2019 (11) TMI 1817 - AT - Income Tax

Transfer pricing adjustment on interest receivables deleted as no ITES service receivables found in records

ITAT Delhi held that transfer pricing adjustment on interest receivables was not warranted as there were no receivables related to ITES services per the ... TP adjustment on account of the interest receivables - receivables in relation to ITES services or not? - HELD THAT:- From the perusal of the order passed in the Assessment Year 2014-15, it is seen that the issue involved in the present assessment is identical. Besides, the contentions of the Ld. DR does not sustain as there is no receivables in relation to ITES services as per the records. Thus, we set aside the finding of the DRP which was complied by the Assessing Officer and delete the adjustment on account of the interest receivables Therefore, Ground of assessee is allowed. Issues involved:1. Appeal against order u/s 144C(1) of the Income Tax Act, 1961 for assessment year 2015-16.2. Transfer pricing grounds.3. Consequential grounds of appeal.Detailed Analysis:Issue 1: Appeal against order u/s 144C(1) of the Income Tax Act, 1961 for assessment year 2015-16.The appeal was filed against the order passed by ACIT, Circle 4(1), Gurgaon. The appellant challenged the validity of the order and subsequent adjustments made by the authorities.Issue 2: Transfer Pricing GroundsThe appellant contested the rejection of economic analysis and the charging of interest on delayed receivables by the authorities. The Tribunal referred to previous judgments in the appellant's favor for assessment years 2012-13, 2013-14, and 2014-15. It was held that no separate adjustment on account of interest receivables is required when a working capital adjustment has already been made. The Tribunal emphasized the need for proper inquiry by the TPO to discern a pattern indicating an international transaction. The Tribunal allowed the appeal, setting aside the adjustment on account of interest receivables.Issue 3: Consequential Grounds of AppealThe appellant raised issues related to computational errors in the order, initiation of penalty under section 271(1)(c) of the Act, non-credit of Foreign tax credit, and levying of interest under sections 234A, 234B, and 234C of the Act. However, as the primary issue regarding interest receivables was decided in favor of the appellant, these consequential grounds were not adjudicated upon at that juncture.The Tribunal allowed the appeal of the assessee, partly, for statistical purposes, and dismissed the stay application. The decision was based on the findings that the interest receivables issue was identical to previous assessments and that no receivables related to ITES services were found in the records. The Tribunal emphasized the importance of proper inquiry and analysis by the TPO to determine the existence of an international transaction.