2018 (9) TMI 964

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....assessee to its AEs on the Fully and Compulsory Convertible Debentures (FCCDs) issued by it. Assessee is a part of 3C group of companies and was incorporated on 16.5.2007. They are engaged in the business of construction and development of real estate projects. For the purpose of their business they have issued fully compulsorily convertible debentures (FCCDs) during the financial years 2008-09, 2009-10 and 2011-12 and interest at the rate of SBI PLI rate plus 300 basis points p.a. to its Associated Enterprises (AEs) as per the share subscription agreement dated 11.12.2008. During the year under consideration, assessee paid the interest in the following way: International transactions Associated Enterprise Interest rate as charged ....

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.... the time of its issue of FCCDs in FY 2008-09, at 11.75% for FCCDs issued in FY 2009-10 and at 14.75% for FCCDs issued in FY 2011-12 which was prevalent at such time and after adding 300 basis points each on such PLR as permitted under the Foreign Exchange Control Regulations. 5. Learned TPO, however, restricted the interest to 12.25% in respect of the FDRs issued during the FY 2008-08, 11.75% in respect of FCCDs issued during financial year 2009-10 and 14.75% in respect of FCCDs issued during the financial year 2011-12 and thereby disallowing the 300 basis points, and proposed an adjustment of Rs. 8,51,58,538/-. 6. When objections were raised before the learned DRP, Ld. DRP felt that no interference was called for in TPO's order, as ....

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.... matter the learned DRP accepted the SB PLR rate in respect of the FYs 2009- 10 and 2010-11, there is no dispute on that aspect. However, he submitted that during the FY 2008-09, the FCCDs was issued by the assessee in four installments, namely, 8.12.2008, 16.12.2008, 22.12.2008 and 2.1.2009. As per the interest rates prescribed by SBI to benchmark premium lending rate, it is clear that for the period upto 1.1.2009, the rate of interest was at 13% whereas for the last transaction on 2.1.2009, it was 12.25%. He further submitted that the case of the assessee is squarely covered by the decision of a coordinate bench of this Tribunal for the Asstt. Year 2009-10 to 2011-12, ITA Nos.7022 to 7024/Del/2017 in assessee's own case and by way of orde....

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....fact remains that in respect of the AY 2008- 09 the variance permissible under law to determine the arm's length price was 5%, as such, even for the last batch of FCCDs issued on 2.1.2009, the variance is only 3.75% whereas in respect of all other FCCDs either for the year 2008-09 or the years 2009-10 and 2011-12, such a variance is only 3%. He submits that this aspect is fairly covered by the decision of a coordinate bench in ITA Nos.7022 to 7024/Del/2017. 13. On a careful perusal of the record more particularly the order relied upon by the assessee, we find that vide para 27, a coordinate bench of this Tribunal has recorded its finding to the following effect: "27. On merit also, the AO/TPO made the addition on account of diff....