Case Law Details
Ambuja Cement Limited Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that payments under the BBCD arrangements were made with specific regulatory approval prescribed by the RBI hence that approval can also be viewed in support of the transaction price as an arm’s length price.
Facts-
During the course of proceedings before the Transfer Pricing Officer, to whom the ascertainment of Arm’s Length Price of the international transactions entered into by the assessee with its AEs was referred, it was noticed that the assessee made instalment payments for two ships under Bare Boat cum Charter Demise (BBCD) from its AE- namely Cement Ambuja International Limited, Mauritius (CAIL).
These two vessels were self-loading bulk cement carriers, and the entire arrangement was routed through, and duly approved by, the RBI. It was noted that under the terms of arrangement, the assessee company was to pay to CAIL ten half-yearly instalments for both of these vessels, and the implicit interest rate, under the arrangement, was 7.5% p.a.
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