AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 85
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....) has erred both in law and on facts in upholding addition of Rs. 12,74,485/- by bench marking the receivables on transactions of sales/services of the appellant company by adopting the prime lending rate of SB1 plus markup of 300 basis points. 1.1 Thatthe learned Commissioner of Income Tax (Appeals) has failed to appreciate that after having determined the ALP in a sale/service transaction, it cannot be assumed that separate adjustment is required in respect of interest therefrom, since outstanding net receivables emanate from the service sales transaction itself. 1.2 Thatfurthermore the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that since appellant is also not charging any interest on overdue debts fro....
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....laring total income of Rs. 4,66,13,010/-. The case was selected for scrutiny and notice under section 143(2) of the Income-tax Act, 1961 (in short 'the Act') was issued and complied with. The Assessing Officer observed International transaction carried out by the assessee and referred the matter of determination of arm's-length price of the International transaction to the Ld. Transfer Pricing Officer (in short "TPO". The Ld. TPO noted following international transactions carried out by the assessee and method used for determining the arm's-length price by the assessee as under: Sl. No. Head Value Method Used for Determining the price 1 Import of Raw Materials 294,33,452 TNMM 2 Export of Goods 17075,32,757 TNMM 3 Imp....
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....nd adopted average prime lending rate of SBI of 11.80% with an additional 300 basis points (to take into account other factors/reasons) as the right benchmark for the interest. The learning TPO accordingly proposed adjustment of Rs. 41,44,702/- 2.4 After incorporating, that adjustment proposed by the Ld. TPO in his order dated 20/01/2014, the Assessing Officer passed a draft assessment order on 17/02/2014. As no objections were filed before the Ld. Dispute Resolution Panel, within the stipulated period, the Assessing Officer passed final assessment order on 18/03/2014 computing the total income as under: (All figures in Rs.) A Income from business/as declared) Profit of the business (as per the computat....
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....the Ld. counsel of the assessee made detailed arguments and filed written submissions, which are reproduced as under: "3 Contention of Appellant Company in detail: 3.1 Receivables are not an international transaction per-se * 'Receivable' mentioned under Explanation to Sec. 92B of the Act does not mean 'accounts receivable' therefore outstanding balance cannot be treated as an independent transaction. * 'Receivable' under clause (c) of explanation to section 92B of the Act apply to loan funds only therefore charging of interest is applicable only in the case of lending or borrowing of funds and not in the case of commercial over-dues. * 'Receivable' does not mean that de hors the context every 'receivab....
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....7] - ITA No 765/2016 (Del) Pr CIT vs. Kusum Healthcare (P) Ltd. - 68 SOT 259 (Mum) Goldstar Jewellery Ltd vs. JCIT - 80 taxmann.com 12 (Bang) ACIT vs. Millipore (India) Ltd - 97 taxmann.com 668 (Bang) Adcock Ingram Ltd vs. Dy CIT 3.3 No interest has been charged on overdue debts from third party, appellant is a debt free company and not paving any interest on funds utilized in business: * Overdue debts in respect of AEs and independent third parties are of similar transaction. The appellant is also not paying any interest on the supplier credit that it is availing from domestic as well as from AEs. * Appellant is a debt free company and is not paying interest on any funds utilized by it in its business activities. * Reliance....
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.... re-characterized the transaction. Reliance is placed on the judgment by Hon'ble Delhi High Court in the case of CIT vs. EKL Appliances Ltd reported in 345 ITR 241. * Reliance is also placed on following judicial pronouncements: - 91 taxmann.com 443 (Del) Motherson Sumi Infotech & Designs Ltd vs. Dy CIT - - ITA No 765/2016 (Del) Pr CIT vs. Kusum Healthcare (P) Ltd. 3.5 In alternate- LIBOR rate be applied in for computation of interest against SBI PLR rate applied by AO. * Since AE is not based in India for benchmarking, SBI PLR rate in not a valid comparable. Rates should be as per the prevalent borrowing rates in the other countries, which is LIBOR. * Indian interest rates for the purpose of benchmarking of lending or borrowi....