TaxTMI 
TaxTMI 
2016 (11) TMI 962
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.... (in short 'the Act'). 2. In this appeal, assessee has raised the following Grounds of appeal :- "1. On the facts and in circumstances of the case and in law, the ld. CIT(A) erred in confirming the action of Income-tax officer - 9(1)(1) "the AO"+ by treating the outstanding debtors balance as at the year-end as an 'international transaction' u/s 92B and thereby computed arm's length price u/s 92C(3) by making addition of notional interest. 2. The ld. CIT(A) failed to appreciate and ought to have held that the continuing debit balance with the Associate Enterprises ("AE") does not constitute an "international transaction" as defined u/s 92B of the Act. 3. Without prejudice to the above, since the Appellant does ....
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....cular, reference has been made to the decision of Tribunal for Assessment Year 2009-10 dated 31.10.2016 (supra) wherein the addition has been deleted based on an alternate plea of the assessee that even if the overdue receivables from the associated enterprises constitute an 'international transaction' within the meaning of Sec. 92B of the Act, if the margin of the assessee is calculated after reducing the notional interest, the resultant margin still compares favourably with the average margin of the comparables and thus, no further addition is required to be made. In this context, the following discussion in the order of Tribunal dated 31.10.2016 has been referred to :- "8. At the time of hearing, the learned representative for t....
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....he transaction can be said to be at arm's length and no separate adjustment is required to be made on this count. We find that such a plea of assessee was very much before the Assessing Officer also, as is evident from a copy of communication dated 21.12.2011 addressed to the Assessing Officer, a copy whereof is placed at pages 43 to 46 of the Paper Book. At pages 47 to 49 of Paper Book, the working of notional interest on delayed payment from associated enterprises and also the working of operating profit to operating income of the assessee and the comparable concerns have been placed. The aforesaid material brings out the assertions of assessee that even if the outstanding receivables from the associated enterprises constitute an 'interna....
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....tanding debtors (associated enterprises) balances is not tenable and is directed to be deleted. Thus, assessee succeeds on this aspect." 5. In the above background, the learned representative for the assessee has referred to the fact-situation in the instant assessment year. It is pointed out that in this year too, assessee has given credit period of 45 days to its associated enterprises and its is only for the payments received from the associated enterprises beyond the period of 45 days the Assessing Officer has made an adjustment on account of notional interest @ 6.19%, being short term deposit rate of State Bank of India, which was restricted to LIBOR + 200 basis points by the CIT(A). Similar was the situation in Assessment Year 2009....