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iii. Transfer Pricing adjustment by imputing interest on share application money sent to associated enterprise. 
iv.      Set off of brought forward the assessee

                                                              M/s. VVF Limited
3. In this case assessee is a producer and exporter of chemicals and a leading contract manufacturer of toilet soaps and personal care products.

During the year under consideration the assessee entered into various international transactions. The Transfer Pricing Officer has made the following transfer pricing adjustment: -

For the re-characterisation of share application money into loans, the same was upheld by the DRP. However, it was directed that the interest charge should be @ libor +3%, as in the case of loans. Against this order assessee is in appeal before us.

5. We have heard both the Counsels and perused the records. Learned counsel of the assessee submitted that assessee has charged corporate guarantee fee at the rate of 1.68% on the basis of its internal cup, the rate at which assessee obtains such guarantee. Further he submitted that internal cup in this regard has been found to be acceptable by the ITAT in assessee's own case in the decision referred by the DRP. Learned counsel further submits that the DRP has wrongly interpreted the ITAT decision that the charge of interest should be at the rate of libor +3% perpetually. He submitted that the same was the internal cup available for that assessment year and following the aforesaid ratio the internal cup available for the current year has been adopted by the assessee and M/s. VVF Limited accordingly, the same needs to be upheld.

9. Similarly, as regards the interest on loan to the Associate Enterprise we agree with the learned counsel of the assessee that the ITAT has upheld the application of internal cup for that assessment year on the basis of internal cup of libor + 3% available for that assessment year, if the rate of interest being the internal cup available for the current assessment year is libor + 2.68% the same needs to be accepted. We direct accordingly.

10. As regards the share application money issue is concerned, we find M/s. VVF Limited that learned counsel of the assessee has accepted that the shares have not been allotted and the share application money has been refunded. However, learned counsel of the assessee submits that the transactions were genuine and the refund was also warranted by genuine circumstances. Accordingly in the interest of justice, we direct the Assessing Officer to examine the veracity of assessee's submissions. If the Assessing Officer is convinced by the veracity of assessee submissions, no interest is leviable, however, if the Assessing Officer is not so convinced the internal cup rate of interest being libor + 2.68% shall be levied.