thus arrived at as under:
Basic interest rate for the credit LIBOR+400 basis points
rating of the AE
Add: Transaction Cost 300 basis points ... Rate LIBOR + 700 basis points
Add: Adjustment for security Not computed
Final CUP Rate > LIBOR + 700 basis points
As the currency in which
appeal:
"1. (i) The Learned TPO/AO erred in ignoring
LIBOR as a bench mark for determining Arms
Length Price for determining Arms Length ... 1605/Hyd/2010
dated 29.11.2013 has held that the LIBOR linked interest rate is
to be adopted for benchmarking interest on advances to foreign
charge any interest, the rate of interest
charged on loan should be LIBOR plus by taking the following cases:
1. Geodesic ... benchmark its returns with the domestic
interest rate rather than Libor. The ideal interest rate on
outbound intra-group loans would be that interest rate
ITAT was right in adopting "LIBOR" (London. Inter Bank
Offered Rate) as benchmark for interest on loan given to associate
enterprises from India ... ITAT erred in directing the AO/TPO to adopt the LIBOR rate plus
2% as the rate of interest, for making adjustment to ALP, without
External Commercial Borrowings
(ECB) and benchmarked the interest rate paid against LIBOR rate of
4.13% (being LIBOR + 350 basis points). (Refer page ... treating the CCDs as
ECBs and benchmarking the interest rate against LIBOR rate. It was
submitted that CCDs being a hybrid instrument, cannot be treated
proposing to benchmark the interest rate
on Fully Compulsory Convertible Debentures at LIBOR+200 basis
points ignoring that the Fully Compulsory Convertible debentures
were denominated ... benchmarked the interest rate paid by the assessee by
taking the Libor Plus 200 basic points. Paras 7.2 to 7.4 of
the TPO order
pertains to determination of arms
length price for the international transaction on Libor+ as
7
ITA.No.1140 & 1159/Hyd/2013
M/s. Vijai ... ought to have appreciated that the
LIBOR plus cannot be taken as the base for the
determination of arms length price for the
international transactions
interest receivables on loan
given to AE by applying the rate of LIBOR + 550 BPS on interest free loans
advances to Associated Enterprises ... Closing -
4,85,21,000
7. The ld. TPO had taken US LIBOR + 550 basis points for benchmarking
the interest and applied 6% interest rate
receivables;
(ix) Without prejudice, the lower authorities have erred in not
adopting LIBOR as the basis for benchmarking.
(x) Assuming without admitting that the adjustment ... loan and computed
the arm's length interest adopting 6-month LIBOR plus 400 basis points at
4.3836%. TP Adjustment was computed
loan ignoring the directions of Hon'ble DRP to use LIBOR plus
500 basis points.
6. The Ld. TPO/ AO has erred in laws ... laws and
facts of the case by computing interest at US LIBOR further
enhanced by more than 125% for risk profile etc. which is
completely
