Transfer-pricing matter returned to AO for reconsideration to allow extra evidence; LIBOR plus 200 bps interest on receivables accepted

ITAT restored the transfer-pricing issue to the file of the AO for further adjudication to allow the taxpayer to file additional documentary evidence, noting consistency with prior coordinate-bench decisions. The tribunal directed the AO/learned TPO to accept interest on similar foreign-currency trade receivables/advances at LIBOR plus 200 basis points. Grounds were partly allowed.

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Issues involved:
The issues involved in the judgment are the payment for global/regional management overhead allocation fee and interest on trade receivables.

Payment for global/regional management overhead allocation fee:
The appellant appealed against the order of the Deputy Commissioner of Income Tax regarding adjustments suggested by the Transfer Pricing Officer. The Appellate Tribunal decided to send the issue back to the Assessing Officer for factual verification based on the need for additional evidence, following the precedent set in earlier assessment years. The Tribunal considered it necessary for the assessee to submit all relevant material for fresh verification.

Interest on trade receivables:
The Tribunal considered whether interest on trade receivables should be benchmarked separately as an international transaction. The appellant argued that the interest rate should be based on LIBOR+200 points, citing precedents. The Tribunal referred to decisions by the Bombay High Court and various Tribunals, concluding that the interest rate on similar foreign currency receivables should be accepted as LIBOR+200 points. The Tribunal directed the Assessing Officer to adopt this rate, partly allowing the grounds of appeal.

Separate Judgment:
No separate judgment was delivered by the judges in this case.

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