Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (2) TMI 207 - AT - Income TaxTP Adjustment - ALP determination - interest received on outbound loans - LIBOR v/s PLR - HELD THAT:- These loans were given solely for the business expediency and business convenience but not with the aim of earning interest from the subsidiary companies. Various Hon’ble Courts have held that the foreign currency loans to foreign subsidiary companies, the ALP should be computed based on the market determined interest applicable to the currency in which the loan has to be repaid ie., on LIBOR and not on PLR. The Hon’ble Delhi High Court in the case of CIT vs. Cotton Naturals India (P) Ltd [2015 (3) TMI 1031 - DELHI HIGH COURT] held that for outbound loans the LIBOR rate should adopted but not PLR of Indian Banks. It was also established by the assessee that the loans were given for the purpose of carrying on the business and not with an intention of earning interest. Therefore, we are of the considered view that in the instant case, the prevailing LIBOR rate should be adopted for the interest received on outbound loans. We therefore direct the Ld. TPO to calculate the interest as per the prevailing LIBOR rates. Thus, this ground raised by the assessee is allowed.
|