The ITAT held as follows: No transfer pricing adjustment...

The ITAT held as follows: No transfer pricing adjustment warranted on account of correspondent banking activities as the services are reciprocal in nature, hence no markup should be loaded. No adjustment required for marketing and support services relating to external commercial borrowings as the fee/commission income was accepted at arm's length price. Regarding marketing of derivatives, the Tribunal upheld the CIT(A)'s order deleting the adjustment as the TPO disregarded its own show cause notice and relied on undisclosed secret comparables. For interest received from group entities, the ITAT held that applying LIBOR rate was incorrect and instead Fed Fund rate should have been considered for US loan. The single year data adopted by TPO for determining arm's length price of transition support services was upheld. Expenditure incurred on employee separation/termination was allowed as deduction u/s 37. Expenses for mobilizing NRI deposits were allowed. No addition was made for overfunding of employees' gratuity fund based on actuarial valuation. Addition for interchange income received by offshore branches and disallowance u/s 40A(9) for employee share scheme were deleted following precedents. Disallowance of exempt income was restricted to 1% of such income. No disallowance u/s 40(a)(ia) for nostro.