2024 (2) TMI 1336

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....eals) (CIT(A)} is bad both in the eye of law and on facts. 2. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in sustaining the transfer pricing adjustment of Rs. 5,81,986/- made by the TPO on account of interest charged on foreign currency loan extended to the Associated Enterprise (AE), Jindal Pipes (Singapore) Pte. Ltd. 3. (1) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in sustaining the above adjustment computing the interest at the rate of 6 months LIBOR plus 350 basis points as the Arms' Length rate as against the 1 month LIBOR plus 320 basis points charged by the assessee. (ii) That the above addition....

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....s at the rate of 1 months LIBOR plus 300 basis points which is 3.23% p.a. approx and the same was declared in the return of income filed by the assessee. 4. The above International transaction of interest received of Rs. 19,88,755/-was benchmarked by the assessee adopting CUP method, being the appropriate method. The assessee has considered JPSPL, its Associated Enterprise as the internal comparable because JPSPL (AE) has also taken the loan from Citibank N.A. Singapore for the tenure of 3 months at the rate of 6 months LIBOR + 225 basis points i.e. 2.937% p.a. approx. and the assessee has charged the higher rate of interest from JPSPL, AE, being 1 month LIBOR + 300 basis points i.e. 3.23% p.a. approx., thus the transaction of the assess....

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....          11.11.2011 32,55,001.22   142 5.687 72,016.14   14.11.2011 15,51,39,500.00   139 5.687 33,59,909.28   22.02.2012 98,39,336.90   39 5.687 59,788.93 Total Interest           34,91,714.36 Arms' Length Interest           34,91,714.36 Less: Interest receied           19,88,755.00 Difference to be adjusted           15,02,959.36 8. Aggrieved by the order of the AO, assessee filed the appeal before CIT(A), who directed to consider LIB....

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.... The assessee holds 30% shareholding of JPSPL and the guarantee has been advanced by the assessee as a matter of commercial prudence primarily to protect the business interest of the group by fulfilling the shareholder's obligation. 12. With regard to the fact that two agreements pertains to different financial year, it was submitted that both the transactions pertain to the same period in which LIBOR rates are applied i.e. in 2012. It is noticeable that agreement between JPSPL and Citibank, Singapore pertains to Year 2012 and since the tenure of loan is for a period of 3 months, the interest will be accrued in same calendar year i.e. 2012. On the other hand, with reference to loan agreement between JPSPL and the assessee, it is undi....