Held that\u00a0 parent company\u2019s commitment to providing its subsidiary with the resources it needs to meet its financial obligations or to get credit. However, as the format of the letter of comfort asked for by the bank was not available, its impact on the interest to be charged on the loan could not be estimated. Though the adjustment made to the interest rate by the Assessing Officer in treating the letter of comfort as a bank guarantee could not be upheld, the assessee\u2019s alternative argument of treating the interest rates prescribed under the head \u201cSafe Harbour Rules\u201d, that is, under rule\u00a010TD(2A)(5), which was 6 months LIBOR plus 400 bps, was acceptable. The Assessing Officer was directed to treat this rate as the arm’s length price of the international transaction and make adjustment accordingly. Even according to the quote of the bank an identical upfront fee of 1.25 per cent. of the bank loan was charged. Therefore, the letter of comfort called for a separate adjustment to the interest. \u00a0Arm\u2019s length price adjustment to be made accordingly. (AY. 2018-19)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 92C : Transfer pricing-Arm\u2019s length price-Avoidance of tax-International transaction-Interest on loan given to Associated Enterprise-Interest in terms of safe harbour rules acceptable-Arm\u2019s Length price adjustment is to be made accordingly. [S.92B, 92CA, R. 10TD(2A)(5)] <\/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-51009","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-dgJ","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/51009","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=51009"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/51009\/revisions"}],"predecessor-version":[{"id":51010,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/51009\/revisions\/51010"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=51009"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=51009"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=51009"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}