Trianz Holdings Private Limited , Bangalore Deputy Commissioner of Income Tax Circle-7(1)(1), Bangalore

This case involves Trianz Holdings Private Limited appealing a transfer pricing adjustment made by the TPO. The assessee charged 8.28% interest on a loan to an associated enterprise, while the TPO proposed an adjustment based on a 14.47% interest rate. The tribunal has remitted the issue back to the AO/TPO for a fresh examination of the appropriate interest rate, considering the LIBOR rate and the specific transaction.

IN THE INCOME TAX APPELLATE TRIBUNAL
“A’’ BENCH: BANGALORE

BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER

AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER
IT(TP)A No.699/Bang/2017
Assessment Year: 2012-13

Mr.Trianz Holdings Pvt. Ltd.,
#165/2, 6th Floor, ‘Kalyani Magnum’
Bannerghatta Road,
Bangalore – 560 076.
PAN NO : AAFCA 8051 P
APPELLANT 

Vs.

ITO,
Ward – 3,
Vijayapura.
RESPONDENT

Appellant by : Shri. Srinivas K. P, CA
Respondent by : Ms. Neera Malhotra, D.R.
Date of Hearing : 02.12.2020
Date of Pronouncement : 04.12.2020

O R D E R

PER CHANDRA POOJARI, ACCOUNTANT MEMBER:

This appeal is by the assessee directed against the final Assessment Order dated 31.01.2017. The first ground is with regard to Transfer Pricing Adjustment of Rs.1,50,63,720/-. The facts are that assessee charged interest at 8.28% on the loan given to Associated Enterprise (AE). However, the TPO charged interest at 14.47% to determine the TP adjustment on this issue. On the other hand, DR submitted that libor interest is to be charged.

2. We have heard both the parties and perused the material on record. Inthis case, the assessee advanced money to its sister concern after availing loan from State Bank of India which charged interest at 8.28%. The same interest was charged by the assessee to its AE. However, the TPO charged interest at14.47% and made TP adjustment at 1,50,63,720/-. The DR observed that advancing money to AE is being international transaction, calls for TP adjustment. However, with regard to quantification, it is observed thatassessee has not advanced any arguments on this. But before us, learned AR submitted that the assessee charged interest at 8.28% p.a. which is more than libor. In our opinion, the AO has to examine libor rate in the specific transaction under consideration and if it is more than 8.28%, the same is to be charged otherwise the rate at which assessee advanced should be applied. The issue is remitted to AO/TPO for fresh consideration.

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