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2022 (10) TMI 1170 - AT - Income TaxTP Adjustment - management service charges - TPO alleged that no services were received by the assessee - HELD THAT:- The present assessee has submitted evidences in support of rendering of services which have been held to be routine activities in nature. Finally, considering the facts of the case, the impugned adjustment confirmed by ld. DRP could not be sustained. AO is directed to re-compute the income of the assessee. TP Adjustment on FCCD - assessee issued debentures to its AE M/s Flakt Woods Cyprus Ltd. and paid interest @12% - HELD THAT:- The term debentures, in its ordinary sense, denote one of the modes for borrowing money by any company in exercise of its borrowing powers. The instrument imports an obligation or a covenant to pay. It is a repayment of the loans of the money borrowed by issue of debentures. Thus, the debentures are essential borrowing of money against interest with a certain other rights. Benchmarking interest rate as applicable to lending of money may be applied to determine ALP of these transactions. Considering the same, the adjudication of Ld. DRP determining the ALP as Nil could not be upheld. The convertible debentures may give ownership rights to the holders but the rights accrue only at a future date and till such time, the holder is entitled to receive interest on such holding. Since the debentures are denominated in Indian Rupees, the same, in our considered opinion, could be benchmarked at SBI Prime Lending Rate with mark-up of 2% considering the fact that the assessee has credit rating of BB+ (S & P). AO / Ld. TPO is directed to re-compute TP adjustment accordingly.
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