https://www.taxtmi.com/highlights?id=87044 The ITAT held that interest payments on Compulsorily Convertible Debentures (CCDs) denominated in Indian currency must be benchmarked against domestic interest rates, not international rates. The Tribunal rejected the application of LIBOR plus 200 basis points (applicable to foreign currency loans) for transfer pricing adjustments on rupee-denominated instruments. Instead, the appropriate benchmark for such instruments should be the domestic Prime Lending Rate (PLR). The Tribunal reasoned that CCDs issued in Indian currency are essentially rupee-denominated loans, and therefore cannot be treated as foreign currency loans for benchmarking purposes. The appeal was decided in favor of the assessee, with the ruling that interest on Indian currency-denominated FCCDs/NCDs/debentures must be benchmarked using PLR rates. en-us Wed, 02 Apr 2025 08:35:27 +0530 Wed, 02 Apr 2025 08:35:28 +0530 TaxTMI RSS Generator https://www.taxtmi.com/highlights?id=87044 The ITAT held that interest payments on Compulsorily Convertible Debentures (CCDs) denominated in Indian currency must be benchmarked against domestic interest rates, not international rates. The Tribunal rejected the application of LIBOR plus 200 basis points (applicable to foreign currency loans) for transfer pricing adjustments on rupee-denominated instruments. Instead, the appropriate benchmark for such instruments should be the domestic Prime Lending Rate (PLR). The Tribunal reasoned that CCDs issued in Indian currency are essentially rupee-denominated loans, and therefore cannot be treated as foreign currency loans for benchmarking purposes. The appeal was decided in favor of the assessee, with the ruling that interest on Indian currency-denominated FCCDs/NCDs/debentures must be benchmarked using PLR rates. Highlights Income Tax Wed, 02 Apr 2025 08:35:27 +0530 https://www.taxtmi.com/highlights?id=87044