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2018 (6) TMI 962 - AT - Income TaxDetermination of ALP for interest of loan - whether assessee had entered into international transaction with its associated enterprises in which Arm’s Length Price is applicable? - Held that:- TPO/Assessing Officer has grossly erred in applying notional interest @11% (i.e. cost of procurement of funds by assessee @5% + 600 basis points) whereas the cost of procurement of similar funds from third part was LIBOR + 600 basis points, which comes at 7.20%. ( that is, prevailing USD LIBOR rate, which was 1.2% plus 600bps). Therefore, we are of the view that the interest rate of 8% charged by the assessee from its AE should be at arm's length. That being so, we decline to interfere in the order passed by the ld CIT(A), his order on this issue is hereby confirmed and grounds of appeal raised by the Revenue is dismissed. Upward adjustment - TPO applying CUP method without assigning any reasons for rejecting the TNMM as the most appropriate method (MAM) - Held that:- Business strategies, market penetration, increase or save its market share are relevant and material factors determining prices and profit. All these factors have to be taken into consideration while eliminating the material effects which warrants some kind of reasonable accurate adjustments - thus selective application of CUP Method by TPO is ad hoc, and without any cogent basis, hence the entire approach followed by the Ld. TPO in rejecting the TP study memorandum of assessee for application of TNMM method is unjustified. For the reasons set out above, we find no infirmity in the order passed by the ld CIT(A). - Decided against revenue
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