Gulbrandsen Technologies (India) Private Limited Vs Additional/Joint/Deputy /ACIT/ITO-National Faceless Assessment Centre (ITAT Ahmedabad)
Fixed ECB Rate Accepted: ITAT Ahmedabad Resolves Transfer Pricing Dispute by Benchmarking at 5.35%
ITAT Ahmedabad “D” Bench, in Gulbrandsen Technologies (India) Pvt. Ltd. vs ACIT (NFAC) (ITA No. 160/Ahd/2022, AY 2017-18, order dated 23-12-2025), dealt with a transfer pricing adjustment on interest paid on ECB loans obtained from Associated Enterprises.
The assessee had availed ECB in FY 2005-06 at a fixed interest rate of 5.50%, duly approved by RBI and benchmarked on 6-month LIBOR + permissible spread prevailing at the time of the loan agreement. This fixed rate had been consistently accepted as ALP by the TPO in several earlier years (AYs 2008-09 to 2013-14 and 2016-17) without any adjustment.
For AY 2017-18, however, the TPO/DRP benchmarked the interest using LIBOR of the relevant year (5.23%), holding that RBI’s all-in-cost ceiling is not determinative for ALP, and made a TP adjustment of ₹4.96 lakh alleging excess interest.
While observing that the assessee had strong merit since the loan was at a fixed RBI-approved rate consistently accepted in the past, the Tribunal recorded the assessee’s voluntary offer to settle the dispute to avoid prolonged litigation. Accepting this fair concession, ITAT directed the AO/TPO to benchmark the ECB interest at 5.35% for the year under consideration.
The appeal was partly allowed, with a clear caveat that this one-time settlement would not operate as a precedent for other years or other loan transactions.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
