Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (6) TMI 330 - AT - Income TaxTP Adjustment - Benchmarking of interest receivable on loan given by the assessee to the subsidiary company in Germany - HELD THAT:- Honourable Delhi High Court in Commissioner of income tax versus Cotton naturals India private limited [2015 (3) TMI 1031 - DELHI HIGH COURT] has categorically held that the financial position and credit rating of the subsidiaries will be broadly the same as of the holding company. Therefore, there should not be any adjustment on account of capital risk. The honourable court also categorically held that where the transaction was of lending money in foreign currency to its foreign subsidiaries the comparable transactions therefore was of foreign currency lent by unrelated parties. When the learned CIT- A applied the decision of the honourable Delhi High Court for applying the rate of interest where the foreign currency is lent but did not apply this aspect of the decision. Therefore, when the assessee has charged higher interest on loan to subsidiary compared to the prevailing interest rate in the country in which the money is lent, CUP method undisputedly agreed by the parties as the most appropriate method, there is no reason to make any adjustment in the hands of the assessee on this count. Assessee has given comparable instances of the prevailing interest rate for short-term and long-term in Germany, which could not be disputed as a better comparable price. We allow ground number 1 of the appeal of the assessee (which is the solitary ground of appeal) and direct the learned transfer-pricing officer/assessing officer to delete the adjustment on account of arm’s-length price of interest received on loan given to a wholly owned subsidiary in Germany. - Appeal of the assessee is allowed.
|