TMI Blog2015 (10) TMI 2624X X X X Extracts X X X X X X X X Extracts X X X X ..... he LIBOR of the Singapore and Hong Kong, as the case may be. Now the question is what is the rate of interest which constitutes ALP in this case. It is the decision of the coordinate Bench in the case of Melstar Information Technologies Ltd (2015 (5) TMI 70 - ITAT MUMBAI) that LIBOR + 2% is followed by the Tribunal of Bombay Benches. No contrary decision of Bombay Benches of the Tribunal is brought to our notice by the Ld AR. Therefore, we are of the opinion that AO / TPO is directed to benchmark the impugned transaction by applying the arm‟s length rate of interest at LIBOR + 2% and the LIBOR of the respective countries should be considered. Accordingly, this part of the ground is partly allowed. Considering rate of notional inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw and in fact in adding the notional interest amounting to ₹ 1.16 Crs on the business advances given by an appellant to its Associated Enterprises (AE). Your appellant prays that addition of ₹ 1.16 Crs made under section 92CA(3) shall be deleted. 2. Without prejudice to the above, the Ld AO has erred in law and in fact in considering rate of notional interest as 12 months average Libor + 300 basis. 2. Briefly stated relevant facts of the case are that the assessee gave loans to its Associated Enterprises (AEs) at Singapore and Hong Kong and they are 100% subsidiaries of the assessee. Assessee did not charge the interest on the said loans. The said loans were returned subsequently and the details of loan amounts retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respective country, where the loans was consumed. In this regard, he relied on the judgment of the Hon‟ble jurisdictional High Court in the case of CIT vs. Tata Autocomp Systems Ltd [2015] 374 ITR 516 (Bombay), which is relevant for the following proposition: Where assessee advanced loans to its AE situated in Germany, rate of interest was to be determined on basis of rate prevailing in Germany where loan had been consumed. 4. Further, relying on the decision of the ITAT, Delhi in the case of Bharti Airtel Ltd vs. Addl. CIT [2014] 43 taxmann.com 50 (Delhi Trib.), Ld Counsel for the assessee mentioned that the Tribunal disapproved the TPO‟s decision in making addition to the assessee s ALP in respect of the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer was to be directed to consider arm‟s length rate of interest at LIBOR + 2 per cent. 6. We have heard both the parties on this issue and perused the papers placed before us. Considering the above and after hearing both the parties, we find there is no dispute on the nature of loans as international transactions‟ in view of retrospective amendment cited above. Regarding the charging of interest on such interest free loans given to the subsidiaries, it is now decided issue, by virtue of the above cited judgment of the jurisdictional High Court, that the said loan amounts are required to be bechmarked considering the LIBOR of the Singapore and Hong Kong, as the case may be. Now the question is what is the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is not uniform for applying the uniform average of 12 months LIBOR on all these loans of that countries is prima facie not valid and appropriate. In these circumstances, we are of the opinion, considering the average of 6 months LIBOR of those countries, where loans are consumed, would meet the ends of justice. In any case, this issue was not addressed by the lower authorities during the relevant proceedings. As such, no judicial precedent is brought to our notice on this issue. Therefore, in our opinion, AO / TPO should verify the facts and give an opportunity to the assessee and decide the issue afresh in the light of the above discussion. Accordingly, this part of the ground is allowed for statistical purposes. 8. In the result, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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