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2016 (8) TMI 1417 - AT - Income TaxArm's length price of interest at LIBOR+2% - whether it should be higher than LIBOR+2%, because the LIBOR is not the rate of consideration for loan transactions as it differs from country to country - Held that:- Referring to Tribunal in assessee company's own case, we direct the Assessing Officer to accept the interest rate charged at LIBOR+1% as an arm's length price. Transfer Pricing Addition in respect of Corporate Guarantee - Held that:- Guarantee commission at the rate of 0.5% from its Associate Enterprise can be said to be at arms length. Thus, respectfully following the decision of Tribunal in assessee company`s own case, whereby issue were decided in favour of the assessee company. Accordingly, we direct the AO/TPO to compute and charge the guarantee commission at the rate of 0.5% from its Associate Enterprise. Addition on account of adjustment in respect of interest on recharactarising share application money as Loan advanced to Associate Enterprise - Held that:- AR for the assessee company stated that the share application money can not be treated as loan amount merely because there is a delay in issuance of shares by the subsidiary in the name of the assessee. The assessee company further stated that the same identical issue is covered by the Hon`ble Mumbai Tribunal`s order in assessee's own case for A.Y. 2007-08. Share application money can not be treated as loan amount merely because there is a delay in issuance of shares by the subsidiary in the name of the assessee. Addition in respect of interest and finance expenses related to acquisition of shares of foreign subsidiary and disallowance of the same under section 36 (1) (iii) - Held that:- Interest expenditure incurred by the assessee is out of commercial exigency of the business and hence should be allowed as business expenditure under section 36 (1) (iii) of the Act, and we accordingly direct the Ld. CIT (A) / AO to delete the addition for A.Y.2008-09. Expenditure towards the foreign travel of its employees for expansion of its business acquired in Canada - Held that:- Since the foreign travel expenses are incurred by the assessee company in respect of the visit of its employees to overseas places in pursuance of its acquisition of call centre business in Canada and expanding the business thereof, the same should not be disallowed because all these expenses are related to business purpose and covered under the provisions of section 37 (1), therefore, we do not hesitate to direct the CIT (A) / AO to delete the said addition. In the result, appeal of the assessee is allowed on this ground.
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