TMI Blog2017 (11) TMI 639X X X X Extracts X X X X X X X X Extracts X X X X ..... ted with ordinary business transactions. Thus having regard to the facts and circumstances of the case, we do not find any merit in the argument that no ALP interest could be added on account of the loan advanced to Multination Textile Group Limited, Mauritius. Rate of interest - according to the assessee 6% offered in respect of House of Pearl Fashions Limited, USA is proper, whereas in respect of Multination Textile Group Limited a nominal interest at LIBOR plus 200 basic points may be charged - Held that:- There is an inherent inconsistency in the view taken by the TPO because, if at all the ALP interest in so far as the assessee is concerned is the interest rate expected by an Indian lender, then irrespective of the fact of Nor Pearl Knitweard Limited, Bangladesh obtained loan at Bangladesh at any rate less than this expected rate, he should not have accepted. The tested party in the case of Nor Pearl Knitwear Limited, Bangladesh and in the case of other two concerns is the assessee only. In respect of the same tested party the TPO cannot adopt two different yardsticks. Shifting of the testing parties in the same breath is not permissible. We, therefore, in this set of circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... denomination. Besides this, the assessee also made investment in quoted shares to a tune of ₹ 1,68,50,16,186/- and earned dividend income of ₹ 2,33,03,212/-. They have filed their return of income for the AY 2009-10 on 30.09.2009 declaring a total income of ₹ 6,43,63,397/- and during the scrutiny proceedings, in view of the International transactions entered into by the assessee with the associated enterprises, AO referred the determination of the Arm s Length Price (for short referred to as ALP ) of the International transaction to the TPO. TPO vide order dated 30.01.2013 determined the ALP of the interest transaction with the AEs at ₹ 87,23,089/- by taking the ALP of the interest at 16%, basing on the SBI PLR for the FY 2008-09 at 12.75% PLUS 350 basic points. Pursuant to the draft assessment order assessee carried the matter to the Ld. DRP and Ld. DRP vide order dated 19.12.2013 approved the action of the Assessing Officer (for short AO ) in rejecting the rate of interest at 6% offered by the assessee in respect of House of Pearl Fashions Limited, USA and levying deemed interest of Multination Textile Group Limited, Mauritius, and directed the AO to det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the rate of interest works out to 9.50 as against the 16% charged by the TPO. Ld. AR submitted that when the foreign AEs could get loans in their countries, where the interest charged is far less than 6%, it is totally unjustified on the part of the authorities below not to accept 6% offered by the assessee. Ld. DR vehemently relied upon the orders of the authorities of the Assessing Officer. 5. We have carefully gone through the facts in the light of the contentions raised on either side. Insofar as the contentions of the assessee about non-chargeability of interest in respect of Multination Textile Group Limited, Mauritius is concerned, the contention of the assessee is that such AE was running into losses, thereby necessitated the assessee in the capacity of a parent to pump funds, but in view of the legal difficulties, instead of equity, funds are given in the form of loan so that in future they could be recovered easily. On this aspect Ld. CIT (A) observed that the plea taken by the assessee before him was that if the interest would have been charged then the profit of the AE would be less and automatically the dividend which the assessee had to receive from the AE would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision relating to computation of income from international transactions having regard to arm s length price. Other case laws cited by the assessee are not germane to the facts of this case. Hence in our considered opinion they do not help the case of the assesse. 6. These decisions are applicable to the facts of the case on hand and having regard to the facts and circumstances of the case, we do not find any merit in the argument that no ALP interest could be added on account of the loan advanced to Multination Textile Group Limited, Mauritius. 7. Now coming to the rate of interest, according to the assessee 6% offered in respect of House of Pearl Fashions Limited, USA is proper, whereas in respect of Multination Textile Group Limited a nominal interest at LIBOR plus 200 basic points may be charged. However, the Ld. AO charged it at 16% reduced by the Ld. CIT (A) to the SBI base rate as on 30th June of the relevant previous year plus 150 basic points which according to the assessee comes to 9.5%. On this aspect the order of the TPO as noted earlier reads that interest at 6% p.a. was acceptable in case of Nor Pearl Knitwear Limited, Bangladesh holding that in view of su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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