D] followed - the AO is directed to exclude the communication expenses from the total turnover also and workout the deduction accordingly – Decided in favour of Assessee. Determination of ALP u/s 92C of the Act - Transfer pricing adjustment – Income from software segment, ITES segment and capital advances to AE – Held that:- As already decided that these companies are not to be selected on various reasons, the objections of Assessee s upheld and the TPO/AO is directed to work out the arithmetic mean of PLI on the balance of companies – Decided in favour of Assessee.
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