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TMI Blog2021 (3) TMI 1397X X X X Extracts X X X X X X X X Extracts X X X X ..... 12-13 and 2016-17 the interest charged at 3% on the loan granted to the same AE has been accepted by the TPO. Though, these orders passed by the TPO are for subsequent assessment years; however, they have persuasive value while determining the arm s length rate of interest, as, there is no material change in the factual position. We hold that interest charged at 3% on the loan advanced to EM Germany should be considered to be at arm s length. Hence, there is no need for any adjustment. Accordingly, the addition made is deleted. Disallowance made u/s 14A r.w.r.8D - As argued before rejecting assessee s computation of disallowance and invoking rule 8D, the Assessing Officer has not recorded proper satisfaction - HELD THAT:- Legal posi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lies to the diagnostic world. It has eight subsidiaries situated in different parts of the world. As stated by the transfer pricing officer (TPO), in the years 2009 and 2010, the assessee acquired few more companies in diagnostic field. From the transfer pricing study report, the TPO found that during the year under consideration, EM Germany, an associate enterprise (AE) of the assessee had acquired certain companies engaged in the business of diagnostic products to expand its business. He found, for funding such acquisition the assessee had granted loans to EM Germany in USD as well as in Euro. The aggregate amount of loan granted to the AE was to the tune of Rs.27.30 crores. He further found that assessee had charged interest on the loan ..... 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, during the relevant period, the LIBOR rate for USD loan stood at 0.53% p.a. and the same for URIBOR was 1.1575%. He submitted, considering the LIBOR rate, the interest charged by the assessee at 3% is at arm s length price (ALP); hence, should not have been disturbed. Proceeding further, he submitted, in Assessment Years 2012-13 and 2016-17, the TPO has accepted the interest charged at 3% to the very same AEs to be at arm s length. In this context, he drew our attention to the relevant orders passed by the TPO placed in the paper book. 5. The learned Departmental Representative, drawing our attention to paragraph 6.3.9 of learned Commissioner (Appeals) s order submitted, in case of similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value while determining the arm s length rate of interest, as, there is no material change in the factual position. Keeping in view these factors, we hold that interest charged at 3% on the loan advanced to EM Germany should be considered to be at arm s length. Hence, there is no need for any adjustment. Accordingly, the addition made is deleted. 7. In grounds 2 3, the assessee has challenged disallowance made u/s 14A r.w.r.8D. 8. Briefly the facts are, during the year under consideration the assessee had earned exempt income by way of dividend amounting to Rs.1,77,16,087/- and by way of long term capital gain amounting to Rs.3,71,43,046/-. In the computation of income, the assessee suo motu made a disallowance of Rs.7,10,356/- towa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the assessee is, before rejecting assessee s computation of disallowance and invoking rule 8D, the Assessing Officer has not recorded proper satisfaction. He submitted, though, the assessee furnished detailed explanation explaining the manner in which suo motu disallowance was made; however, without properly examining the correctness of assessee s claim having regard to the books of account, the Assessing Officer has simply rejected assessee s claim. Thus, he submitted, the disallowance made under section 14A r.w.r. 8D should be deleted. 10. The learned Departmental Representative strongly relying upon the observations of the departmental authorities submitted, the Assessing Officer having recorded proper satisfaction, assessee s clai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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