Income Tax Appellate Tribunal Chennai M/S. Sundaram Fasteners,Chennai vs Acit, Corporate Circle6(1), Chennai on 8 November, 2024 आयकर अपीलीय अिधकरण, 'डी' यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL 'D' ी एबी टी. वक , ाियक सद एवं ी अिमताभ शु ा, लेखा सद के सम BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER IT (TP) A Nos.32 & 33/Chny/2021 िनधा रण वष /Assessment Years: 201617 & 201516 M/s.Sundram Fasteners Ltd., v. The ACIT, 98A, 7th Floor, Corporate Circle6(1), Dr.Radhakrishnan Salai, Chennai. Mylapore, Chennai600 004. [PAN: AAACS 8779 D] (अपीलाथ /Appellant) ( यथ /Respondent) अपीलाथ क ओर से/ Appellant by : Mr. Vikram Vijayaraghavan, Advocate यथ क ओर से /Respondent by : Ms. C.Vatchala, CIT सुनवाईक तारीख/Date of Hearing : 27.08.2024 घोषणाक तारीख /Date of Pronouncement : 08.11.2024 आदेश / O R D E R PER ABY T. VARKEY, JM: These are appeals preferred by the assessee against the separate impugned orders of the Assessing Officer (hereinafter in short 'the AO') dated 29.03.2021 / 31.03.2021 pursuant to the directions of the Dispute Resolution Panel (hereinafter in short 'the DRP') both dated 05.02.2021 and pertain to Assessment Years (hereinafter in short 'AY') 201617 & 201516 respectively. IT(TP)A Nos.32 & 33/Chny/2021 (AY 201617 & 201516) M/s.Sundram Fasteners Ltd. :: 2 :: 2. Both parties agreed that issues permeating in both the assessment years are similar and identical except that of ground no.3, 5, 9, 12 & 13 for assessment year 201617, which will be discussed at the last. Therefore, we take up lead appeal for assessment year 201516 first and decision of which will be followed mutatis mutandis for assessment year 201617. IT(TP)A No.33/Chny/2021: (AY 201516): 3. Ground Nos.2 to 2.1(a), 2.3 and 2.4 relates to the issue of TP adjustment towards international transactions amounting to Rs.6,54,47,655/. The relevant observations of the TPO is found at page 11 under para 7 of the TPO order, wherein he observes as under: "The crux of the issue is the interest on the loans given is waived by the assessee though the loans charged with 3M EURIBOR + 3.5% p.a (3.66%) interest. It means the assessee has not been compensated by the AEs for the loans given to them. Since the interest on loan is not received by the assessee at the rate of 3M EURIBOR + 3.5% p.a the transaction cannot be considered at arm's length. The assessee has charged interest @9% for the loan given to one of the related company i.e. Windbolt GmbH, Germany, which is a joint venture. The assessee also given toits own subsidiaries which are also in Germany without any interest (waived). So the interest rate @9% can be considered as internal CUP. further, The assessee has not replied to the specific query that why interest charged to the joint venture company located in Germany should not be treated as a internal CUP for the loans given to its subsidiary which is also in Germany. So as proposed in the showcause notice the interest rate @9% is adopted as Arm's Length interest for the loans waived by the assessee and LIBOR + 350 bps (4.085%) IT(TP)A Nos.32 & 33/Chny/2021 (AY 201617 & 201516) M/s.Sundram Fasteners Ltd. :: 3 :: rate of interest is adopted as Arm's Length interest for the loan waived by the assessee to its AE viz., Sundram International Inc., USA. The assessee itself admitted in its reply to the show cause notice that this AE viz., Sundram International Inc, USA is not in operation for many years and its financial position is not good. Hence this justifies the usage of this high interest rate of LIBOR + 350 bps (4.085%). The TPO thus ordered adjustment to be made in respect of loan given to its AE's as under: No Loan granted Amount Rate of Interest Amount To Interest (in Rs.) 1 Peiner 68,0