Arm’s Length Interest Rate Determined by Reference to Borrower’s Country

Journal
India
Asia-Pacific Tax Bulletin 2017 (Volume 23), No. 5
This case note explains the Bombay High Court’s decision in Commissioner of Income Tax v. The Great Eastern Shipping Co. Ltd., which held that, where an Indian company advances a loan to a foreign associated enterprise, the arm’s length interest rate is to be ascertained by reference to the relevant rate of interest in the borrower’s country, and not that in India.