TaxTMI 
TaxTMI 
2017 (9) TMI 1578
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....he adjustment of Rs. 6,36,894/- u/s 92CA(3) of the I.T. Act on account of interest on delay in recovering the outstanding trade receivables from the AE. 3. Facts of the case, in brief, are that the assessee company is engaged in the business of manufacturing of Thread Rolling Dies, Milled Flat Dies and Milled Ground Dies and sale of Screws. It filed its return of income on 25.09.2010 declaring total income of Rs. 68,20,911/-. During the year under consideration, the assessee company had entered into international transactions with the Associated Enterprises covered u/s 92CA of the I.T. Act. The Assessing Officer referred the matter to the Transfer Pricing Officer (TPO) in terms of section 92CA(3) of the I.T. Act. During the course of tra....
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.... accordingly passed the order by madding disallowance of Rs. 6,36,894/-. 6. Ld. counsel for the assessee at the outset referred to the decision of the Hon'ble Delhi High Court in the case of Pr.CIT vs. M/s Bechtel India Pvt. Ltd. reported in 2016-TII-37-HC-DEL-TP and submitted that the Hon'ble High Court in the said decision has held that the assessee being a debt free company therefore the question of receiving any interest on receivables did not arise. He submitted that the Special Leave Petition filed by the Department against the decision of the Hon'ble High Court has been rejected by the Hon'ble Supreme Court. 7. Referring to the decision of the Hon'ble Delhi High Court in the case of Pr.CIT vs. Kusum Health Care Pvt. Ltd....
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....wing, lending or guarantee, purchase or sale of marketable securities or any type of advance, payments or deferred payment or receivable or any other debt arising during the course of business. He accordingly submitted that the TPO was justified in making adjustment of Rs. 6,36,894/- u/s 92CA(3) on account of notional interest on delay in recovering the outstanding from the AE. 10. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the DRP and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. The only issue to be decided in the above ground is regarding as to whether the receivables beyond the period mentioned in the s....
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.... the Act of the expression „receivables‟ does not mean that de hors the context every item of „receivables‟ appearing in the accounts of an entity, which may have dealings with foreign AEs would automatically be characterised as an international transaction. There may be a delay in collection of monies for supplies made, even beyond the agreed limit, due to a variety of factors which will have to be investigated on a case to case basis. Importantly, the impact this would have on the working capital of the Assessee will have to be studied. In other words, there has to be a proper inquiry by the TPO by analysing the statistics over a period of time to discern a pattern which would indicate that vis-à-vis the rec....
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....decisions cited above, we hold that the TPO is not justified in making adjustment of interest amounting to Rs. 6,36,894/- on account of alleged delay in recovering the outstanding toward receivables from the AE as per the provisions of section 92CA(3) of the I.T. Act. The first issue raised by the assessee in the grounds of appeal is accordingly allowed. 12. The assessee has also taken an additional ground which reads as under :- "That the Ld. AO has erred in law in creating a demand of Rs. 1,62,330/- on account of dividend distribution tax by taking the surcharge @ 10% instead of 7.5% on final dividend declared in June 2010." 13. Ld. counsel for the assessee at the outset submitted that the facts pertaining to the additional....