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TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE

Adjustment – Interest : Where assessee- company advanced loan to an associated enterprise and charged interest at rate of 1 month LIBOR plus 300 basis points, adopted CUP method and considered JPSPL, its associated enterprise, as internal comparable because JPSPL had taken loan from Citibank Singapore for tenure of 3 months at rate of 6 months LIBOR plus 225 basis points, since both loans were short term loans, guarantee had been advanced by assessee as a matter of commercial prudence primarily to protect business interest of group by fulfilling shareholder’s obligation and both transactions pertained to same period in which LIBOR rates were applied i.e. in 2012,said transaction was at arm’s length – Maharashtra Seamless Ltd. v. Deputy Commissioner of Income-tax, Circle-16(1) – [2024] 160 taxmann.com 143 (Delhi – Trib.)

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