2020 (2) TMI 1611

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....he assessee has challenged the Transfer Pricing Adjustment at Rs. 1,90,18,524/- by treating the receivables outstanding beyond 60 days from associated enterprises (AEs) as deemed loan and charging notional interest on the basis of LIBOR plus 300 basis points. 2. Before us, it has been submitted by the ld. counsel that in assessee's own case for the Assessment Year 2014-15, the Tribunal vide order dated 31.12.2018 in ITA No.6751/Del/2008 has held that no Transfer Pricing Adjustment on account of interest on receivables can be made, because in the computation of working capital adjustment, such interest receivables gets subsumed following the judgment of Hon'ble Delhi High Court in the case of PCIT vs. Kusum Healthcare Pvt. Ltd. in ITA No.....

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....has been made, then no separate adjustment is called for on interest of receivables. The Tribunal has followed the judgment of Hon'ble Delhi High Court in the case of PCIT vs. Kusum Healthcare Pvt. Ltd. (supra). The relevant observation and the finding of the Tribunal in assessee's own case read as under: "4. Briefly stated, the appellant company is a subsidiary of EGN BV, Netherlands. The appellant company is primarily engaged in providing Information Technology enabled network management / technical support and other back-office support services to its Group Company. It also undertakes software development services for developing software applications which are used within the Orange Group. 5. The international transacti....

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.... the TPO for taking SBI PLR as CUP but directed to add 300 basis points to the same. The DRP further directed to take 60 days to be reasonable period beyond which interest must be charged on outstanding receivables. Following the directions of the DRP final addition was made at Rs. 1,45,27,731/-. 9. Aggrieved by this the assessee is before us. 10. It is the say of the ld. AR that interest on receivables is not an international transaction as the interest proposed to be charged, if any, is already built in the sale price and thus no interest needs to be computed on the outstanding receivables from the AEs. The ld. AR further pointed out that the operating profit margin has not been disturbed by the Assessing Officer/TPO. Th....

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....undoubtedly inextricable connected is in accordance with established TP principles as well as ratio laid down by the Hon'ble jurisdictional High Court in the case of Sony Ericsson Mobile Communication India (P.) Ltd. (supra). For the aforesaid reasons, we allow the appeal of the assessee. It ordered accordingly." 13. This decision of the coordinate bench has been affirmed by the Hon'ble High Court of Delhi in ITA No. 765/2016 vide order dated 24.04.2017. The relevant findings of the Hon'ble High Court read as under: 11. The court finds that the entire focus of the AO was on just one AY and of receivables in relation to that AY can hardly reflect a pattern that would justify a TPO concluding that the figure of r....