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TMI Blog2015 (7) TMI 974X X X X Extracts X X X X X X X X Extracts X X X X ..... 18.5%. The assessee’s categorical statement before the TPO that there was no default committed by it in making repayment leading to payment of interest at such higher rate to the bank, has remained uncontroverted. It means that the assessee actually paid interest @ 9% during the year and no eventuality of paying interest @ 18.5% due to default or untimely repayment arose during the year. Since the CUP method talks of making a comparison of the international transaction with the actual ‘price charged or paid’ in a comparable uncontrolled transaction, which is 9% in the present case, we cannot accept the view point of the authorities below in substituting the hypothetical price of 18.5%, which would have been paid in the case of an eventuali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reported two international transactions of Interest payable on ECB and Interest receivable on loan advanced. There is no dispute on the first transaction. The entire controversy is against the determination of arm s length price (ALP) of the second international transaction of : Interest receivable on loan advanced with the reported value of transaction at ₹ 80,18,588/-. The Comparable uncontrolled price method (CUP) was used to demonstrate that this transaction was at the ALP. The detail of this transaction is that the assessee had recoverable advance/loan amounting to ₹ 6.97 crore and odd with the outstanding of ₹ 1.99 crore and odd from its associated enterprise, namely, M/s Bumi Highway (M) Sdn. Bhd, Orissa Project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ival submissions and perused the relevant material on record. It is observed that the assessee employed the CUP method for depicting that this international transaction was at arm s length price. The applicability of the CUP as the most appropriate method or the selection of comparable uncontrolled transaction has not been disputed by the TPO. The only area of dispute is about the application of 9% interest rate (actually paid) or 18.5% rate of interest (which would have been payable in case of default to its banker.) 7. In this regard, it is relevant to note that section 92C(1) of the Act provides that the arm s length price in relation to an international transaction shall be determined by any of the methods provided therein. The first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led transaction is the price charged or paid. It is the actual transaction of charging or paying the price in a comparable uncontrolled transaction which is to be considered for the purposes of determining the ALP under the CUP method. There is no reference to any hypothetical or illusive price which ought to have been charged or paid for the services rendered. Since the delegated legislation refers to the price charged or paid , there can be no question of substituting such actual price charged or paid with a notional or hypothetical price which could have been charged or paid. 9. Coming back to the facts of the instant case, it is seen that the assessee paid interest to Bank of Nova Scotia @ 9% per annum, which has not been disputed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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