Extended credit period to AE attracts TP adjustment

CA Manish Soni Context: The amendment made by Finance Act 2012 (‘FA 2012’) by way of explanation to Sec. 92B w.r.e.f. 1 April 2002 included many transactions in the definition of international transaction for Transfer Pricing (‘TP’) purpose. In this case, the ITAT ruled that extended credit period allowed to the Associated Enterprises (‘AE’) amounted to short term funding without interest and thus attracted TP adjustment on account of notional interest from such short term funding. TPO made adjustment considering interest rate @18.816% but DRP reduced it to ...