2014 (12) TMI 1149

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....-. The return was selected for scrutiny assessment and accordingly statutory notices were issued and served upon the assessee. 3. During the course of scrutiny assessment proceedings, as per the audit report in Form No.3CEB filed by the assessee, the AO noticed that the assessee has undertaken international transactions with its associate enterprises exceeding Rs. 15 crores. The case was referred to the Transfer Pricing Officer (TPO) u/s. 92CA(1) of the Act for determination of the arm's length price of the international transactions. The international transactions of the assessee are as under: Sr. No Name of the associated enterprises Nature of Transaction Amount 1 Prism Diamonds Inc. USA Export of cut & polished diamonds 4,61,70,....

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....e is 7.81%. It was further explained that the assessee has been benchmarking the same rate since A.Y. 2005-06. The contention of the assessee did not find favour with the TPO, who proceeded by applying LIBOR plus 500 basis points and computed the interest at Rs. 3,93,088/-. Since the assessee has offered Rs. 2,50,000 the effective adjustment was determined at Rs. 1,43,088/- Draft assessment order was made by the AO vide order dated 28.03.2013. The assessee objected the said adjustment before the Dispute Resolution Panel (DRP). It was claimed that the outstanding loan of Rs. 53.47 lacs was given to the associate enterprise in past and the entire loan has been repaid back on 27.02.2009. It was further brought to the notice of the DRP that the....

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....w on the same set of facts violates the rule of consistency. Secondly, the DRP erred in considering the loan as loan from India. The fact of the matter is that it was a foreign currency loan which was given abroad. Therefore the most appropriate method is taking the LIBOR as correct benchmark. A similar view has been taken by the Tribunal in the case of Hinduja Global Solution Ltd. 145 ITD 361. Considering the past history and the decision of the Tribunal (supra), we find that the benchmarking done by the assessee is correct and the AO is directed to delete the addition. Ground no.1 with its sub ground is allowed. 6. The second grievance of the assessee relates to the disallowance of Rs. 1,48,61,119 u/s. 40A(2)(b) of the Act. At the very o....

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.... parties at Deesa and then benchmark the average job work rate for the financial year in question and compute the job work charges. 14. We, therefore, set aside the order of the CIT(A) on the issue of addition of Rs. 43,97,624/- with the above direction to the AO, who shall afford adequate and reasonable opportunity to the assessee to present its case." 8. As no distinguishing fact has been brought to our notice, respectfully, following the decision of the co-ordinate Bench, the matter is restored to the file of the AO to be decided afresh in the light of the direction given by the Tribunal in A.Y. 2005-06 (supra). Ground no.2 is treated as allowed for statistical purpose. 9. Ground no.3 relates to disallowance of deduction for donations....