2017 (10) TMI 111

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....ted by the Company under normal trade practices and once working capital adjustment is granted no separate adjustment on account of outstanding receivable is maintainable. The Ld. AR further submits that the assessee is also challenging Ground No. 14 & 15 related to depreciation. (Credit Tax). 3. As per the submissions made by the Ld. AR Ground No. 1 to 3 and Ground No. 6 to 13 & 16, 17 are not contested by the Ld. AR. Therefore, the same are dismissed. 4. "The contesting grounds in the assessee's appeal are as follows:- "1. That on facts and in law, the DRP/TPO/A.O have grossly erred by charging interest on credit period granted by the company under normal trade practices by: i. Identifying outstanding receivables a....

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.... and circumstances of the case and in law, the Ld. Assessing Officer has erred in computing the demand of Rs. 11,29,66,370/-." 5. The brief facts of the case are that Teradata Group Pvt. Enterprises provides Data Warehousing Solutions to customers around the world. As per the TP study submissions following additional functions are carried out by the assessee: 1. Serving as contract R & D Facility at Sikandarabad for Teradata- US which is global owner of all Teradata Intellectual property. 2. Posting Global Consulting Centers at Mumbai & Pune, Professional Support Services are provided and other non Indian Teradata Affiliates. 3. Teradata-US and Teradata Irland engaged TDI as contract manufacturing to build the ....

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....r. 8. The Ld. DR submitted that the assessee's reliance on the case of Kusum Health Care Pvt. Ltd is not just and proper and the Ld. DR relied upon the order of McKinsey Knowledge Centre (P) Ltd. Vs. DCIT Circle-16(2), New Delhi 2017. In para 63 it is held as under:- 60. "Adjustment is in respect of international transaction of rendering services to the AE. Interest for the credit period allowed as per the Agreement is factored in the price charged for the rendering of services. In the oppugnation, the non-realization of invoice value beyond the stipulated period is a separate international transaction, whose ALP is required to be The Delhi Bench in Ameriprise India (P.) Ltd. (supra) and Techbooks International (P.) Ltd. (supra)....

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....s ordinarily computed by considering the average of the opening and closing values of inventories, receivables and payables. A transfer pricing adjustment on account of interest on delayed realization of invoice value has nothing to do with the closing or opening values. It depends on the period of realization on transaction to transaction basis. To put it differently, suppose an invoice is raised on 1st May; period allowed for realization is two months; and the invoice is actually realized on 31st December. Notwithstanding the fact that interest on such late realization would become chargeable for a period of 6 months (from 1st July to 31st December), but the amount of invoice will not be receivable as at the end of the financial year on 3....

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....lysing the statistics over a period of time to discern a pattern which would indicate that vis-a-vis the receivables for the supplies made to an AE, the arrangement reflects an international transaction intended to benefit the AE in some way. 11. The Court finds that the entire focus of the AO was on just one AY and the figure of receivables in relation to that AY can hardly reflect a pattern that would justify a TPO concluding that the figure of receivables beyond 180 days constitutes an international transaction by itself. With the Assessee having already factored in the impact of the receivables on the working capital and thereby on its pricing/profitability vis-a-vis that of its comparables, any further adjustment only on the b....