TaxTMI 
TaxTMI 
2018 (4) TMI 1691
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....g adjustment of Rs. 5,21,70,765/- made by it on account of Interest on loan to Sun Pharma Global Inc (AE) at London Inter Bank Offer Rate (LIBOR) Plus 2% Rate =7.401% which is almos equal to the Prime Lending Rate or American Bank lending rate? 2. Whether on the facts and circumstances of the case and in law, the ITAT was justified directing the AO to restrict the entire transfer pricing adjustment of Rs. 12,55,719/- made by it on account of Interest on short term advances to Sim Pharmaceuticals U.K.Ltd., Sun Pharmaceuticals Ltd., and Sun Pharmaceuticals Peru SAC (Aes) at London Inter Bank Offer Rate (LIBOR) Plus 0.25%=5.651% instead of LIBOR Plus 2% Rate =7.401% which is almost equal to the Prime Lending Rate or American Bank Lend....
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.... (2) Whether on the facts and circumstances of the case and in law, the ITAT was justified in directing the Assessing Officer to consider Foreign Exchange Fluctuation Gain of Rs. 14,33,80,289/- on account of cancellation/renewal of forward contracts made by the assessee to protect the risk of investments in its subsidiary companies as capital receipts?" 3. Insofar as question No. (1) is concerned, broadly stated, it appears from the record that the expenditure incurred by the assessee for and on behalf of M/s. Sun Pharmaceutical Industries, partnership firm of which he is a partner, is a subject matter of dispute at the hands of the Revenue. The assessee contends that such expenditure is in the nature of his business expenditure and ther....
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.... decision in assessee's appeal and which, as noted above, was not allowed by the Tribunal. Therefore, this question is not entertained in the present Tax Appeal making it clear that the corresponding question of applicability or otherwise of section 37 of the Act raised by the Revenue in Tax Appeal No. 312 of 2018 would be debated independently. 6. So far as question (2) is concerned, it pertains to taxing of gain arising out foreign exchange fluctuation gain of Rs. 14.33 crores (rounded off). This has two parameters. The facts on record would suggest that the assessee had entered into forward contracts to safeguard the value of investments fluctuation. The assessee had treated such foreign exchange rate gain as capital receipt. The ....
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....the Revenue in appeal before the High Court was "Is profit on cancellation of forward exchange contract, a capital receipt or a revenue receipt?". This Court answered the question against the Revenue making following observations: "14. Thus, the finding by the Tribunal is that the foreign exchange was acquired under the contract for the purpose of discharging an obligation on capital account viz. towards borrowing for the purpose of import of capital assets, which would indicate that the surplus realised on cancellation of such contract would bear the same characteristic. As held by the Apex Court, the principle that is to be applied for determining the character of a receipt, whether results in any profit or loss on account of app....