Cinepolis India Private Limited Vs ACIT (ITAT Delhi)
ITAT Delhi Deletes ₹9.35 Cr TP Adjustment on Interest on Rupee-Denominated CCDs; PLR to Prevail Over LIBOR
Delhi Bench ‘H’ of the ITAT, in , deleted the transfer-pricing adjustment of ₹9.35 crore made on account of interest paid on compulsorily convertible debentures (CCDs) issued to a non-resident AE. The Tribunal held that where CCDs are denominated in Indian currency, the arm’s length interest must be benchmarked with reference to domestic Prime Lending Rate (PLR) and not LIBOR-based rates. Following the Special Bench decision in Hyderabad Infratech (P.) Ltd. [2025] 171 taxmann.com 385 (Hyd-Trib)(SB), the Tribunal rejected the TPO/DRP approach of applying foreign-currency benchmarks and reliance on Safe Harbour Rules without the assessee opting for them. Since the Assessee had paid interest at 12% and even the Safe Harbour computation would result in a higher permissible rate, the TP adjustment was held to be unjustified and was accordingly deleted. The appeal of the Assessee was allowed in full.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the assessee is directed against the order of the Assessing Officer dated 30.03.2021 passed u/s 143(3) r.w.s 143(3A) & 143(3B) of the Income Tax Act, 1961 (hereinafter ‘the Act’) arising out of order of Dispute Resolution Panel directions dated 17.11.2020 pertaining to Assessment Year 2016-17.
