India - Case Note: High Court Determines Interest Rate on Foreign Associated Enterprise’s Overdue Debt
- A. Dugar; L. Bhandari
- Asia-Pacific Tax Bulletin, 2019 (Volume 25), No 1
- 22 January 2019
This case note reviews the finding by the Bombay High Court in Principal Commissioner of Income-tax-13, Mumbai v. Tecnimont (P.) Ltd. that notional interest imputed for transfer pricing purposes in respect of the delayed recovery by an Indian resident taxpayer of outstanding receivables from a foreign associated enterprise is to be calculated on the basis of the interest rate that prevails in the associated enterprise’s country, and not on the basis of the State Bank of India’s prime lending rate.