TaxTMI 
TaxTMI 
TaxTMI 
2022 (2) TMI 70
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....positions/ submissions of the Appellant. 2. The Ld. AO/ Learned Transfer Pricing Officer ('Ld. TPO') (following the directions of Ld. DRP) have red on facts and in law in enhancing the income of the Appellant by Rs. 29,20,68,757 2.1 The Ld. TPO erred on the facts and in the circumstances of the case and in law in framing the order u/s 92CA of the Income Tax Act, 1961 ('the Act') on findings which are erroneous in law, contrary to the facts and based on mere conjectures and surmises. 2.2. The Ld. TPO failed to appreciate the submissions made/ contentions raised by the Appellant and further erred in making several allegations, observations, assertions and inferences in the order, which were both factually incorrect as well as legally untenable. 3. The Ld. AO/ Ld. TPO (while following the directions of the Ld. DRP) erred in enhancing the income of the Appellant by INR 18,46,77,370 holding that the international transactions of the Appellant pertaining to Contract Software Development ('CSD') services and Information Technology enabled services ('ITeS') do not satisfy the arm's length principle envisaged under the Income Tax Act, 1961 ('the Act') and in doing so, have grossly e....
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....nal interest on the basis of average State Bank of India ('SBI') base rate plus 300 basis points and in doing so, have grossly erred in: 4.1 not appreciating that continuing debit balances do not constitute an 'international transactions' within provisions of section 92B of the Act; 4.2 exceeded his jurisdiction by undertaking adjustments on alleged excess credit period without the same being referred by the Ld. AO under Section 92CA(i) of the Act; 4.3 by charging interest on outstanding receivables, despite the fact that the Appellant had carried out working capital adjustment and hence, no further adjustment on account of interest on outstanding receivables was warranted; 4.4 not following the directions of Hon'ble Income Tax Appellate Tribunal in Appellant's own case for AY 2014-15 and AY 2015-16 with respect to adjustment of interest on delayed receivables. 5. Disregarding judicial pronouncements in India while making the transfer pricing adjustment with respect to provision of CSD / ITeS services and adjustment of interest on delayed receivables; 6. The Ld. AO has grossly erred in computing interest under section 234A and 234B of the Act; 7. The Ld. AO has grossl....
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..... TPO to exclude certain comparables already adjudicated by DRP/ITAT in Appellant's own case for prior years. iii. Directed the Ld. TPO to give working capital adjustment during the said years as well as in terms of the directions of the Panel during AY 2015- 16 applying the SBIPLR as interest rate, iv. Upheld the adjustment on account receivables categorised as a loan by the Ld. TPO. 2.1 Pursuant to the directions, the Assessing Officer passed the impugned final assessment order, wherein the transfer pricing adjustment was reduced to Rs. 29,20,68,757/-. Aggrieved, the assessee is before the Tribunal raising the grounds as reproduced above. 3. Before us, the assessee filed a paper-book containing pages 1 to 184. Both the parties appeared through videoconferencing facility. We have heard arguments of the parties in the light of the orders of the lower authorities and have perused the materials available on record. 4. The grounds No. 1 to 2.2 of the appeal are general in nature and, therefore, we do not require any specific adjudication on those grounds. 5. The ground No. 3 to 3.9 of the appeal relates to transfer pricing adjustment to CSD and ITes segment. 5.1 Brief facts q....
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....oth the segments independently is required to be remanded back to the ld. TPO as the entire exercise of benchmarking international transactions are to be redone. 23. Since the issue of benchmarking the international transaction is required to be examined qua both the segments i.e. CSDS and ITES separately and independently for factual analysis of taxpayer's TP study, the case is remanded back to ld. TPO who shall determine the ALP of international transactions of both the segments independently afresh after providing an opportunity of being heard to the parties. Consequently, the appeal filed by the taxpayer is allowed for statistical purposes." 5.7 Both the parties agreed that there is no change in functional profile of the assessee and nature of transactions in the year under consideration as compared to AY 2013-14, therefore following the finding of the Tribunal (supra), we set aside the finding of lower authorities and remit the matter back to the Learned AO/TPO for determining arm's-length price of international transaction of Contract Software Development services (CSD) and ITes in segregated manner complying the direction of the Tribunal (supra) in assessment year 2013-14....
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....eriod extended to the AEs. Thus, the approach by the assessee of aggregating the international transactions pertaining to sale of goods to AE and receivables arising from such transactions which is 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 receivables beyond 180 days constitutes an international transaction by itself. With the Assessee having already factored in the impact of the receivables on the working capital and thereby on its pricing/profitability vis-a-vis that of its comparables, any further a....