Interest on Unpaid Loan Enhances Liquidity, Justifies TPO Charging Interest as Outstanding Loan Under Transfer Pricing Rules.

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....TP Adjustment - Interest on interest outstanding/interest receivable - The interest on a loan is a compensation received towards the utilisation of funds given by the assessee to its AE and the interest element on the said loan if not paid improves the liquidity position of the AEs and become part and parcel of the said loan transaction. Therefore, no infirmity in the action of the TPO in treating the interest receivable as a loan outstanding and charging interest on the same accordingly. - AT....