Siva Industries and Holdings Ltd. v. ACIT, Central Circle-6(1) Chennai

46 SOT 112Income Tax Appellate Tribunal2014#5063 most cited

What is Siva Industries and Holdings Ltd. v. ACIT, Central Circle-6(1) Chennai authority for?

When an assessee provides loans to its associated enterprise (AE) using its own funds (not borrowed funds), the arm's length interest rate for such inter-company loans should be determined by considering comparable interest rates like PLR, SBI short-term rate, or LIBOR plus a markup. This principle applies even if the funds were raised through sources like zero per cent optional convertible preferential shares.

23

judgments rely on this decision, according to BharatTax’s citation analysis of 366,339 Indian tax judgments — from 2016 to 2025.

Also referred to as

Siva Industries and Holdings Ltd. v. ACIT · 46 SOT 112 · transfer pricing · associated enterprises · interest on inter-company loans · arm's length interest rate · own funds · borrowed funds · PLR rate · LIBOR rate

Sections most often in play

Section 143(3)Section 92BSection 144C(5)Section 144C(13)Section 144BSection 153Section 234BSection 234C

Issues it is cited on

interest on outstanding receivablesfunctional analysisinterest u/s 234cworking capital adjustmentcup methodsection 144c(5)tested partysection 92bcomparable companiesarm's length priceassociated enterprisestransfer pricing adjustment

Judgments citing Siva Industries and Holdings Ltd. v. ACIT, Central Circle-6(1) Chennai

DCIT/ACIT, Circle-6(2), Kolkata vs. M/S. Emami Limited, Kolkata

In the result, the appeal filed by the Revenue ( in ITA No

ITA 1065/KOL/2017[2011-12]Status: DisposedITAT Kolkata15 Jun 2018AY 2011-12

Bench: Shri S. S. Godara, Jm &Dr. A.L.Saini, Am आयकरअपीलसं./Ita Nos.1065 & 1066/Kol/2017 ("नधा"रणवष" / Assessment Years: 2011-12& 2012-13)

For Appellant: Shri S. Dasgupta, Addl. CIT(DR)For Respondent: Shri Akkal Dudhwewala, FCA
Section 143(3)Section 144CSection 92C

…enterprise to its associated enterprise. For that we rely on the judgment of Coordinate Bench Income Tax Appellate Tribunal Bench 'A' Chennai, ITA No. 2148/Mds/2010, AY 2006-07 in M/s Siva Industries & Holdings Ltd. v The Assistant Commissioner of Income Tax, 46 SOT 112 (CHENNAI), which has provided that the selection of LIBOR over the assessee's cost of funds should be considered to benchmark the loan provided by the Indian enterprise to its associated enterprise. The relevant extracts of the Ruling is as follows: "Once the transaction between the assessee and the associated enterprise is in foreign currency an…

DCIT, Circle-4(1), Kolkata vs. M/S. M.K. Shah Exports Ltd., Kolkata

In the result the appeal by the revenue is dismissed

ITA 2149/KOL/2014[2008-2009]Status: DisposedITAT Kolkata12 May 2017AY 2008-2009

Bench: Hon’Ble Sri N.V.Vasudevan, Jm & Shri M.Balaganesh, Am] I.T.A No. 2149/Kol/2014 Assessment Year : 2008-09 D.C.I.T., Circle-4(1), -Vs.- M/S. M.K.Shah Exports Ltd. Kolkata Kolkata [Pan : Aaccm 0884 H] (Respondent) (Appellant) For The Appellant : None (Dr)(Adj. Request Is Rejected) For The Respondent : Shri Rohit Shukla, Fca Date Of Hearing : 03.05.2017. Date Of Pronouncement : 12.05.2017. Order Per N.V.Vasudevan, Jm This Is An Appeal By The Revenue Against The Order Dated 15.09.2014 Of C.I.T.(A)-Vi, Kolkata Relating To A.Y.2008-09. 2. Grounds Of Appeal Raised By The Revenue Read As Follows :- 1. That On The Facts & Circumstances Of The Case, The Ld. Cit(A) Erred In Law As Well As On Facts In Holding That Addition On Account Of Adjustment Of Interest Of Rs.40,32,011 Charged To The Subsidiary Company Zao Classic Russia Was Not Warranted, Ignoring The Fact That The Addition Was Made On The Arms Length Price Determined By The Tpo U/S 92(Ca)(1). 2 That On The Facts & In Circumstances Of The Case, The Cit(A) Erred In Law As Well As On Facts In Holding That Cess On Green Leaf Of Rs.1 ,44,03,221/- Is An Allowable Expenditure, Ignoring The Fact That It Is Directly Attributable To Core Agriculture Activities Which Is Taxable Under State Agriculture Income Tax, Beyond The Purview Of Central Income Tax & On The Same Issue Slp Is Pending In The Case Of Aft Industries. 3 That The Appellant Craves For Leave To Add, Delete Or Modify Any Of The Grounds Of Appeal Before Or At The Time Of Hearing.

For Appellant: None (DR)(Adj. request is rejected)For Respondent: Shri Rohit Shukla, FCA
Section 92

…Thus the rate of 8% charged by the appellant was higher than the LIBOR rate. The appellant also relied upon a number of decisions, in particular the decision of ITAT, Chennai in the case of Siva Industries and Holdings Ltd vs ACIT, Central Circle-6(1) Chennai 46 SOT 112. In the appellate proceedings the appellant has cited some more decisions such as Four Soft Ltd vs DC IT in ITA No. 1495/Hyd 12010, Cotton Natural (I) Pvt Ltd. vs DCIT in ITA No. 5855/De1/2012. In the case of Siva Industries and Holdings Ltd. (supra), it has been held by the Hon'ble tribunal that once the transaction is between the assessee and th…

Marico Ltd., Mumbai vs. Addl.C.I.T. RG. 9(2), Mumbai

The appeal of the assessee is allowed

ITA 8858/MUM/2011[2007-08]Status: DisposedITAT Mumbai18 May 2016AY 2007-08
For Appellant: Shri P.J. Pardiwala and Shri Nitesh JoshiFor Respondent: Shri N.K. Chand-CIT
Section 254(1)

…has to be considered a valid base for determining ALP for foreign loans.If the loan taken and received are in foreign currency LIBOR would be the safest tool to justify or reject the claim of the AO/an assessee.In the cases of Siva Industries & Holdings Ltd.(46 SOT 112);Cotton Naturals (I) Private Ltd.(5855/ Del/2012)the issue under appeal has been dealt in details.In both the cases the Tribunal has held that in case of foreign currency Loan, LIBOR rates should to be applied.The Hon’ble Bombay High Court in the case of Tata Autocomp Systems Ltd.(ITA No.1320 of 2012 dtd.03.02.2015) has deliberated upon the issue.…