2018 (7) TMI 1956

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....ign subsidiary. 3. Rival contentions have been heard and record perused. Facts in brief are that assessee is a company engaged in the business of manufacturing and exporting of drum closures, pipes and cotton yard. During the year under consideration, the TPO made upward adjustment in respect of international transaction entered into by the assessee with its associated enterprises in respect of guarantee provided to its AE. 4. It was argued by learned AR that guarantee was advanced by the assessee as a matter of commercial presidency to protect the business interest of the group and in the absence of guarantee assessee would have provided the funds to its subsidiary, hence provision of guarantee does not lead to any additional risk in....

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....to AE amounting to Rs. 59,172/-. Issue under consideration is squarely covered by the decision of Delhi High Court in the case of Cotton Naturals (I) Pvt. Ltd., 55 taxmann.com 523 wherein it was held that arm's length interest rate for loan advanced to foreign subsidiary by the Indian company should be computed based on market determined interest rate applicable to currency in which loan has to be repaid. Respectfully following the proposition laid down by Delhi High Court, we direct the AO to compute interest as per the interest rates applicable to currency in which loan was required to be repaid by the assessee. We direct accordingly.. 7. With respect to claim of deduction u/s.35D and depreciation u/s.32(1)(ii)(a) of the IT Act, AO has....