2018 (8) TMI 442

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....ans granted to Associated Enterprises (for short 'AEs') of the assessee 2. Briefly stated relevant facts are that the assessee is engaged in the business of manufacturing and trading of readymade garments and job work besides involving in the activities mainly in various subsidiaries throughout the world. Portfolio of the assessee comprises of shares and securities of many group companies and also of non group companies. In the year under consideration, the assessee declared turnover in traded goods at Rs. 31,33,51,395/-. During the relevant year the assessee had undertaken various International Transactions with its AEs and, among other things, had extended loans to its AEs in dollar denomination in earlier years. The assessee filed his....

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....009-10 wherein similar loans to same AE's have been decided vide PARA 7 of the order in favour of the assessee. The assessee has also submitted a ground-wise written synopsis before us stating as under : Ground-wise submissions in brief are as under Ground No. 1: It is a general in nature and does not require any submissions or adjudication. Ground No. 2-4: TP additions Rs. 46.79.119/-; 1. The assessee is an ultimate holding company of House of Pearl Fashion Group, a multinational ready to wear apparel conglomerate. It is mainly an investment company and also trades in the readymade garments. 2. The major business of assessee (in short HOPFL) comprised of investment activities mainly in various subsid....

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....s an ALP for the receipt of interest and proposed an addition of Rs. 62,50,069.7- as per the calculations given at Page 6 of TPO's Order dated 27.01.2014 for two AE i.e M/s House of Pearl Fashions Limited, USA and M/s Multination Textile Group Limited, Mauritius. 7. Assessee filed a reference before the DRP. The Ld. DRP confirmed the addition pertaining to ALP of the interest transactions. The learned DRP, however, directed to charge interest (ALP) at base rate as on 30th June of the relevant previous year plus 150 basis points as per Para 10 of DRP's order. 8. As per DRP's direction, the SBI base rate as on 30th June, 2009 was about 7.5% and plus 150 basis, the rate works out to be 9.00% as against 13.25% char....

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....of SBI plus 300 basis points towards risk adjustment is highly excessive and the addition if any should be restricted to the LIBOR plus 200 basis point, as have been held in many judgments, some of which are as under:- a) Cotton Naturals India Pvt. Ltd. Vs DCIT [2013-T11-34-ITAT-Delhi-TP]. Approved by Hon'ble Delhi High Court [TS-117-HC-2015 (DEL)-TP]. b) Aurionpro Solutions Limited [TS-474-HC-2017 (BOM)-TP]. c) The Great Eastern Shipping Co. Ltd [TS-534-HC-2017 (BOM)-TP] d) Tata Autocomp Systems Limited [TS-45-HC-2015 (BOM)-TP] e) UFO Moviez India Ltd [TS-883-HC-2016(DEL)-TP] f) Hinduja Global Solutions Pvt. Ltd. Vs. Addl. CIT [2013-T11-122-ITAT-Mumbai]. g) Siva Ventures Li....

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.... and stipulate. The aforesaid provisions neither curtail the commercial freedom, nor do they bar or prohibit a legitimate transaction. They permit transfer pricing adjustment so as to bring to tax what would have been paid for the transaction in the same or similar comparable circumstances by an independent third party. This issue of charging interest from the AE has now widely been held to be that ALP, when the transaction is undertaken in foreign currency, should be on LIBOR plus mark-up of 1 to 2% and cannot be the PLR of Indian Banks etc. Since assesse has already charged more than these rates, thus no adjustment is warranted on these facts. In light of aforesaid judgments, it is prayed that the amount of addition by t....