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2017 (4) TMI 1009 - AT - Income TaxALP adjustment - addition to LIBOR plus 2% - Held that:- So far as the issue of ALP adjustment being required, in principle, is concerned, learned counsel for the assessee has fairly conceded that this issue must be decided against the assessee at this forum, and that he will carry the matter, if so advised, in further appeal before Hon’ble Courts above. Ground no. 1 and 2, therefore, have to be decided against the assessee Coming to the quantum of addition, we find that the approach adopted by the authorities below is not justified and cannot meet any judicial approval. The adjustment on account of guarantee fees, as made by the TPO, it is wholly unwarranted as no such guarantee is given and, as such, there is no such transaction for determination of arm’s length price. In any event, as regards the question as to whether an additional arm’s length price adjustment on account of higher risk of lending to a low rated subsidiary is required, this issue is now covered, in favour of the assessee, by a coordinate bench decision in the case of UFO Movies India Ltd Vs ACIT [2016 (2) TMI 196 - ITAT DELHI] Forex derivative loss - speculative and notional loss not allowable for set-off against taxable income - Held that:- All the derivate transactions are specific hedging transactions against foreign exchange transactions of the assessee and are to be treated as integral part of the business transactions of the assessee. These transactions, by no stretch of logic, cannot be treated as standalone transactions, and as such loss on these transactions cannot be treated as loss from speculation business ineligible for set off against normal business profits. As for the CBDT instruction relied upon by the Assessing Officer, such instructions do not bind the appellate authorities, and nothing, therefore, turns on the same- so far as our adjudication is concerned. The losses on account of foreign exchange contracts are bonafide expenses incurred in furtherance of legitimate business interests of the assessee and are to be allowed as deduction under section 37(1) as such - Decided in favour of assessee
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