AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (3) TMI 585
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....ar 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 AE of the Appellant as unsecured loan and computing notional ,nlcresl on....
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....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 Assessing Officer has also proposed additions towards corporate tax issues like disallowance u/s.14A of the Act, disallowance u/s. 36(1)(va) and disallowance u/....
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....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 assessment order without giving effect to the DRP direction and subsequently passed rectification order u/s.154 on 24.05.2018 and deleted TP adjustment in relation to EDS segment. 7. Being aggrieved by final assessment order, assessee is in appeal before us. 8. Ground....
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....ATBANG -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 order of the authorities below submitted that AE receivables is separate international transaction even before amendment to section 92B and hence, any outstanding receivables beyond specified credit period should be benchmarked to determine ALP between the parties and said bench marking should be on the basis of rate of interest, if any, paid by assessee on its borrowings in Indian currency. Therefore, Assessing Officer as well as DR....
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....ere 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 international transactions for delay in realization of AE receivables. In order to impute interest on receivables, the benefit and detriment that it would be enjoyed and suffered by the parties to the transaction requires consideration. The assessee has allowed credit to its AE which is a non-resident, therefore the benefits that the AE derives from enjoying the long credit period for payment in respect of services rendered has to be measured ....
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....e 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 decision of Hon'ble Madras High Court in the case of CIT Vs. M/s.Industrial Security Intelligence India Pvt. Ltd., in TCA No.585 & 586 of 2015 dated 24.07.2015. 17. The learned DR, on the other hand, fairly accepted that the issue is covered in favour of the assessee by the decision of Hon'ble Supreme Court. Further, as a matter of fact, she has strongly supported the order of the Assessing Officer . 18. Having heard both sides and considered material....