TMI Blog2018 (4) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the assessee against the order of the AO passed consequent to the directions of the DRP inter alia on the following grounds:- 1. The learned TPO / AO and the Hon'ble DRP grievously erred by determining and sustaining the transfer pricing adjustment of ₹ 6,94,98,484/- and not following the judgement of the Hon'ble Tribunal, Bangalore Bench in your appellant's own case for AY 2010-11 and AY 2011-12 and also not appreciating that the Hon'ble DRP in your appellant's own case for AY 2010- 11, AY 2011-12 and AY 2012-13 has adjudicated the matter in favour of your appellant. 2. The learned TPO / AO erred in holding and the Hon'ble DRP grievously erred by upholding that your appellant must mandatorily apply Reserve Bank of India's reference exchange rates while selling foreign currency, although it is itself an average rate of the previous days transactions made by major forex dealers and announced on a daily basis during the day and not available when the business commences in the morning; 3. The learned TPO / AO and the Hon'ble DRP grievously erred by not granting the benefit of plus or minus three percent for adjustments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied upon the order of the Mumbai Bench, accepted the contention of the assessee and has held that assessee was justified in claiming the benefit available to it under proviso to section 92C(3) of the Act. The relevant observations of the Tribunal is extracted hereunder for the sake of reference:- 05. We have perused the orders and heard the rival contentions. Question before us is whether second proviso to Section 92C(2) which allows +/- 5% range to an assessee could be applied even in a case where the transactions involved were on account of trading in foreign exchange, where RBI rates were considered to be a bench-mark for the arms length study. In the case of Development Bank of Singapore v. DDIT (supra) the Mumbai Tribunal considered the question whether the +/- 5% range would be available when libor rate was considered for bench marking the arms length pricing with respect to interest charges on loans. At para 11 to 13 of its order, the coordinate bench held as under:- 11. At this juncture, we consider it expedient to note that the above quoted proviso to section 92C(2) has been substituted by the Finance (No.2) Act, 2009 w.e.f. 1.10.2009 with two provisos. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t point for our determination is as to whether the LIBOR rate should be considered as a single interest rate or the arithmetical mean of more than one interest rate. In order to find answer to this question, it is sine qua non to understand the connotation and import of LIBOR. In this regard, both the sides have placed on record some literature throwing light on LIBOR. Wikipedia, the free encyclopedia define the London Inter bank Offered Rate (LIBOR) as the average interest rate estimated by leading banks in London that they would be charged if borrowing from other banks. It has further been explained that LIBOR is a benchmark giving an indication of the average rate at which a LIBOR contributor bank can obtain unsecured funding in the London interbank market for a given period. Individual bbalibor rates are the end-product of a calculation based upon submissions from LIBOR contributor banks, which are then averaged under a trimmed mean methodology . Libor rates are calculated for ten currencies and 15 borrowing periods ranging from overnight to one year and are published daily at 11.30 a.m. (London time) by Thomson Reuters. Currently 18 banks contribute to the fixing of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by making available the option of plus minus 5% variation to the assessee. As the present addition of ITA No.6631/M/2006 CO 248/M/2009. The Development Bank of Singapore. 14 50,476 made by the AO was the outcome of not allowing plus minus 5% cushion, which in our considered opinion is richly due to the assessee, we hold that the learned CIT(A) was justified in deleting this addition. 06. Mumbai Bench had held that libor rates were also an averaging of rate of interest charged or paid on inter-bank deposits by a number of panel banks. Of course, here for the ALP analysis what has been considered was the RBI exchange rates. However, we find that RBI in its press release dt. 06.08.2008 has mentioned as under:- August 6, 2008. Computation and Dissemination of RBI Reference Rate The Reserve Bank of India complies on a daily basis and publishes reference rates for Spot USD/INR and Spot EUR/INR. The rates are arrived at by averaging the mean of the bid/offer rates polled from a few select banks among 12 noon every week day (excluding Saturdays). The contributing banks are selected on the basis of their standing, market share in the domestic foreign exchange ..... X X X X Extracts X X X X X X X X Extracts X X X X
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