TaxTMI 
TaxTMI 
2014 (4) TMI 27
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....ated 03-08-2012 considered some of the issues and directed the AO to complete orders accordingly. Accordingly, orders have been passed by the AO on which Assessee is in appeal before us. 3. We have heard the learned counsel and learned DR in detail. We have also perused the paper books placed on record along with detailed written submissions and copies of the orders relied upon. Grounds are considered as under: 4. Ground No. 2 is with reference to transfer pricing adjustment made by the TPO on the loans given to the subsidiaries. 4.1 Assessee has given loans to its subsidiaries, which are as under: S.No. Name of the company Interest received (INR) (a) Aurobindo Pharma USA 7,50,84,371 (b) AB Farmo Industria Farmaceutica LTDA 11,06,386 (c) Helix Health Care BV(GBP) 2,02,68,356 (d) Helix Health Care (USD) 81,37,025 (e) Helix Health Care B.V. (Euro) 1,31,20,314 (f) Aurobindo Tongling (Dataong) 1,30,73,318 (g) Aurobindo (Dataong Biopharma) 8,07,83,440 Total interest received 19,84,99,892 Assessee provided loans to the AEs after obtaining requisite approval from RBI and interest has been charged on the basis of L....
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....hem are as under: 4.4 In the case of Siva Industries & Holdings Ltd. 46 SOT 112 (Chennai) held that "A perusal of the order of the TPO clearly shows that the assessee had raised the funds by way of issuance of 0 per cent optional convertible preferential shares. Thus it is noticed that the funds raised by the assessee company for giving the loan to India Telecom Holdings Ltd., Mauritius, which is its Associated Enterprises and which is the subsidiary company, is out of the funds of the assessee company. It is not borrowed funds. The assessee has given the loan to the Associated Enterprises in US dollars. The assessee is also receiving interest from the Associated Enterprises in Indian rupees. Once the transaction between the assessee and the Associated Enterprises is in foreign currency and the transaction is an international transaction, then the transaction would have to be looked upon by applying the commercial principles in regard to international transaction. If this is so, then the domestic prime lending rate would have no applicability and the international rate fixed being LIB OR would come into play. In the circumstances, we are of the view that it LIB OR rate which ....
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.... for the domestic loan. Hence, the comparable, in respect of foreign currency loan in the international market, is to be LlBOR based which is internationally recognized and adopted. In our considered view, the DRP rightly directed the assessing officer to adopt the LIB OR plus tor the purpose of TP adjustment. Our view is fortified by the decision of the Madras Bench in the case of Siva Industries". 4.7 Similar view has been taken in the case of Tata Auto comp Systems Limited vs. ACIT, ITAT Mumbai, ITA NO. 7354/MUM/11(A. Y. 2007-08). 4.8 On the legal principles there is no dispute that LIBOR specific percentage points has to be considered as ALP. There is also no basis, as rightly observed by the DRP, to adopt corporate bonds rate at 17.26%. Therefore, in principle we agree with Assessee's contentions that libor + percentage points is to be accepted. However, it is seen from the details furnished at page 91 of paper book, few of loans provided in AY 2003-04 and 2004-05 in the case of Arubindo and Arubindo Farmo industria Farmaceutica Ldta and loans obtained from Axis bank and Federal Bank where the rate of interest paid was LIBOR +2.1% and LIBOR +3.25%. On these loans Assesse....
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....and there is no contrary decision pointed out by the revenue, we respectfully follow the above judgment and in the light of that the claim of the assessee is allowed." The issue is in favour of Assessee, therefore, on merits also, the issue is to be decided in favour of Assessee. Accordingly, Ground Nos. 3 & 4 are allowed. 6. Ground Nos. 5 & 6 are pertaining to the issue of claim u/s 10B. 6.1 There are two sub issues in these grounds, one being exclusion of freight charges of Rs. 27,28,26,997/- from export turnover. It was Assessee's contention that this amount if excluded from the export turnover should be excluded from the total turnover as well. 6.2 After considering rival submissions, we are of the opinion that in case any amount is excluded to be from export turnover, the same is required to be excluded from the total turnover as well. The Special Bench in the case of Saksoft Ltd., 30 SOT 55 (Chennai) has clearly examined this issue and held that for the purpose of applying the formula u/s 10B(4), the freight, telecom charges or insurance attributable to delivery of articles or things or computer software outside India or expenses, if any, incurred in foreign exchange....
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....basis of certificates issued in this regard and restricted weighted deduction to an extent of Rs. 28,50,03,656/- in the draft order. Assessee objected to the same before the DRP and filed some more forms in 3CL received on 23-03-2012. DRP directed the AO to consider the said forms and allow the expenditure accordingly. In the consequential proceedings, AO restricted the disallowance by Rs. 16,76,16,325. It was the contention that even though weighted deduction is not allowed the above amount is also allowable u/s 35(1)(iv). The additional ground raised before the DRP on this issue vide letter dated 4th June, 2012 was not considered. Before us, the learned counsel filed the details of the claim allowed, reconciliation of various figures and final order as under:- Claimed as per return of income 863,201,326 Allowed by DRP 695,585,000 Disallowance 167,616,326 7.2 It was further contended that the claim is allowable under the provisions and relied on the decisions of the coordinate bench in the case of Ayushakti Ayurved (P) Ltd. Vs. ACIT 9(1) Mumbai 37 SOT 313 (Mum.) and Transweigh (India) Ltd. Vs. ITO, 22 SOT 338 (Mum.) wherein the expenditure incurred for the purpose of r....