Held, that the LIBOR had to be the benchmark for Euro and USD transactions, rather than the rate of interest on domestic borrowings. The stand of the authorities in replacing the LIBOR with Indian prime lending rate could not be upheld. It was not even the case of the Department that the basic points above the LIBOR were inadequate or too low. Accordingly, the benchmarking by the assessee could not be faulted and the arm\u2019s length price adjustment was to be deleted. Held, that admittedly, the shares were pledged at the instance of or for the benefit of an associated enterprise of the assessee. Pledging shares for the benefit of an associated enterprise was an international transaction between the associated enterprises under section\u00a092B\u00a0of the\u00a0Income-tax Act, 1961. It was akin to a corporate guarantee and required to be benchmarked as such. The Assessing Officer was directed to adopt 0.5 per cent. as the arm\u2019s length consideration for the corporate guarantee issued by the assessee in favour of its associated enterprise. The arm\u2019s length price adjustment was to be scaled down to five per cent. of the correct value of shares and for the actual pledge period.(Ay.2008-09 to 2010-11)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 92C : Transfer pricing-Arm\u2019s length price-Loans advanced to Associated Enterprises-Rate of interest for benchmarking foreign currency denominated loan-Libor to be taken as the basis-Not Indian prime lending rate-Pledge of shares for benefit of associated enterprise-To be benchmarked Rate at 0.5 Per Cent-Price adjustment scaled down to five Per Cent. of correct value of shares and for actual pledge period. [S.92B] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-36427","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-9tx","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/36427","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=36427"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/36427\/revisions"}],"predecessor-version":[{"id":36428,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/36427\/revisions\/36428"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=36427"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=36427"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=36427"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}