Short term deposits cannot be taken at par with an international transaction u/s 92B of the Income Tax Act

Last updated: 28 June 2021
Quick Summary
The Income Tax Appellate Tribunal has ruled that short-term deposit rates from a domestic bank cannot be equated with international transactions under Section 92B of the Income Tax Act. The tribunal found that the lower authorities incorrectly applied the State Bank of India's prime lending rate for term deposits when calculating the arm's length price adjustment for interest on receivables from overseas associated enterprises. This adjustment was deleted as it did not consider the nature of international transactions involving foreign currency and overseas market conditions.

Court :
ITAT Hyderabad

Brief :
This assessee’s appeal for AY.2013-14 arises against the CIT(A)-6, Hyderabad’s order dt.01-08-2019 in appeal No.10079/2018-19/B3/CIT(A)-6, involving proceedings u/s.143(3) r.w.s.92CA(3) of the Income Tax Act, 1961 [in short,‘the Act’].

Citation :
I.T.A. No. 1709/HYD/2019

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