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TMI Blog2022 (6) TMI 664X X X X Extracts X X X X X X X X Extracts X X X X ..... n. Com 523 Delhi High Court) because the case of the assessee under reference pertains to interest on loan and its taxability and not on the issues raised in the order relied upon. Hence, SBI Market Lending Rate will be applicable because money has been loaned from an Indian Rupee Account. 2. The Ld. CIT(A) has deleted the addition without considering the fact that loan advanced to the AE has benchmarked the interest rate to its AE with SBIPLR as the loan has been advanced from India in Indian Currency of the recipient AE that is in US Dollars. 3. That the grounds of appeals are without prejudice to each other." 3. Brief facts of the case are that the Assessing Officer (AO) in this case passed an order relating to transfer pricing adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Pricing Officer (IPO) during the course of Transfer Pricing assessment under section 92CA of the Act for 2010-11 held that the assessee had not charged an arm's length interest on the advance. According to the TPO, the assessee should have charged an interest @ 13.87 (12.37 plus 1.5%) from its associated Enterprises. Shyam Telecom Inc (STI) and not @ 3.5% which is the rate adopted by the assessee. As per the Ld. TRP, it is the Prime Lending Rate (PLR) of the India banks that should be applied for benchmarking the interest transaction. The average of the highest (12.5%) and the lowest (12.25%) charged by the banks is 12.37%. Further as the risk faced by the assessee is much more than the risk faced by the banks who lend money in the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Delhi) was referred. Ld. CIT(A) also referred to his order for AY 2010-11 wherein it was mentioned that in the case of appellant for AYs 2008-09 & 2009-10, Revenue has consistently taken LIBOR plus markup thereon as the basis of determination of interest on the international transaction of loan to foreign AE. Hence, Ld. CIT(A) held that respectfully following the decision of Hon'ble Delhi High Court in case of CIT vs. Cotton Naturals (I)(P.) Ltd. (supra) and the order of the ITAT in case of Bharti Airtel vs. ACIT vide ITA No. 5636/Del/2011, the grounds of appeal are allowed. We may gainfully refer relevant part of the Ld. CIT(A)'s order as under:- "3.2 I have carefully considered the order of Ld. TPO for the AY 2010-11, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supra) and Bharti Airtel (Supra), these grounds of appeal are allowed." 3.3 Since the facts are similar in the present appeal, following the above decision, transfer price addition of Rs. 1,84,51,539/- u/s. 92C(3) on account of notional interest receivable made by the AO/TPO is ordered to be deleted. Hence, grounds of appeal 1 and 2 are allowed. 5. Against the above order, the Revenue is in appeal before us. 6. We have heard both the parties and perused the record. Ld. counsel of the assessee pleaded that the issue is covered in favour of the assessee by assessee's own case for earlier years. Upon careful consideration, we note that in the present case, the assessee has offered rate of interest of 3.5% on international transaction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rather the issue is remitted to the file of AO for application of LIBOR plus appropriate markup for credit rating of the AE. Hence, the submission of the Ld. counsel of the assessee that the application of 3.5% rate by the assessee has already been decided in favour of the assessee in earlier years is not correct, as it is not emanating as to whether this rate is arrived at on the basis of LIBOR rate plus appropriate markup as per the credit rating of AE as directed by IT AT in earlier years, after taking into consideration Hon'ble Delhi High Court decision in Cotton Naturals (I)(P.) Ltd. (supra). Further, Ld. CIT(A) has also not commented how the rate of 3.5% was arrived at as to whether the same was in accordance with IT AT decision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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