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2019 (9) TMI 1684 - AT - Income TaxTP adjustment - adjustment on account of the interest on loan - bench marking of the interest on loan at US LIBOR - DRP held the interest at US LIBOR Plus 500 basis points - assessee arguing that the mark up of 500 basis points added to the LIBOR is not justified, since entities are under the same management and control, which reduced the risk factors - HELD THAT:- There is no dispute that the assessee advanced the interest free loan to its wholly owned subsidiary. In the first round of litigation, TPO reckoned the notional interest as per PLR and was confirmed by the Ld. DRP. In the second round of litigation TPO bench marked the interest on loan at SBI PLR plus 300 basis points, whereas, Ld. DRP, while following their own finding for the AY 2002-03 made it US LIBOR plus 500 basis points. It is not the case of the assessee that the facts involved in the matter are different from those involved for the AY 2002-03. It is not the case of the assessee that the findings of the Ld. DRP for the AY 2002-03 are in any way disturbed in any subsequent proceedings. Thus LIBOR with mark up cannot be found fault with, having regard to the facts of the case of the assessee. However, we find that the mark up of 500 basis points to the US LIBOR appears to be unjustifiable. We consequently, accept the alternate plea of the assessee and find that the bench marking of the interest on loan at US LIBOR plus 170 basis points would meet the ends of justice, and, accordingly, direct the Ld. TPO to recompute the notional interest at US LIBOR plus 170 basis points. Appeal of the assessee Allowed in part.
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