TaxTMI 
TaxTMI 
2015 (10) TMI 2624
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....nterest amounting to Rs. 1.16 Crs on the business advances given by an appellant to its Associated Enterprises (AE). Your appellant prays that addition of Rs. 1.16 Crs made under section 92CA(3) shall be deleted. 2. Without prejudice to the above, the Ld AO has erred in law and in fact in considering rate of notional interest as 12 months average Libor + 300 basis." 2. Briefly stated relevant facts of the case are that the assessee gave loans to its Associated Enterprises (AEs) at Singapore and Hong Kong and they are 100% subsidiaries of the assessee. Assessee did not charge the interest on the said loans. The said loans were returned subsequently and the details of loan amounts returned by the AEs and the number of days are given in pa....
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.... In this regard, he relied on the judgment of the Hon‟ble jurisdictional High Court in the case of CIT vs. Tata Autocomp Systems Ltd [2015] 374 ITR 516 (Bombay), which is relevant for the following proposition: "Where assessee advanced loans to its AE situated in Germany, rate of interest was to be determined on basis of rate prevailing in Germany where loan had been consumed." 4. Further, relying on the decision of the ITAT, Delhi in the case of Bharti Airtel Ltd vs. Addl. CIT [2014] 43 taxmann.com 50 (Delhi - Trib.), Ld Counsel for the assessee mentioned that the Tribunal disapproved the TPO‟s decision in making addition to the assessee's ALP in respect of the interest charged by adding higher points LIBOR as balancing the ....
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....s length rate of interest at LIBOR + 2 per cent." 6. We have heard both the parties on this issue and perused the papers placed before us. Considering the above and after hearing both the parties, we find there is no dispute on the nature of loans as „international transactions‟ in view of retrospective amendment cited above. Regarding the charging of interest on such interest free loans given to the subsidiaries, it is now decided issue, by virtue of the above cited judgment of the jurisdictional High Court, that the said loan amounts are required to be bechmarked considering the LIBOR of the Singapore and Hong Kong, as the case may be. Now the question is what is the rate of interest which constitutes ALP in this case. It is....