2018 (11) TMI 1693 - HC - Income Tax

TP Adjustment - Tribunal in terms of Section 92C r.w.r. 10B of the I.T. Rules in restricting the rate of interest at LIBOR 2% on loans given by the Assessee to its Associated Enterprise instead of 17.26% proposed by the Transfer Pricing Officer (TPO)? - Tribunal also restricting the rate of interest at 0.5% on corporate guarantee given by the Assessee to its Associated Enterprise instead of 6% proposed by the Transfer Pricing Officer - HELD THAT - Both the questions for our consideration stand concluded against Revenue and in favour of the Respondent Assessee by the decision of this Court in CIT Vs. M/s Everest Kanto Cyliners Ltd. 2018 (7) TMI 2048 - BOMBAY HIGH COURT . Infact the impugned order of the Tribunal has followed its decision in Everest Kanto Cyliners Ltd. which was the subject matter of the above appeal before us and the view of the Tribunal was upheld. No substantial question of law

Summary

Issues:
1. Challenge to the order of the Income Tax Appellate Tribunal related to Assessment Year 2008-09.
2. Interpretation of Section 92C of the Income Tax Act regarding interest rates on loans and corporate guarantees to Associated Enterprises.

Analysis:
1. The appeal challenged the order of the Income Tax Appellate Tribunal regarding Assessment Year 2008-09. The Revenue raised two questions of law concerning the application of Section 92C of the Income Tax Act. The first question pertained to the justification of the Tribunal in restricting the interest rate on loans to Associated Enterprises at 'LIBOR + 2%' instead of the 17.26% proposed by the Transfer Pricing Officer. The second question related to the justification of limiting the interest rate on corporate guarantees to Associated Enterprises at 0.5% instead of the 6% proposed by the Transfer Pricing Officer.

2. The Court noted that the issues raised by the Revenue had already been conclusively decided against them in a previous case, CIT Vs. M/s Everest Kanto Cylinders Ltd. The Court highlighted that the Tribunal's decision in the present case was in line with its ruling in the Everest Kanto Cylinders Ltd. matter, which had been upheld by the Court. As a result, the Court found that the questions posed by the Revenue did not give rise to substantial questions of law and, therefore, declined to entertain them.

3. Consequently, the Court dismissed the appeal, citing that the questions raised by the Revenue had already been settled in a previous case. The Court made no order as to costs, indicating that the appeal was not successful for the Appellant challenging the Tribunal's order related to Assessment Year 2008-09 and the interpretation of Section 92C of the Income Tax Act regarding interest rates on loans and corporate guarantees to Associated Enterprises.