TaxTMI 
TaxTMI 
2018 (1) TMI 240
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....es (AE). Therefore, he made reference to the transfer pricing officer (TPO) for ascertaining the arms length price (ALP) of the IT. s. 2.1. During the Transfer Pricing (TP) proceedings the TPO found that the assessee has carried out certain IT. s with its AE. s. He TPO observed that the margin earned by the assessee on cost was higher than the average margin of the comparable companies on the cost, that the IT. s entered into by the assessee were at arm's length. 2.2. He further observed in many occasions there was considerable delay in receiving the payment from the overseas parties. He directed the assessee to file details in that regard and observed that the delay in realization in case of non-AE. s was greater than the delay in realization in case of the AE. s. He found that the average delay in case of AE. s was 290 days (weighted average delay-348 days), that the average delay in case of non-AE. s 340 days (weighted average delay-477 days). He found that the assessee has not charged interest for delayed payment from the AE. s as well as the non-AE. s. It was claimed befor the TPO that no adjustment was required to be made for interest on delayed debt from the AE. s. It was ....
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.... s on the invoices realized after a period of 170 days, that an interest free credit period of 170 days was to be allowed to the AE. The DRP directed the TPO/AO to compute the figure of interest accordingly. 2.4. It was brought to our notice that identical question was dealt with by the Tribunal in assessee's own case for the AY. (ITA/802/Mum/2014/dtd. 29. 07. 2016). We find that following GOA. s were filed by AO before the Tribunal: "Whether on the facts and in the circumstances of the case and in law, the Hon'ble DRP was correct in deleting the addition of Rs. 33, 90, 931 on account of notional interest due to delayed recovery of trade debts from AE by accepting the assessee's contention without verifying factual accuracy of the same. Whether on the facts and in the circumstances of the case and in law, the Hon'ble DRP was correct in deleting the addition of Rs. 33, 90, 931 on account of notional interest due to delayed recovery of trade debts from AE without appreciating the fact that the assessee by its own admission dated 22. 12. 2013 (Annexure-1 is made part of this authorization), has mentioned that in the case of non-AE if two cases of huge delay are excluded, the ave....
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.... the issue at hand for the A. Y. 2009-10. 6. 3 Let us now examine the facts in the present case. In a case like this the proper method is to take a simple average. If we take a simple average then there has been a delay of 132 days in the case of AE and 130 days in the case of Non-AEs in realization of the export proceeds. Thus there is uniformity in the act of the assessee in not charging interest from both AE and Non-AE debtors for delayed realization of export proceeds. 7. Respectfully following the judgment of Hon'ble Bombay High Court in the case of Indo American Jewellery Ltd. the appeal filed by the Revenue is dismissed." Considering the above, we decide first ground of appeal in favour of the assessee , as there is 'uniformity in the act of the assessee in not charging interest from both AE and Non-AE debtors for delayed realisation of export proceeds. ' 3. Recomputation of deduction u/s. 10AA of the Act is the subject matter of the next ground of appeal. During the assessment proceedings, the AO found that the assessee-company had declared total income of Rs. 4, 77, 240/-in the return of income filed on 21. 09. 2010, after claiming deduction of Rs. 80, 85, 924/-u/....
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.... of diamond studded jewellery. Its claim for deduction u/s. 10A was restricted by CIT(A) to the extent of receipt of foreign exchange uptil 30-9-2008. It was argued by ld. AR that RBI has already issued circular in respect of units situated in SEZ(Special Economic Zone), relaxing the realisation to the exports proceeds. Reliance was also placed on the decision of coordinate bench in the case of Tara Jewels Exports Pvt. Ltd. , ITA No. 662/Mum/2012, dated 29-1-2014, wherein it was held that after the RBI have clarified that it has not stipulated any time period for the realisation of sale proceeds for SEZ units, it can only be considered as having allowed and indefinite period for the same. Consequently, it cannot be said that the condition of Section 10A was not satisfied. 4. We have considered rival contentions and found that deduction u/a. 10A was restricted to the extent of export receipts realised uptll 30-9- 2008. The assessee company is situated In SEZ, the RBI, the Competent Authority, u/s. 10A(3) of the Act had vide its Circular bearing A. P. -(DIR Series) Circular No:91 dated 1st April, 2003 relaxed the realization of export proceeds, which reads as under: "In terms o....
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....ight and insurance charges. 8. The submission which has been urged on behalf of the Revenue is that while freight and insurance charges are liable to be excluded in computing export turnover, a similar exclusion has not been provided in regard to total turnover. The submission of the Revenue, however, misses the point that the expression "total turnover" has not been defined at all by Parliament for the purposes of section 10A. However, the expression "export turnover" has been defined. The definition of "export turnover" excludes freight and insurance. Since export turnover has been defined by Parliament and there is a specific exclusion of freight and insurance, the expression "export turnover" cannot have a different meaning when it forms a constituent part of the total turnover for the purposes of the application of the formula. Undoubtedly, it was open to Parliament to make a provision to the contrary. However, no such provision having been made, the principle which has been enunciated earlier must prevail as a matter of correct statutory interpretation. Any other interpretation would lead to an absurdity. If the contention of the Revenue were to be accepted, the same expre....