TaxTMI 
TaxTMI 
2021 (3) TMI 585
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....g he total income of the Appellant for Assessment Year 2011-12 al INR 29,88,63,333 as against the returned income of INR 266,998,568. Grounds in relation to Transfer Pricing - Technical Support Services Segment 2. The AO inadvertently erred on the facts and in law, in computing the adjustment of INR 17,417,268 in relation to the international transaction of provision of engineering design, drawing and consultancy services in the impugned assessment order passed pursuant to the directions of the Dispute Resolution Panel dated 27 December 2017. Without apprcciating he fact that the said adjustment was deleted by the Ld. Transfer Pricing Officer (ld. TPO"). 3. The Ld. Assessing Officer and TPO, and Hon'ble DRP erred on the facts and in law in passing the assessment order pursuant to the directions of the DRP making alt adjustment of INR 4,241,096 by considering. The outstanding receivables from AEs as a separate 'international transaction" and accordingly determining the arms length price of the impugned international transaction. 4. The Ld. AO, Ld TPO and Hon'ble DRP erred on facts and in law in erroneously re-characterizing the outstanding receivables from....
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....tion under section 36(1)(va) read with section 43B of the Act if the said payments are made on or before the due date for filing the RoI for the subject assessment year . 8. The Id. AO and Hon'ble DRP erred on facts and in law by not giving the credit for Tax Deducted at Source (TDS") and Advance tax. 8.1 The ld. AO and Hon'ble DRP erred it not giving credit for TDS amounting to INR 21,616,883 and advance tax amounting to INR 1,190,000. 9. On the facts and in the circumstances of the case the AO erred in levying interest under section 234B and 234C of the Act." 3. The case has been selected for scrutiny and during the course of assessment proceedings, a reference u/s. 92CA(1) of the Act was made to Transfer Pricing Officer to determine ALP of international transactions with its AEs. During transfer pricing assessment proceedings, the TPO made upward adjustment of Rs. 1,75,55,986/- to the EDS segment and Rs. 42,41,096/- as interest on AE receivables. Based on the TPO order dated 29.01.2015, Assessing Officer has passed draft assessment order u/s. 143(3) r.w.s 92CA of the Act on 30.03.2015 and proposed following transfer pricing adjustments. The Assessin....
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.... - 6 Doosan Heavy Industries and Construction Co. Limited, Republic of Korea, Project Material 434,396,596 TNMM 6. The assessee has filed objections against draft assessment order passed by Assessing Officer before DRP-2, Bengaluru, and challenged various adjustments proposed by Assessing Officer, but could not succeed. The learned DRP has upheld adjustments proposed by the Assessing Officer towards upward adjustments on EDS segments and interest on AE receivables. The learned Assessing Officer has passed final assessment order on 22.02.2016 in pursuant to directions of DRP and made additions proposed by TPO towards international transactions . The assessee carried matter in appeal before ITAT., Chennai. The Tribunal vide its order dated 14.12.2016 has set aside the appeal to the learned DRP for fresh consideration. The DRP-2, Bengaluru vide its order dated 27.12.2017, in consequent to the directions of Tribunal has passed order u/s. 144C(5) of the Act and confirmed additions made by Assessing Officer towards upward adjustments on EDS segment and interest imputation on AE receivables. The Assessing Officer in pursuant to the directions of DRP has passed final asse....
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....2010-TIl-50-ITATBANG- TP) Dy. CIT v/s MIs.lndo American Jewellery Limited. ITA No. 5872/Mum/2009 Nimbus Communications Limited (ITA No.2361 (Mum.) of2007) Patni Computer System Limited (ITA No 426 & 1131/PN/06) No interest chargeable on outstanding balances: M/s. Logix Micro Systems Ltd VsAsstCIT(2010-TlI-50-ITATBANG -TP) Nimbus Communications limited ITA No.2361 (Mum.) of 2007) Patni Computer System Limited (ITA No 426 & 1131/PN/06) International rate should be used since transaction denominated in foreign currency: Pr. CIT vsTecnimontPvt Ltd., ITA 56 o120l6 (Bombay High Court) CIT vs. Cotton Naturals (I) Pvt. Ltd.. ITA No. 233/2014 Delhi HC Plintron Global Technology Solution Vs DCIT. ITA No. 532/Chny/2017 Siva Industries & Holdings Ltd. VsACIr (ITA No.148/Mds/2010 Sin Ventures Limited vs. ACIT (ITA No. 216l/Mds/20ll) Bharti Airtel Services Limited. ITA No. 58l6/Del/2012 Kohinoor Foods Ltd. Vs ACIT,ITA NO. 3688 to 3891IDel/2OI2 Foursoft Ltd. Vs Dy. CIT(ITA No. 1495/Hyd/20l0) 11. The learned DR , on the other hand, strongly supporting o....
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....ther note that once delay in realization of AE receivables constitute an international transaction, whether or not, assessee charges interest on receivables from AE or not, has no relevance because any understanding or arrangement between the assessee and its AE which is detrimental to Revenue and against the principles of scheme of Chapter X of the Act, cannot come to the rescue of the assessee. We further note that merely because there is no provision to chargeability of interest in the agreement between the assessee and its AE for delayed realization and merely because assessee does not pay any interest to the AE on the security deposit, the Revenue cannot be deprived on its legitimate share in accordance with the scheme of Chapter X of the Act and the purpose behind the Chapter X. Therefore, we are of the considered view that there is no error in the finding recorded by the AO as well as the TPO and the DRP to come to the conclusion that delay in realization of receivables from AE beyond credit period tantamount to indirect funding to AE which constitutes separate international transactions. 13. Having said so, let us examine what is appropriate rate for benchmarking interna....
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.... receivables beyond specified credit period constitute separate international transactions and the same needs to be benchmarked and hence there is no error in findings recorded by AO / DRP to hold that it is an international transaction. But when it comes to rate at which such interest is to be imputed, it is a well settled principle of law that international LIBOR rate is an appropriate rate for imputing interest on AE transactions, because transactions giving rise to receivables were denominated in foreign currency and accordingly, we direct AO to apply LIBOR+300 BPS for imputing interest on AE receivables. Accordingly, ground taken by assessee is partly allowed. 15. The next issue that came up for our consideration from ground no.7 of appeal is employees contribution to PF & ESI. The Assessing Officer has disallowed employees contribution towards PF & ESI on the ground that same has been remitted beyond due date specified under respective Acts. 16. The learned AR for assessee at the time of hearing submitted that this issue is squarely covered by the decision of Hon'ble Supreme Court in the case of CIT Vs. Vinay Cements Ltd. reported in 313 CTR 268 and also the decis....