M/S. ACME CLEANTECH SOLUTIONS LTD.,NEW DELHI vs. DCIT, NEW DELHI

ITA 3641/DEL/2017Status: DisposedITAT Delhi20 November 2025AY 2011-1218 pages
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What did the Tribunal hold?

The Tribunal held that interest on loans advanced to AEs, repayable in USD, should be benchmarked using the LIBOR rate plus a margin, not the domestic lending rate. It also remanded the issue of investment verification to the AO and allowed the disallowance of warranty provisions as an ascertained liability.

What were the facts?

The assessee company, engaged in manufacturing and servicing telecom infrastructure, advanced loans to its Associated Enterprises (AEs). The Transfer Pricing Officer (TPO) proposed adjustments to the arm's length price (ALP) of these international transactions, specifically on loans and outstanding receivables. The Assessing Officer (AO) made further additions under Section 14A and disallowed warranty provisions.

What were the issues?

Whether the correct ALP for international transactions involving loans to AEs is determined by domestic lending rates or LIBOR, and whether provisions for warranty are allowable.

Which sections of the Income-tax Act were involved?

Section 92CA,Section 14A,Section 115JB

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Income Tax Appellate Tribunal, DELHI “I” BENCH: NEW DELHI

Before: SHRI SUDHIR PAREEK & SHRI MANISH AGARWAL

For Appellant: Dr. Rakesh Gupta, Adv, Shri Somil Agarwal, Adv. (Virtual), Shri Sakshamm Agarwal, AR &, Shri Deepesh Garg, Adv
For Respondent: Shri Dharm Veer Singh, CIT DR
Hearing: 21.08.2025Pronounced: 20.11.2025

PER MANISH AGARWAL, AM : In the captioned appeals, one appeal is filed by assessee against the assessment o

The order continues below.

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