What did the Tribunal hold?

The tribunal directed the AO/TPO to recompute the interest rate on loan funds considering LIBOR/EUROIBOR as comparables. It also remitted one ground of appeal back to the CIT(A) for adjudication.

The ITAT order is a corrigendum to a previous order. It clarifies the tribunal's decision regarding the recomputation of interest on loan funds and the adjudication of a specific ground of appeal by the CIT(A).

What were the issues?

The primary issue was the correct method for determining the arm's length price (ALP) for interest on international loans. Another issue involved the CIT(A)'s non-adjudication of a specific ground of appeal.

DCIT vs M/S. Titagarh Wagon Ltd. | ITAT Kolkata 2024

Corrigendum This corrigendum is passed by the Bench for rectification of the mistakes found in the orders of the above-mentioned appellant vide order dated 09/04/2024 in following paragraphs.

The paragraph no-29 of the original order is stated as follows: - “29. We heard the rival submission and considered the documents available in the record. The TPO during assessment made the upward adjustment of interest amount to Rs. 1,88,11,087/-. The ld. TPO derived cost of the fund to the appellant by a formula wherein the “cost of funds” to the appellant was derived at 16.95% on which risk premium of 300 bps over the cost of the funds so derived. Thus ld. TPO considered the ALP interest @ 16.95% over interest @ 7.16% charged by assessee. The borrowing / lending undertaken in international market. The interest should be charged on the basis of LIBOR/ EUROIBOR which is considered to the real cost of interest funding. In terms of rule 10B, comparable of foreign currency loans has to be compared with loan provided in comparable conditions prevailing in markets in which the parties to the transaction operate and comparable contractual term i.e. foreign currency loan provided in the international market. During assessment the comparable U/R 10B(2)(b) are not considered. In our considered view, we set aside the order of AO/TPO and directed the AO/TPO to recompute the rate of interest on loan fund after considering the comparable. Needless to say, the assessee should get reasonable opportunity in set aside proceeding. Accordingly, ground no. 11 to 14 of the revenue is allowed for statistical purpose.”

Whereas paragraph No.29 of the order dated 09/04/2024 may be read as follows: - 3 ITA 1064 & 1065/Kol/2018 CO Nos.14 & 15/Kol2021 M/s Titagarh Wagaon Ltd

DCIT, LTU-2, KOLKATA, KOLKATA vs. M/S. TITAGARH WAGON LTD., KOLKATA

What did the Tribunal hold?

What were the facts?

What were the issues?

Which sections of the Income-tax Act were involved?

Recent GST High Court judgments