TaxTMI 
TaxTMI 
2026 (8) TMI 1343
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....ed 15/10/2025 issued by the learned Dispute Resolution Panel-2, Mumbai ["learned DRP"], for the assessment year 2022-23. 2. In this appeal, the assessee has raised the following grounds: - (1) The Ld. DRP has erred in law and on the facts of the case in confirming the action of the TPO in taxing notional interest of Rs. 2,05,06,425 as transfer pricing adjustment. The action is unjustified and unwarranted and without considering written submission. (2) Without prejudice to the above the Ld. DRP has erred in law and on the facts of the case in confirming the action of the TPO in comparing NCDs having premium payable on redemption with NCDs having interest. The action is unjustified and unwarranted. (3) The Ld. DR....
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....e assessee in Form 3 CEB are as follows: - S. No. Name of AE Nature of transaction Currency Amount Interest Rate Remarks 1 Rajang Limited Purchase of NCDs INR 10,32,27,750 0% Issued during the year 2 Rajang Limited Purchase of NCDs INR 31,21,22,147 0% Reported as closing balance as on 31.03.2022 5. The assessee submitted that during the year under consideration, it has subscribed to non-interest-bearing 1000 NCDs of GBP 1000 each issued by its associated enterprise for making further investment. It was further submitted that in the financial year 2017-18, the assessee subscribed to similar non-interest-bearing 1360 NCDs of GBP 1000 each issued by its associated enterprise. Ac....
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....yable to the assessee, the TPO held that since the date of redemption is not fixed, the effective return on investment cannot be determined. Accordingly, the TPO held that the consideration for the loan is a must, and since the assessee did not charge any interest on the amount of NCDs, the international transaction of investment in NCDs is not at arm's length. As the NCDs were issued in GBP, the TPO computed interest at 6.57%, based on 6 months' average LIBOR +400 basis points, following the "Other Method" as the most appropriate method. As the closing balance of investments in NCDs issued by the associated enterprise was reported in the audited financials at Rs. 31,21,22,147, which includes investments of Rs. 10,32,27,750 made in the ....
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...., similar international transaction of investment in NCDs was found to be at arm's length by the TPO vide order passed under section 92CA(3) of the Act. Thus, placing reliance upon the decision of the Hon'ble Supreme Court in Radhasoami Satsang v. CIT, reported in [1992] 193 ITR 321 (SC), the learned AR submitted that as the Revenue have accepted a similar transaction to be at ALP in the assessment year 2018-19, there is no basis for making the transfer pricing adjustment in the year under consideration for the very same international transaction. 9. On the other hand, the learned Departmental Representative ("learned DR"), by vehemently relying upon the order passed by the lower authorities, submitted that the principle of res judicata ....
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....ear in which the assessee for the first time subscribed to the NCDs issued by its associated enterprise, reference was made to the TPO under section 92CA(1) of the Act for the determination of the ALP in respect of the international transaction entered into by the assessee. It is undisputed that, for the assessment year 2018-19, the assessee, inter alia, duly disclosed the purchase of NCDs from its associated enterprise as an international transaction. We find that vide its order dated 30/07/2021 passed under section 92CA(3) of the Act, the TPO after analysing all the necessary details and documents in support of the ALP determined by the assessee, concluded that no adjustment is required qua the international transactions entered into by t....