Intergarden India Pvt Ltd vs. ACIT (ITAT Bangalore)

DATE: March 18, 2016 (Date of pronouncement)
DATE: March 28, 2016 (Date of publication)
AY: 2007-08 and 2006-07
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Deduction of section-10B, transferring pricing adjustment on account of ECB from parent company

Revenue has not disputed the submission made by the assessee before the CIT (A) that effective rate of interest paid by it in India was 6.62% on loans. Interest paid by assessee on loans taken from AE abroad was 5%. This was below the rate of interest assessee was paying on loans taken within India. When internal CUP with unrelated parties is available, in our opinion, it should be given precedence over external CUP Once such raw gherkins are put into some process which increases its shelf life to six months or more, there indeed happen some irreversible change. Raw gherkins are changed from its original state to a state where it remains good for human consumption even after six months. Thus the steps as undertaken by the assessee which included fermentation and which extended the shelf life of raw gherkins, even if we construe as not ‘manufacture’, as commonly understood, it cannot be denied that it resulted in a product which cannot be equated with raw gherkins. The processes undertaken by the assessee had significant effect on the raw nature, converting it to a material capable of withstanding decay for a considerable period of time. In our opinion, in such a situation, it is difficult to say that what was packed by the assessee after the various process was very same as the raw gherkins which it got from its contract farmers.

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