Tribunal partially allows appeal, directs re-examination of medical equipment purchase. Penalty and interest claims dismissed.

The Tribunal partly allowed the appeal, directing the AO/TPO to re-examine the purchase of medical equipment issue and delete the adjustment for interest on receivables. The grounds regarding penalty proceedings under section 271(1)(c) of the IT Act and levy of interest under section 234B of the IT Act were dismissed.

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Issues Involved:

1. Adjustment on account of the purchase of medical equipment.
2. Adjustment on account of interest on outstanding receivables.
3. Initiation of penalty proceedings under section 271(1)(c) of the IT Act.
4. Levy of interest under section 234B of the IT Act.

Issue-Wise Detailed Analysis:

1. Adjustment on account of the purchase of medical equipment:

The assessee argued that the arm's length value of imported capital goods cannot be limited to customs duty and transportation costs alone. The TPO had determined the ALP of the purchase of fixed assets as nil, which was contested by the assessee. The assessee provided customs documentation but failed to provide contemporaneous evidence of the cost of the goods in the hands of the AE. The DRP held that the ALP and WDV for calculating depreciation should be limited to customs duty and transportation costs. The Tribunal restored the issue to the AO/TPO to allow the assessee another opportunity to substantiate its case with evidence regarding the purchase cost in the hands of the AE or a valuer's report.

2. Adjustment on account of interest on outstanding receivables:

The assessee contended that interest on outstanding receivables should be subsumed in the working capital adjustment provided. The DRP had previously deleted such adjustments in the assessee's own case for AY 2009-10. The Tribunal noted that the average payment period to AEs was significantly longer than the collection period, and no interest was charged from third parties for delayed payments. Citing the Delhi High Court decision in Kusum Healthcare Private Limited, the Tribunal held that no separate adjustment for interest on receivables was warranted, directing the AO to delete the addition.

3. Initiation of penalty proceedings under section 271(1)(c) of the IT Act:

The Tribunal found this ground to be premature and dismissed it at this juncture.

4. Levy of interest under section 234B of the IT Act:

The Tribunal noted that the levy of interest under section 234B is mandatory and consequential, thus dismissing this ground of appeal.

Conclusion:

The Tribunal partly allowed the appeal for statistical purposes, directing the AO/TPO to re-examine the purchase of medical equipment issue and delete the adjustment for interest on receivables. The grounds regarding penalty proceedings and interest levy were dismissed.

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