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2016 (11) TMI 962 - AT - Income TaxAddition of notional interest on the outstanding debtor balances with associated enterprises - Held that:- At the time of hearing, it is pointed out that if the notional interest calculated @ LIBOR + 200 basis points is reduced from the margin earned by the assessee, the entity level margin will reduce from 21.29% to 21.17% and if the notional interest calculated @ 6.19%, as taken by the Assessing Officer, is reduced from the margin of assessee, the entity level margin would reduce from 21.29% to 19.65%. It is pointed out that in both the situations, the reduced margin of assessee is much higher than the margin of the comparable concerns accepted by the TPO, i.e., 8% and, therefore, the transactions with the associated enterprises can be accepted to be at an arm’s length and no separate adjustment is required to be made. The aforesaid factual matrix is similar to that considered by the Tribunal in Assessment Year 2009-10 (supra) and, therefore, following the precedent, in the instant year also, it has to be held that the addition of ₹ 12,83,550/- made on account of notional interest chargeable on the outstanding debtor (i.e. associated enterprises) balances is not tenable and is directed to be deleted. - Decided in favour of assessee
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