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TMI Blog2013 (12) TMI 1535X X X X Extracts X X X X X X X X Extracts X X X X ..... h the working of period of delay which are beyond 200 days and to calculate interest at the LIBOR rate prevalent for the financial year 2007-08 plus 150 points i.e., 1.5%. The learned Counsel for the assessee has submitted this working before us. As per the said working the learned Counsel informed that LIBOR rate during the financial year 2007-08 was around 4.7% and if 1.5% is added, then interest rate would work out to 6.21%. Accordingly, we direct the Assessing Officer / TPO to verify the working and apply interest rate of LIBOR + 1.5% and workout the adjustment on account of interest for the period beyond 200 days. The assessee will furnish this working before the TPO for verification. Thus, the grounds raised by the assessee are treate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o consider the cost of borrowings in the hands of the appellant as the rate of interest for the purpose of quantifying the notional interest on delayed payment from the AEs as against the ad-hoc rate of interest at 7%. In view of the same, the Hon'ble Members of DRP ought to have directed the AO to make adjustment U / s. 92CA(3) of the Act on account of notional interest on delayed payment from AEs as under: (a) By adopting 4.14% representing cost of borrowings in the hands of the appellant by not giving weightage to interest free funds available in the hands of the appellant; Alternatively (b) By adopting 3.07% representing cost of borrowings in the hands of the appellant by giving weightage to interest free funds availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the learned Counsel for the assessee submitted that the assessee had huge interest free funds and if the average cost of borrowings in the hands of the assessee is taken into consideration by giving waitage to the interest free funds then the average cost of borrowing at best be 3.07%. If at all any interest rate is to be applied, then it can be only 3.07%. He has also filed the working of this extent at Page-19 of the paper book. However, he submitted that the assessee's main contention is that it has not charged interest to non-A.Es also on delayed payments and it has not been considered as international transaction in the transfer pricing study report. He has also filed the details of transactions with the A.E. / non-A.E. along wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of the High Court cannot be held to be applicable on the peculiar facts of the case. He thus submitted that the adjustment made on account of interest on delayed payment received from the A.E. has rightly been added and adjustments have been made. 6. We have heard the rival contentions, perused the findings of the authorities below as well as the material available on record. The main issue involved in the present case is, whether in the sales transactions made to the A.E., the interest can be charged on the delayed payment which has exceeded the credit period. The assessee's main contention has been that in the case of non-A.E. also, the assessee has not charged any interest on such delayed payments. However, on a perusal of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e financial year 2007-08 plus 150 points i.e., 1.5%. The learned Counsel for the assessee has submitted this working before us. As per the said working the learned Counsel informed that LIBOR rate during the financial year 2007-08 was around 4.7% and if 1.5% is added, then interest rate would work out to 6.21%. Accordingly, we direct the Assessing Officer / TPO to verify the working and apply interest rate of LIBOR + 1.5% and workout the adjustment on account of interest for the period beyond 200 days. The assessee will furnish this working before the TPO for verification. Thus, the grounds raised by the assessee are treated as partly allowed. 7. In the result, assessee's appeal is treated as partly allowed. - - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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