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TMI Blog2017 (12) TMI 468X X X X Extracts X X X X X X X X Extracts X X X X ..... is issue to the file of the Assessing Officer for fresh adjudication. The grounds no.7 and 8 are accordingly allowed for statistical purposes. X X X X Extracts X X X X X X X X Extracts X X X X ..... - as difference in arm's length price determined by Transfer Pricing Officer (TPO) in pursuance of DRP's order and the appellant. 4(i). On the facts and circumstances of the case, the learned AO has erred, both on facts and in law in making to make the above said addition in total disregard to the order of Hon'ble ITAT in assessee's own case for the Assessment Year 2007-08 & 2008-09. (ii). That the AO has erred in making the addition despite the fact that the transaction being in pursuance of the same agreement, the facts remaining the same, the order of the Hon'ble ITAT is binding on him. 5(i) On the facts and circumstances of the case, the learned AO has erred, both on facts and in law in making the to make addition of an amount of ₹ 49,35,541/- on account of difference in arm's length price on the transaction of interest on loan given to the subsidiary. (ii) On the facts and circumstances of the case, the Hon'ble DRP erred in determining the reasonable interest rate @ 14.75% per annum as against 4% determined by the assessee based on transfer pricing study. (iii) On the facts and circumstances of the case, the Hon'ble DRP erre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l." 8. Ld. counsel for the assessee referred to the loan agreements, copy of which is placed at page 1 to 13 of the Paper Book and submitted that the loan was advanced at a fixed rate way back in the year 2002-03 and, therefore, the interest rate cannot be varied or changed in the year under consideration. Referring to the order of the DRP, ld. counsel for the assessee drew the attention of the Bench to the following observations :- "DRP findings :- This panel has carefully considered the submissions of the taxpayer and the arguments of the TPO and gives the following findings: 1. It is seen that Delhi Bench of Hon'ble ITAT has passed order dated 13- 10-2013 impinging on the issue for the AY 2007-08. This Panel has verified from the TPO and it has been informed that Department has preferred appeal against the said order of Hon'ble ITAT. Accordingly, this Panel is constraint not to follow the order of Hon'ble ITAT." 9. He submitted that the appeal filed by the Department before the Hon'ble Delhi High Court has been dismissed vide ITA No.233/2014 order dated 27.03.2015, copy of which is placed at pages 61 to 82 of the Paper Book. Referring to page 14 to 50 of the Paper Book, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d party in India with the same financial health as that of the tax payer's subsidiary. The TPO further observed that the taxpayer has not submitted the financial of the subsidiary, hence the financial healthy of the subsidiary cannot be judged. The TPO further noted that while deciding the interest rate that may be charged on receivables from AE's, Libor rate for calculating interest is not proper. He opined that instead of US rate, Indian rate is to be adopted. He observed that an independent person in India would expect the maximum return on its investment, and if the lending rate is higher in Indian currency then he would not lend in foreign currency where the lending rate is not so attractive. The TPO further noted that it should not be forgotten that, had the AE of the assessee company would have got loan from any bank or financial institution in the place of residency at Libor rate, then why it did not avail of loan at such a rate. Assessing Officer observed that, no company in India would like to invest in the form of loan outside India and that also without security as the interest returns in India would be higher than those prevailing in developed markets. Finally, Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p.a. interest. Hence, adjustment suggested by the TPO is not warranted. 18. We further note that assessee's profits are exempt u/s. 10B. Hence, there is no case that assessee would benefit by shifting profits outside India. This view is supported by Bangalore Tribunal decision in this case Philips Software Centre P Ltd. vs. ACIT Supra and Mumbai Tribunal in the case of I.T.O. vs. Zydus Altana Health Care P Ltd. Supra. 19. We further note that in this case the loan agreement was for fixed rate of interest. The LIBOR has been accepted in decision referred above as the most suitable bench mark for judging Arms' length price in case for foreign currency loan. Hence, adjustment as made by the TPO is not warranted. 20. In the background of the aforesaid discussions and precedents, we hold that the rate of interest charged by the assessee for the loans transactions with the AE was Arms Length Price. Hence, no transfer pricing adjustment is called for. 21. In the result, the Assessee's appeal is allowed." 13. We find following the above decision the Tribunal in assessee's own case for assessment year 2007-08 vide ITA No.3265/Del/2011 order dated 30.10.2013 has allowed the app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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