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2016 (3) TMI 1396 - AT - Income TaxTP Adjustment - international transaction arising from interest charged on the loan advanced by the assessee to its AE - assessee has charged interest at WIBOR + 1%, whereas, the TPO had adopted BPLR of SBI for benchmarking the transaction - Whether the rate of interest to be adopted is BPLR of SBI or WIBOR + 1% for benchmarking the transaction? - HELD THAT:- AR pointed that due to frequent changing of the BPLR by all the banks, the prevalent BPLR of all the Indian Banks are not readily available in the Public Domain or any statistical database. Poland being member of European Union, the more appropriate rate for comparison would be the RFC rates for Euros. The average RFC rates for Euros being 2.80% and the highest rate for 3 years and above being 3.30% only, the rate of 5.47% charged by the assessee company to its subsidiary in Poland is justified. We find that the similar issue had come up before the Coordinate Bench of the Tribunal in the case of Varroc Engineering Pvt. Ltd. Vs. The Asstt. Commissioner of Income Tax [2015 (3) TMI 111 - ITAT PUNE] In the said case the assessee had benchmarked its international transaction relating to interest rate charged at international rate. The benchmarking was adopting at foreign currency City Bank rates. The TPO rejected the benchmarking made by the assessee and adopted the BPLR. We hold that the DRP has erred in confirming the findings of the TPO in adopting BPLR rates. The TPO is directed to recompute the interest rate by adopting WIBOR + 1% in respect of the international transaction under appeal. Accordingly, ground no. 3 raised in the appeal is allowed. Claim of deduction u/s.10A - HELD THAT:- We find that identical issue had come up before the Tribunal in appeal of the assessee for the assessment years 2005-06 and 2006-07. The Tribunal decided the issue in favour of the assessee. The relevant extract of the order of the Tribunal [2015 (12) TMI 398 - ITAT PUNE] held that the deduction under section 10A of the Act has to be given at the stage when the profits and gains of the business are computed in the first instance.
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