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6. The Learned CIT(A) has erred in considering in para 8.4 sub para xi that interest on loan given to subsidiary Company should be worked out at a rate of interest at LIBOR plus 200 basis points as against interest at LIBOR plus 100 basis points charged by Appellant overlooking that loans utilized by subsidiary Company was for short period of three months and the Appellant was not running any risk as the loan was giving loan to its wholly owned subsidiary Company and the prevailing rate of interest under CUP Method was LIBOR plus 100 basis points as the Appellant Company itself has availed a term loan of USD 15,000,000 from DVB Merchant Bank (Asia) Ltd. at LIBOR plus 100 basis points for seven years vide agreement dated 14.1.2005 and the same is comparable transaction and has to be accepted.

12. Appellant craves leave to submit precised (summary) grounds of appeal add and or alter the above grounds of appeal".

3. In Ground No. 6, the assessee has challenged the order of CIT(A) on the issue of upholding the order of the AO partly by sustaining the addition on account of interest on loan Tolani Shipping Co. Ltd., from Associated Enterprise (AE) at LIBOR+200 basis points as against LIBOR+300 points made by the AO, whereas the assessee has benchmarked the said international transaction with its AE at LIBOR+100 basis points.

3.1. The facts in brief are that the assessee is engaged in the business of owning and operation of vessels and managing vessels of its AE. Assessee entered into various Contracts of Affreightments with external parties for transporting their cargo from one place to another place. Besides, assessee also outcharters its own vessels to AE on which it earns freight income. Assessee is also rendering technical management services in respect of vessels nominated by Tolani Shipping (Singapore) Pte. Ltd., (hereafter referred to as TSSPL), a 100% subsidiary of Tolani Shipping Co. Ltd. During the year, assessee- company has entered into agreement with TSSPL vide agreement dt. 01-12-2005, whereby loan of US$ 60 Lakhs was advanced under the condition that same was to be repaid by the AE within one year from the date of its disbursement. The said loan was advanced to AE at LIBOR+100 basis points p.a. to be applied on the outstanding loan amount. The said loan was repaid along with interest of US$ 88,543.33 (equivalent to Rs. 39,26,985/-) Tolani Shipping Co. Ltd., on 19-03-2006. The assessee has benchmarked the said transaction using CUP method. Assessee borrowed a term loan of US$ 1,50,00,000 from DVB Merchant Bank (Asia) Ltd., at LIBOR+100 basis points for a period of seven years vide agreement dt. 14-01-2005. According to assessee since the rate charged by the said bank to the assessee was LIBOR+100 basis points, therefore, the assessee-company has lent money to its AE at a fair rate and is an Arm's Length Price (ALP) for the said transaction. According to the Transfer Pricing Officer (TPO), price charged by the assessee from the AE is not an ALP for the reason that CUP method requires high degree of comparability, whereas in the case of assessee, there were geographical differences between controlled and uncontrolled transactions, whereas according to assessee, the TPO has overlooked the very fact that DVB Merchant Bank (Asia) Ltd., is an international bank and is operating in the international market and arena. The said bank is operating from Singapore and assessee-company has also given loan to its AE, operating in Singapore. Therefore, the question of geographical difference does not arise and observation of TPO are against the facts of the case while the rate of interest charged by the assessee to the AE is at arm's Tolani Shipping Co. Ltd., length. However, the AO brushing aside the submissions of assessee made an adjustment/addition to the tune of Rs. 10,23,204/- by benchmarking the transaction with AE at LIBOR+300 basis points as proposed by the TPO. 3.2. In the appellate proceedings, Ld. CIT(A) partly allowed the appeal of assessee, after considering the submissions of assessee, as reproduced in para 8.3 of the appellate order by observing and holding as under:

i. ITAT, Pune Bench in the case of Capgemini Technology Services India Ltd., Vs. Dy.CIT [90 taxmann.com 191] (Pune-Trib);
ii. ITAT, Mumbai Bench in the case of Parle Biscuits (P) Ltd., Vs. Dy.CIT [46 taxmann.com 11] (Mumbai-Trib); iii. ITAT, Pune Bench in the case of iGate Computer systems Ltd., Vs. Addl.CIT [65 taxmann.com 44] (Pune-Trib); iv. ITAT, Mumbai Bench in the case of Bhansali & Co., Vs. ACIT [54 taxmann.com 131] (Mumbai-Trib);
3.7. We have heard the rival submissions and perused the material on record including the impugned order including decisions cited by the parties. We observe from the record that assessee has borrowed the money from DVB Merchant Bank (Asia) Ltd., at LIBOR+100 basis points. The said bank is operating from Singapore, from where the AE of the assessee is also operating. Assessee has benchmarked the transaction with AE at LIBOR+100 basis points on the same rate of interest at Tolani Shipping Co. Ltd., which the assessee has borrowed money from DVB Merchant Bank (Asia) Ltd. The TPO benchmarked the transaction at LIBOR+300 basis points on the ground that they have geographical differences and the Ld. CIT(A) partly allowed the appeal of assessee by directing the AO to charge interest at LIBOR+200 basis points. After considering the facts of the case in totality and decisions relied upon by the Ld. DR, we find merits in the contention of Ld. AR that there was no geographical difference as observed by the TPO for the reason that DVB Merchant Bank (Asia) Ltd., Singapore and assessee is operating from the same country i.e., Singapore. In our opinion, assessee has rightly followed the CUP method to benchmark the international transaction at the same rate at which it borrowed the loan from the bank, thereby incurring no extra cost nor earning any income on the transaction from the AE. We are of the considered view that the transaction by assessee with AE has rightly been benchmarked on CUP basis at LIBOR+100 basis points as the DVB Merchant Bank (Asia) Ltd., Singapore has lent the money to assessee at the same rate at which the assessee lent the money to its AE meaning thereby had the AE borrowed funds from the Bank directly , these would have been available Tolani Shipping Co. Ltd., at the same rate of interest i.e. Libor + 100 basis point. In our view, the order of CIT(A) cannot be sustained on this point for this reason that the AE of the assessee and DVB Merchant Bank (Asia) Ltd., is operating from the same country, so the reasons sought by the TPO and CIT(A) are not reasonable, accordingly we direct the AO the delete the addition. The ground no. 6 is allowed.