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Facts
The Revenue challenged the orders of the CIT(A) regarding the credit spread on external commercial borrowing. The Revenue argued that the CIT(A) did not properly analyze country rates and ignored a High Court judgment. The assessee's representative contended that the CIT(A) followed a previous tribunal order.
Held
The Tribunal noted that the CIT(A) had relied on previous orders of the Tribunal in the assessee's own case for assessment years 2009-10, 2010-11, and 2011-12. The facts for the current assessment years were identical to the previous ones, and no new material was presented by the Revenue. The Tribunal therefore found no error in the CIT(A)'s order.
Key Issues
Whether the CIT(A) erred in determining the credit spread on external commercial borrowing by relying on RBI guidelines and previous tribunal orders, and ignoring relevant case laws.
Sections Cited
Section 801B, Section 234B, Section 234C
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Income Tax Appellate Tribunal, DELHI
Before: YOGESH KUMAR U.S. & SHRI SANJAY AWASTHI
ORDER
PER YOGESH KUMAR, U.S. JM:
The captioned appeals are filed by the Revenue challenging the orders of the Commissioner of Income Tax (Appeals)-44, Delhi (“Ld.
CIT(A)’ for short) dated 30/01/2025 pertaining to the Assessment Years2016-17 and 2017-18 respectively.
In both the Appeals the solitary grievance of the Department is against the action of the Ld. CIT(A) in determining the credit spread at 500 basis point relying upon the guidelines issued by Reserve Bank of India for external commercial borrowing. It is the case of the Revenue before us that the Ld. CIT(A) has not analyzed the lending and borrowing rate of the countries involved and ignored the Judgment of Hon'ble High Court of Delhi in the case of Cotton Naturals. The Ld. Department's Representative further submitted that as against the orders of the Tribunal for A.Y 2009-10, 2010-11 and 2011-12, the Department has preferred Appeals before the Hon'ble Jurisdictional High Court, which are pending consideration. Therefore, sought for allowing the Appeals.
Per contra, the Ld. Assessee's Representative submitted that the Ld. CIT(A) has merely followed the ratio laid down in the order of the Tribunal for A.Y 2009-10 and 2010-11 dated 13/10/2021 in and 79/Del/2016, therefore, submitted that there is no error or infirmity in the order of the Ld. CIT(A), thus relying on the findings and the conclusion of the Ld. CIT(A), sought for dismissal of the Appeals.
We have heard both the parties and perused the material available on record. In both the years under consideration the Ld. CIT(A) has relied on the orders of the Tribunal in Assessee’s own case for A.Y 2009- 10, 2010-11 and 2011-12in and 79/Del/2016 and decided the issue by directing the A.O./TPO to charge interest LIBOR + 500BPS on loan advance to it’s AE in foreign currency denomination. The relevant portion of the order of the Ld. CIT(A) is as under:-
6.1. Further, the order of the CIT(A) has also been confirmed by the Hon'ble Tribunal in AY 2009-10, 2010-11 and 2011-12 and for the sake of ready reference. the relevant extract of the order of the Hon'ble Tribunal in AY 2009-10 & 79/Del/2016 AY 2010-11 the case of the assessee is reproduced below: 13. We have heard both the parties and perused the material available on record. As regards to Ground No. 1 to 9 of the Revenue's appeal, it is pertinent to note that the CIT(A) relied upon the order for A.Y. 2008-09 decided by the same CIT(A) in the case of the assessee company. Appeal for A.Y. 2008-09 against the order of CIT(A) has already been decided by the Tribunal, New Delhi in and 3887/Del/2013 vide order dated 12.11.2015. The findings of the Tribunal have been recorded in para 12.18 at page 34 of the order. Thus, Ground No. 1 to Ground No. 9 of Revenue's appeal are dismissed. As regards additional grounds in Assessment Year 2009-10 relating to the issue of LIBOR + 100 or 200 is concerned, the issue was settled by the assessee before the Income Tax Authorities thereby filing application under Vivad Se Vishwas Scheme". Besides this, the CIT(A) has directed the AO/TPO to charge interest rate at the rate of LIBOR+5% on the loan advanced to its AE and delete the balance interest. There is no need to interfere with the said directions. Therefore, additional grounds taken by the Revenue are dismissed. Hance, is dismissed.
As regards appeal for Assessment Year 2010-11, the facts in this year are identical to the facts of the earlier Assessment Years which was decided by the Tribunal in & for Assessment Year 2008-09 as well as 4031 & 4032(Assessment Years 2007-08, 2008-09 & 2009-10) order dated 12/11/2015 in favour of the assessee. The new project during the year under appeal was Omaxe City Bhewadi-2 on which deduction was claimed at Rs.5,21,78,612/-. The claim of deduction u/s 801B in respect of Omaxe City, Bhiwadi-2 was never disputed by the Revenue. There was no distinguishing facts brought out by the Revenue either in assessment order or in the order of the CIT(A). Thus, Ground No. 1 to 9 of Revenue'sappeal are dismissed. As regards additional grounds in Assessment Year 2010-11 relating to the issue of LIBOR + 100 or 200 is concerned, the issue was settled by the assessee before the Income Tax Authorities thereby filing application under "Vivad Se Vishwas Scheme" Besides this, the CIT(A) has directed the AO/TPO to charge interest rate at the rate of LIBOR+5% on the loan advanced to its AE and delete the balance interest. There is no need to interfere with the said directions. Therefore, additional grounds taken by the Revenue are dismissed. Therefore. is dismissed."
Further, for AY 2011-12 also, the Hon'ble ITAT in its order dated 11.07.2023 in and 5064/Del/2019 has followed its earlier order for AY 2009-10 and 2010-11 and for the sake of brevity, the findings of the Hon'ble Tribunal order are not reproduced. 6.2. Thus, as the basic facts of the loan advanced to the AE remains the same i.e. the same loan is continuing since FY 2008-09, and all the issued raised by assessee are also identical, I respectfully follow the decisions of my predecessor and the Hon'ble Tribunal in the case of assessee only on the identical issue and direct the AO/TPO to charge interest @ LIBOR + 500BPS on loan advanced to its AE in the foreign currency denomination. 6.3. Ground no. 10 challenge the levy of interest u/s. 2348 and 2340 of the IT Act. 1961. It is mention that interest under the aforesaid sections is automatic. compensatory, consequential and mandatory as per the express provisions of the IT Act. Accordingly, this ground is also dismissed.
In the result, the appeal of the assessee is Partly Allowed.”
As the Revenue has not brought any material or judicial precedent contrary to the order of the Tribunal in Assessee’s own case for Assessment Year 2009-10 to 2011-12, we find no error or infirmity in the order of the Ld. CIT(A) in following the ratio laid down by the Tribunal in Assessee’s own case for the previous years. Finding no merits in the Grounds of appeal of the Revenue, we dismiss the grounds of Appeal of the Revenue.
In the result, appeals of the Revenue are dismissed.
Order pronounced in the open court on 04th February, 2026