TMI Blog2020 (12) TMI 1161X X X X Extracts X X X X X X X X Extracts X X X X ..... s equally well settled that rate of interest should be determined on the basis of rate of interest prevailing at the time of availing the loan. From perusal of the order passed by the tribunal, it is evident that before the tribunal, the assessee had filed the copy of show cause notice issued by Transfer Pricing Officer, the assessee's submission in response to the same and order of the Transfer Pricing Officer for Assessment Year 2008-09. The tribunal has further found that the loans were obtained by the assessee in the year 2000-01 at the rate of 7.5% and 8.49% respectively. The tribunal has further recorded the finding that assessee has obtained the loans in the year 2001 and the issue has been considered by the Transfer Pricing Officer for the Assessment Years 2004-05 and 2005-06 and also for the Assessment Year 2008-09. It has further been held that Transfer Pricing Officer after considering the assessee's submission has accepted the rate of interest fixed in the loan agreements. It is also pertinent to mention here that the rate of interest has been accepted by the Assessing Officer for the years 2002-03 to Assessment Year 2008-09 except the Assessment Year 2006-07. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) Whether the Tribunal committed an error in not appreciating the fact that loans or external commercial borrowings between the cross border entities resulting in an international transaction and each transaction has to be considered every year with respect to the arms length price?. 2. Factual background in which the aforesaid substantial questions of law arise for our consideration need mention. The assessee is engaged in the business of research and development in the area of material sciences and process technology and providing and related software development services. The assessee filed return of income for the Assessment Year 2006-07 on 31.10.2006 and declared an income of ₹ 2,12,18,961/-. The return of income was processed under Section 143(1) on 10.09.2007. Subsequently, the case of the assessee was selected for scrutiny and notice under Section 143(2) of the Act was issued on 05.10.2007. During the relevant financial year, it was observed that the assessee had international transactions exceeding ₹ 15 Crores. Therefore, with prior approval of the Commissioner of Income Tax (Appeals), Bangalore-I, Bangalore, a reference was made to the Transfer Pricin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he revenue has filed this appeal. 4. Learned counsel for the assessee, at the outset, submitted that the first substantial question of law has already been answered against the revenue by a decision of the Supreme Court in 'COMMISSIONER OF INCOME TAX, CENTRAL-III VS. HCL TECHNOLOGIES LTD.' in Civil Appeal Nos.8469 90/2013. The aforesaid aspect of the matter could not disputed by the learned counsel for the revenue. 5. In view of the decision of the Supreme Court, the first substantial question of law involved in this appeal is answered against the revenue and in favour of the assessee. 6. With reference to the second and third substantial questions of law, it is submitted that the Tribunal, without examining the controversy in terms of Rule 10B(4) of the Income Tax Rules, 1962 (hereinafter referred to as 'the Rules' for short), by merely relying on the statement of the assessee that similar rate of interest paid by the assessee has been accepted by the revenue in earlier Assessment Years i.e. 2002-03, 2003 04, 2004-05, 2005-06 and 2008-09, recorded a finding in favour of the assessee. It is further submitted that the order of the Tribunal is without a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate on which the transaction takes place. It is also submitted that the Reserve Bank of India has given approval with regard to the rate of interest which is a relevant consideration to determine the rate of interest. In support of aforesaid submission, reliance has been placed on the judgment dated 18.11.2015 of the Bombay High Court in 'COMMISSIONER OF INCOME TAX-X Vs. SGS PVT. LTD.' in ITA No.1807/2013 and the judgment dated 18.05.2020 of Delhi High Court in 'PRL. COMMISSIONER OF INCOME-TAX-7 Vs. OPEN SOLUTIONS SOFTWARE SERVICES PVT. LTD.' in ITA No.201/2018. 9. We have considered the submissions made on both sides and have perused the record. Section 10B deals with determination of Arms Length Price under Section 92C of the Act. In the instant case, the assessee had calculated the rate of interest at 7.50% and 8.49%. However, the Assessing Officer has scaled down the same to 5.67%. It is pertinent to mention here that Reserve Bank of India has given the approval in respect of the rate of interest and the approval given by the Reserve Bank of India with regard to rate of interest is a relevant factor while determination of the rate of interest. It is equa ..... 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