TaxTMI 
TaxTMI 
2020 (10) TMI 294
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....(A)'] has erred both on facts and in law in partly allowing the addition/adjustment made by the Assessing Officer (AO)/Transfer Pricing Officer (TPO) of Rs. 446,726/- to the arm's length price of the 'international transactions' on account of notional interest on outstanding balance of receivables from Associated Enterprises ('AE'). 2. That the learned CIT(A) and the learned AO/TPO has erred in not appreciating that outstanding balance of receivables from the AE is not an international transaction as it does not impact the profits, incomes, losses or assets of the appellant. 3. That the learned CIT(A) further erred in law in concluding that characterizing of outstanding account receivables as loan is permitted under section 92B. 3.1 T....
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....rred on facts and in law in directing the AO to benchmark notional interest on account receivables at the rate of LIBOR plus 300 basis points without giving any basis of adding 300 bps to the LIBOR rate.' 3. The brief facts of the case show that Assessee Company is engaged in the business of selling of hardware for Internet and satellite business and also in the field of providing training. During the year the assessee has reported three international transactions. The transaction of manpower recruitment related services and manpower related services provided to its associated enterprise was benchmarked adopting cost plus method and stated that transactions are at arm's-length. With respect to the employee -related transactions no specifie....
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....ion 144C of the income tax act was passed on eighth of April 2015 determining total loss of the assessee at Rs. 79,604,067/- again the returned income of the assessee of loss of Rs. 8,00,50,793 as per return filed on 29/11/2011. 5. Assessee aggrieved with the order of the learned assessing officer preferred an appeal before the learned CIT - A wherein the outstanding overdue receivable from associated enterprise Leon 15 days agreed was held to be a international transaction. However the learned CIT A agreed that for benchmarking such loan only LIBOR should be applied as the outstanding receivable is in US dollars. He directed the TPO/AO to apply LIBOR Rate + 300 base points on outstanding loan instead of SBI base rate +300 base points appl....
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.... also submitted that assessee is charging Cost Plus margin, had the interest cost been on assessee, then it would have been chargeable to AE even if outstanding is received within agreed period. He submitted that therefore it is irrelevant here wither the assessee pays interest or is a debt free company. He submitted that the facts of the case are quite different then the decision cited by the learned that AR. 8. We have carefully considered the rival contention and perused the orders of the lower authorities. In the present case the service agreement clearly says that the amount of payment is to be made by the associated enterprises to the assessee within 15 days. Such payment was not made within that period but beyond that. The learned a....
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....s-length price of the international transaction of provision of the services. Therefore, outstanding debtors beyond an agreed period is a separate international transaction of providing funds to its associated enterprise for which the assessee must have been compensated in the form of interest at LIBOR + 300 BPS as held by CIT (A) . 9. Coming to the various decisions relied upon by the learned authorised representative we find that they are on different facts. The decision of the honourable Delhi High Court in ITA number 765/2016 dated 24th appeal 2017 in case of Kusum healthcare private limited (supra), para number eight clearly shows that assessee has undertaken working capital adjustment for the comparable companies selected in its tran....