foreign currency. The transaction being
an international transaction, LIBOR rate would come into play and it
should be looked upon based on commercial principles ... Reddy's Laboratories Limited, Hyderabad.
of the assessee was that LIBOR+ 2% should be adopted as arms length
interest
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
determined by the TPO on the basis of 12 months US
LIBOR prevalent during FY 2008-09, as under:
Particulars Rate of Difference ... interest (%) points from US
LIBOR
12 month US LIBOR rate for FY 2.71
2008-09
Average interest rate on US 4.12 1.41
treasury securities
Cummins India Limited, Pune vs Dy. Cit, Circle-1(1), Pune, Pune on 3 March
2013
. A.Y. 2007-08
(1) Interest on Loan to AEs at LIBOR plus rate Rs. 5,34,26,484/-
(2) Interest on 0% OFCD ... addition on account of interest on loan to AE at
LIBOR plus rate and interest on 0% OFCD is concerned and the Tribunal has
decided
advances by appellant company to Soma
Textile FZE was determined by applying LIBOR+2% rates, which was also
initially proposed to be adopted ... without prejudice to the fact that even the LIBOR+2% rate applied in
previous year has been disputed by the appellant company
3. Learned representatives
Commercial Borrowing (ECBs) and the range of rates of interest vary between
LIBOR plus 100 bps to 200 bps. The European Central Bank has recommended ... ECBs. Foreign Currency Loans are given by Banks
globally bearing LIBOR based Rate. The average of the LIBOR based Rate for the
period from
assessee paid interest of 4%,
which is required to be compared with LIBOR/SIBOR under CUP. The
average one year SIBOR during the year ranged ... observed that various judicial forums have held that for international
loan transaction LIBOR is appropriate CUP. A few of them are Four
Soft Ltd., Quark
bench mark its
returns with the domestic interest rate rather than LIBOR. The ideal
interest rate on outbound intra group loans would be the interest ... currency in which the loan has to be repaid i.e.
LIBOR and not based on PLR of Indian banks. This view is supported
loan with RBI guidelines on
external commercial borrowings by applying 6 months LIBOR+ 150
basis points for a period of 3 years and 6 months ... LIBOR + 250 basis
points for a period of more than 5 years."
3. Brief facts of the case are that the assessee is engaged
