work out the ALP of interest by
applying only LIBOR instead of LIBOR + credit spread on account of the risk
profile of the borrower ... erred in not appreciating that LIBOR represents the inter bank
interest rate, which is of highest credit rating, whereas the loan was given
erred in law
by using Prime Lending Rate instead of LIBOR for determining the
arm's length interest amount.
5.7 The learned ... free loan given by the assessee to its AE, viz. ADSIL, the
LIBOR rate prevailing as on 31.03.2005 should have been considered
Percentage ALP of the Interest Percentage Adjustment
charged
EKC 21,16,958 LIBOR+1 1,60,78,033 10.25% 1,39,61,075
International ... directed that the
interest shall be charged @6 months LIBOR + 350 Basis point to EKC
International FZE, UAE and 6 months LIBOR + 500 basis point
earlier order, directed the AO/TPO to compute interest by
adopting LIBOR rate plus 3.25% for the outstanding period.
13. The Ld A.R submitted ... ordinate bench of
Tribunal has sustained the addition to the extent of Libor rate plus 150 bps on
an identical issue in the earlier years
being adjustment in respect of Interest
on Loan to Associated Enterprise applying LIBOR rate in the financial year in
which loan was granted plus ... assessee to its associated enterprises was
compared to the prevailing LIBOR at the time of granting such loan.
Accordingly, the assessee claimed the international transaction
holding that the interest charged by the Appellant at the rate of
LIBOR + 2.9% per annum in respect of loan of USD 71.5 million given ... holding that the arm's length price of the loan was LIBOR + 3.32% p.a.
(10). The AO / TPO / DRP erred in not following
been charged by the ICICI
Bank from the assessee i.e. LIBOR plus 250 basis points
meaning thereby that assessee fully recovered the interest paid ... reached to a
conclusion that interest charged from the subsidiary i.e. LIBOR
plus 250 basis points is not an arm length price. Therefore
appreciating the fact that the Appellant has charged interest at 6 months
LIBOR + 400 bps on the advances given to the AE after considering ... internal CUP
of:
a) LIBOR+200 bps being interest charged by SB! on foreign currency loans taken by
MIL: and
b) LIBOR+350 bps being
failed to appreciate the fact that LIBOR + spread is adopted for finance
transactions like loans whereas recovery of trade receipts intends to recover
the cost
charged the rate of interest is to be
restricted to LIBOR / LIBOR + 200 bps.
14. On the facts and in the circumstances of the case ... restricting the rate of interest on
the loan transaction to LIBOR rates without any spread.
15. Without prejudice, learned TPO/ learned
