2011 (1) TMI 68

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..... 2. The issue in appeal lies in a rather narrow compass of facts. The assessee is engaged in the business of marketing of airtime, available on television programs, cricket and other sports events, as also in the business of producing television serials. During the relevant previous year, the assessee had international transactions with one of its associated enterprises, i.e. World Sports Nimbus Pte Ltd Singapore, and the said associated enterprises had some overdue payments, to be made to the assessee. The assessee did not charge any interest on these overdue payments. The Assessing Officer referred these transactions, for ascertainment of arm's length price, to the Transfer Pricing Officer. While it was submitted by the assessee tha....

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....nsaction', on the other hand, is defined under section 92 B as a transaction between two or more associated enterprises, either or both of them are non-residents, "in the nature of purchase, sale or lease of tangible or intangible property, or provision of services, or lending or borrowing of money, or any other transaction having a bearing on the profits, incomes, losses or assets of such enterprises" as also transaction in the nature of cost or expense sharing arrangement. The question that we must address ourselves to is whether a continuing debit balance constitutes a 'transaction' in terms of the provisions of Section 92 B. 5. A continuing debit balance, in our humble understanding, is not an international transaction per ....

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...., in our considered view, a continuing debit balance per se, in the account of the associated enterprises, does not amount to an international transaction under section 92 B in respect of which ALP adjustments can be made. The factum of payment has to be considered vis-à-vis terms of payment set out in the transaction arrangement, and not in isolation with the commercial terms on which transaction in respect of which payment is, according to the revenue authorities, delayed. In any event, even when an ALP is made in respect excessive credit period allowed under the CUP method, stated by the TPO, the comparable has to be dues recoverable from a debtor and not a borrower. It appears that the TPO has adopted interest @ 2.19% LIBOR on ba....