TMI Blog2014 (12) TMI 1149X X X X Extracts X X X X X X X X Extracts X X X X ..... A similar view has been taken by the Tribunal in the case of Hinduja Global Solution Ltd. [2013 (6) TMI 420 - ITAT MUMBAI] . Considering the past history and the decision of the Tribunal (supra), we find that the benchmarking done by the assessee is correct and the AO is directed to delete the addition.- Decided in favour of assessee. Disallowance u/s. 40A(2)(b) - Held that:- As decided in assessee's own case for A.Y. 2005-06 neither the assessee has provided any comparable rates to the revenue authorities nor the revenue authorities have made any attempt either by asking the assessee to provide for the comparable nor they suo moto collected any data from the market. What the revenue authorities have done is that they have relied on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngaged in the business of manufacture of cut and polished diamonds and in sale thereof including exports. The return for the year was filed on 29.09.2009 declaring total income of ₹ 1,31,92,121/-. The return was selected for scrutiny assessment and accordingly statutory notices were issued and served upon the assessee. 3. During the course of scrutiny assessment proceedings, as per the audit report in Form No.3CEB filed by the assessee, the AO noticed that the assessee has undertaken international transactions with its associate enterprises exceeding ₹ 15 crores. The case was referred to the Transfer Pricing Officer (TPO) u/s. 92CA(1) of the Act for determination of the arm s length price of the international transactions. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alent to ₹ 2,27,461. As the assessee has offered ₹ 2,50,000 as interest income, it was contended that interest received is at arm s length. The submissions of the assessee were examined by the TPO. It was found that the assessee has benchmarked loan transactions at LIBOR plus 200 basis points. The TPO was of the opinion that here is no reason on the basis of which 200 basis points have been applied. The TPO proposed to apply arm s length interest @12%. The assessee contended that the effective rate worked out by the assessee is 7.81%. It was further explained that the assessee has been benchmarking the same rate since A.Y. 2005-06. The contention of the assessee did not find favour with the TPO, who proceeded by applying LIBOR p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est has been accepted at arm s length in transfer pricing for A.Ys. 2005-06 to 2008-09. Therefore, deviation from the earlier assessment years breaches rule of consistency. The DR strongly supported the findings of the lower authorities. 5. We have carefully perused the orders of the authorities below. It is an admitted fact that the loan was given in the year 2005. It is also undisputed fact that interest rate charged as LIBOR plus 200 basis points have been accepted in completed assessments from AYs 2005-06 to 2008-09. Thus, by taking a different view on the same set of facts violates the rule of consistency. Secondly, the DRP erred in considering the loan as loan from India. The fact of the matter is that it was a foreign currency loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly to arrive at a figure of estimated charges per carat. In fact, the AO should have collected independent data or have asked the assessee to provide comparable periodic rates prevailing in the market at Deesa to set the bench mark. This exercise has not been done by the AO or by the CIT(A), which according to us, the revenue authorities should have done to arrive at some definite estimate. 13. In these circumstances, we are of the opinion that in the interest of justice to both the sides, the AO must make enquiries and examine the comparable rates from the third parties at Deesa and then benchmark the average job work rate for the financial year in question and compute the job work charges. 14. We, therefore, set aside the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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