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2015 (11) TMI 1264

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..... as based, therefore, it would not be appropriate to use domestic interest rate to benchmarking interest charged on account of such loan transactions. In absence of any independent study carried on by the assessee or any independent CUP rate applied by the TPO based on comparables, the approach of the CIT(A) to follow the guidelines of the Reserve Bank of India appears to be correct approach for benchmarking the ALP. The aforesaid finding of CIT(A) is thus affirmed and we do not find any reason to deviate from such a conclusion. Accordingly, the order of the CIT(A) on this score is affirmed and the grounds raised by the revenue stands dismissed. - Decided in favour of assessee. - ITA No. : 1656/Mum/2013 - - - Dated:- 12-8-2015 - SHRI B R .....

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..... ppropriate or not. 3. The brief facts are that, the assessee has undertaken transaction of giving unsecured interest free loan to its subsidiary for sum amounting to ₹ 284,887,000/-, that is, to Geodesic Technology Solutions Ltd. (Hong Kong) (GTSL), which is its AE. The TPO has applied interest rate @ 20.72% based on his consideration of credit rating of AE in the Category B . He also analyzed financial ratios like, earning per share, debt equity ratio and interest coverage ratio of the AE and based on such credit rating he held that interest rate of 20.72% is to be charged. 4. Before the CIT(A), the assessee submitted that the rate of interest on the international transaction should be taken at LIBOR based. In support of its c .....

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..... are for borrowing by the Indian Corporates for the purposes of capital account transactions and accordingly are fully secured against the capital assets which would be acquired through such ECB. Accordingly, the delayed receivables which would in turn constitute loan which would be for the purposes of working capital, there would ordinarily be a further premium to the all in cost ceiling rates. However the all in cost ceiling rates would also be including the other costs relating to the loan transaction such as processing fee etc. In the case on hand there would be no such costs incurred. However, it is considered that the premium that would be warranted to bridge the gap between a secured and unsecured loan would be more than the processi .....

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