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2023 (7) TMI 740 - AT - Income TaxTP Adjustment - corporate guarantee (‘CG’) extended by the assessee to its foreign subsidiary - HELD THAT:- We note that the CIT(A) had rightly taken note of facts and circumstances and held that the holding company, i.e. SCKPL, that had actually provided the guarantee along with the assessee, had in aggregate charged 1.2% (1% by SCKPL & 0.2% by the assessee), which exceeded the reasonable rate of commission of 0.5%, as held in a series of rulings, and thus no upward adjustment was warranted. Decided against revenue. TP adjustment made u/s 40A(2)(b) - specified domestic transaction involving loan availed from AE, SKCPL and its director - benchmarking the interest rate paid to AEs against the interest rate paid to M/s Silver Cross Marketing Private Limited. - HELD THAT:- CIT(A) had rightly found that Ld. TPO was incorrect on facts and in law in benchmarking the interest paid by the assessee to AEs with the interest paid to M/s Silver Cross Marketing Private Limited. Coming back to the determination of ALP, the assessee has placed on record the Prime Lending Rate (‘PLR’) of 14.55% as notified by the State Bank of India for the year 2013. Accordingly, when the prime lending rate itself had increased over the years and stood at 14.55% for the relevant period, the comparable rate of interest could not be considered at erstwhile rates in a dynamic interest rate environment. Hence, the interest rate of 13.5% paid by the assessee to its AEs being comparable to the prevailing PLR cannot be said to be excessive. We find support from the decision of Cotton Naturals (I) Pvt. Ltd. [2015 (3) TMI 1031 - DELHI HIGH COURT] - Also, the facts on record show that the AE, SKCPL had itself paid interest at the rate of 12.75% to SBI during the relevant year and therefore the interest rate of 13.5% i.e. 12.75% plus mark-up (as amended with effect 01.04.2013) charged from the AEs was fair & reasonable. The ld. D/R, could not controvert this factual matrix. Decided against revenue.
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