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2015 (7) TMI 1288 - AT - Income TaxAddition on account of determination of Arms Length Price (ALP) of the interest charged from its Associated Enterprise(AE) - computation of income arising from an international transaction entered into by the assessee with its Associated Enterprise - assessee company had charged interest from its AE @ LIBOR + 300 bps - Held that:- The interest rates payable on currency specific loans were found to be significantly universal and globally applicable. Since the loan in question before the in foreign currency i.e. US $ and it was also to be repaid in the same currency, the interest rate applicable to the rupee loans would not be a relevant comparable. Therefore, the PLR applied by the TPO was found to be untenable. Following the ratio of the decision Hon’ble Delhi High Court in the case of Cotton Naturals Ltd. (2015 (3) TMI 1031 - DELHI HIGH COURT), in the present case we find no reason to uphold the application of SBL PLR on rupee loan as a benchmark to compare the interest rate on loan advanced by the assessee to its Associated Enterprise in foreign currency. As the loan in the instant case has also been given in foreign currency i.e. US $, therefore, we find no infirmity in the assertions of the assessee that the interest rate charged at LIBOR + 300 bps is liable to be considered as an Arm’s Length rate of interest. As a consequence no further transfer pricing adjustment is required to be made in order to compute the Arm’s Length Price of the interest earned by the assessee on loan advanced to its Associated Enterprise i.e. Synergy Corpn. USA. Therefore, the addition made by the AO is directed to be deleted - decided in favour of assessee
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