9911796707
TMI Blog2021 (3) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... ls, they are taken up together and are disposed of by this common order for the sake of convenience and brevity. 3. The solitary dispute in the above three appeals is in respect of Transfer Pricing adjustment made by the Assessing Officer out of interest paid by the assessee to its Associated Enterprise [AE] M/s. Twilzon Limited on Fully and Compulsorily Convertible Debentures [FCCDs] issued by the assessee to such AE. The FCCDs were issued on 26.07.2011 i.e. in F.Y. 2011-12 relevant to A.Y. 2012-13 and no FCCDs were issued in A.Y. 2013-14 and 2014-15. Therefore, A.Y. 2012-13 is taken as the lead year. 4. At the very outset, the ld. counsel for the assessee stated that the entire quarrel has been decided by the Tribunal in a group company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly. Therefore, exchange risk becomes ineffective. d) Risk to cost of funds also minimizes because assessee is paying taking SBI PLR as arm's length interest rate because no one would lend at less than this rate. e) And for administering the costs assessee has not explained and justified that it has incurred tiny extra cost or made any extraordinary effort. f) The main thing to be noted is that AE is making such huge investment in assessee's business and undertaking big risk, which again substantiates that the assessee has very good credibility. 7. The aforementioned observations of the TPO were also heavily relied upon by the ld. DR during the course of his submissions. On the basis of the aforementioned observations, 300 ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee, we find that vide para 27, a coordinate bench of this Tribunal has recorded its finding to the following effect: "27. On merit also, the AO/TPO made the addition on account of differential rate of interest on FCCDs. The assessee applied the interest rate on the basis of SBI PLR rate plus 300 basis points for the reasons that the FCCDs being unsecured and hybrid/quasi equity instrument as compared to plain vanilla loan instrument. Therefore, the SBI PLR plus 300 basis points over it was reasonable and on the arm's length, particularly when the same was permissible under Foreign Exchange Control Regulations. The AO/TPO, however, restricted the interest rate to 12.25%. The variance in the rate of interest as per TPO/AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. Similar view was taken by the Tribunal in ITA No. 7026/DEL/2017 and 7027/DEL/2017. The relevant findings read as under: "11. We have heard the rival submissions and have given thoughtful consideration to the orders of the authorities below. We have also perused the orders of the co-ordinate bench relied upon by the ld. counsel for the assessee. The undisputed fact is that the FCCDs were issued during FY 2008-09, 2009-10 and 2011-12, which means that no fresh FCCDs were issued during the year under consideration. The year wise details of interest rate, interest amount payable and interest rate and amount restricted by the TPO can be understood from the following chart: Amount of Differential Amount of Differential amount Interest ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to plain vanilla loan instrument. Therefore, the SBI PLR plus 300 basis points over it was reasonable and on the arm's length, particularly when the same was permissible under Foreign Exchange Control Regulations. The AO/TPO, however, restricted the interest rate to 12.25%. The variance in the rate of interest as per TPO/AO to be adjusted and added was 3.75% which was within the permissible range of 5% as permitted by second proviso to Section 92C(2) of the Act. It is also relevant to point out that the percentage of 3% in the aforesaid proviso has been inserted by the Finance Act, 2012 w.e.f. 01.04.2013 and prior to that amendment, this percentage was at 5%. In the present case, since the difference is less than 5%, therefore, no ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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