TaxTMI 
TaxTMI 
2017 (7) TMI 1188
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.... and modified the order of the CIT(A) as well as AO. 3. Counsel for the department has framed following substantial question of law no.1,2, & 3 which are common in both these appeals and the same reads as under:- "1. Whether the Tribunal was legally justified in deleting the addition of Rs. 87,12,49,257/- (In appeal no. 39/2017) and Rs. 1,10,87,46,190/- (In appeal no. 40/2017) being adjustment on account of compensation to be received by the assessee from its Associated Enterprise (AE) for creating marketing intangibles and promoting the brand name of its AE, specifically when the assessee company was promoting marketing intangibles of its AE though the brand belongs to the AE and not to the assessee and the products manufactured by the ....
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.... not framed in appeal no. 39/2017 which are reproduced as under:- "(4) Whether the Tribunal was legally justified in deleting the adjustment of Rs. 80,95,948/- made on account of Arm's Length interest to be charged by the assessee on the outstanding receivables from its AEs and in holding that notional interest on overdue receivables cannot be charged from AEs as assessee has not charged any interest from non-AEs ? (5) Whether the Tribunal was legally justified in holding that no interest is chargeable on receivables specifically when there is specific provision in the Income Tax Act, 1961 for this and deferred payment/receivables are termed as Capital Financing? (7) Whether the Tribunal was legally justified in deleting the disallowa....
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....n CIT Alwar vs. M/s Sakata Inx (India) Ltd. D.B. ITA No.72/2015 decided on 18.5.2017. 6. In that view of the matter, both the issues no.6 & 7 are answered in favour of the assessee and against the department. 6.1 Regarding issue no.1,2, & 3, tribunal while considering the expenses of the associated enterprise (AE) for creating marketing intangibles and promoting the brand name of its AE, it is for the marketing people to look new products which has competition in the national level or grass route level and International level. It is always for the Company to decide on what ratio the expenses are to be incurred at grass route and on that ratio for promoting their product. 6.2 In that view of the matter, unless the amount which was found t....
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....t or receivable or any debt arising during the course of business shall fall under the definition of international transaction. However, at the same time, these transactions of allowing credit period to AE of realization of sale proceeds is not an independent international transaction but is closely linked or a continuous transaction alongwith sale transactions to the AE. The same is also in consonance with rule 10A(d) as well as the concept of aggregation of closely linked transaction supported by the OECD transfer pricing guidelines. In the instant case, no adjustment has been made by the TPO in respect of sale transactions with the AEs and the ALP has been accepted. In light of that, there cannot be any adjustment in respect of the credi....