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2018 (4) TMI 742

cepted 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. - We accordingly have no hesitation in setting aside the order of the AO passed consequent to the direction of the DRP. Accordingly we hold that assessee is entitled for the benefit available to it under proviso to section 92C(3) of the Act. Accordingly the additions made by the AO are hereby deleted. - Decided in favour of assessee - IT(TP)A No.2788/Bang/2017 - Dated:- 13-4-2018 - SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER For The Appellant : Smt. Susan Mathew, CA For The Respondent : Ms. Neera Malhotra, CIT(DR), ITAT, Bengaluru ORDER .....

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ealed against and this appeal be allowed. 2. During the course of hearing, the ld. Counsel for the assessee has contended that the issue involved in this appeal is squarely covered by the order of the Tribunal in the assessee s own case for the AY 2010-11 in which it was held that RBI rates of foreign exchange were also based on averaging. Therefore, the assessee s prices were within +/- 5% range of the RBI rates and therefore there was no necessity for TP adjustment. Copy of the order of the Tribunal is placed on record. 3. The ld. DR, however, placed reliance upon the order of the AO and the DRP. 4. Having carefully examined the orders of the authorities below in the light of rival submissions, we find that the assessee is engaged in fore .....

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ng 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 wi .....

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etermined does not exceed the specified percentage, the price at which the international transaction has actually been undertaken shall be deemed to be the arm s length price . The words so determined as employed in the second proviso assume significance. As these have been used in the second proviso distinct from the subject matter of the first proviso, naturally these will apply to the ALP determined under sub-section (2) consisting of the main provision and also the first proviso. Resultantly, the option of deemed ALP shall extend not only to a situation where more than one price is determined as ALP by the most appropriate method but also where only one price is determined as ALP. The net result is that the option to the assessee shall .....

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ight 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 US $ Libor. Modus operandi for calculation of LIBOR is extracted as under :- Libor is calculated and published by Thomson Reuters on behalf of the British bankers Association (BBA). It is an index that measures the cost of funds to large global banks operating in London financial markets or with London-based counterparties. Each day, the BBA surveys a panel of banks (18 major global banks for the USD Libor), asking the question, At what rate could you borrow funds, were you to do so by asking for and then accepting inter-bank offers in a reasonable market size just prior to 11 am? The BBA throws out the .....

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average of rates at which various panel banks offer to borrow or lend inter bank offers, the same cannot be characterized as one price determined under the comparable uncontrolled price method. It is required to be considered as arithmetical mean of such prices, thereby 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 ch .....

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re was no necessity for transfer pricing adjustment. 6. The order of the Tribunal has not been reversed so far, therefore it holds the field. So long as the Tribunal s order holds the field, the subordinate authorities are required to follow the same in its letter and spirit. The DRP cannot ignore the order of the Tribunal under the garb that revenue has preferred an appeal before the Hon ble High Court against the order of the Tribunal. The action of the DRP is quite contemptuous by not following the order of the Tribunal while adjudicating an issue. We accordingly have no hesitation in setting aside the order of the AO passed consequent to the direction of the DRP. Accordingly we hold that assessee is entitled for the benefit available to .....

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