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2016 (10) TMI 394 - AT - Income TaxTransfer pricing adjustment - determining Arm’s Length Price (ALP) of the Imports made by the assessee - Held that:- It is not disputed that the assessee is enjoying larger credit than printed in the invoice; it ranges 120 days to 240 days. In view of this, the price charged by AE to the assessee more than price charged to third parties. Hence, it is appropriate to be considered the extra credit period enjoyed by the assessee so as to determine the ALP. Further, it is also on record that for assessment year 2009-10, the TPO/AO had not made any adjustment towards this issue as there should be consistency in proceedings. Hence, in our opinion, the argument of ld.A.R to be upheld. Accordingly, we allow the ground taken by the assessee. Determining an ALP interest rate on the assessee’s External Commercial Borrowing - Held that:- There is a force in the argument of the Id. AR. The Assessing Officer cannot apply the implicit interest rate on India’s External Debt, which is unadjusted industrial average. As held by the Special Bench of the Bangalore Bench in the case of Aztec Software & Technology Services Ltd. v. ACIT (2007 (7) TMI 50 - ITAT BANGALORE), we are of the opinion that the unadjusted interest rate in respect of India’s External Debt cannot be applied in assessee’s case. Since the assessee charged interest to its AE at LEBORE ±2% which is appropriate the same is to be considered by TPO/AO and we are of the opinion that there is no adjustment required towards interest payment to its AE to determine ALP.
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