TaxTMI 
TaxTMI 
2022 (7) TMI 260
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....ch says that outstanding receivables are in nature of capital financing and is an international transaction. 2. Whether on the facts and circumstance of the case and in law the Ld. CIT(A) was correct in holding that the amounts outstanding as receivable with foreign AE was not a separate international transaction, especially when about 65% of the sale of the assessee to its foreign AE is lying in debts and no such agreement of sale is furnished." 3. Brief facts of the case are that during the year under consideration, assessee company is engaged in providing business process outsourcing services i.e. collection/account receivable management and customer retention services to its Associated Enterprises. The assessee in order to d....
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....bove analysis of the assessee but held that receivables constitute separate international transactions under section 92B read with section 92F of the Act and Rule 10B of the Rules. 7. The TPO in his impugned order dated 30/09/2016 has treated the delayed payments received by the assessee from its various AEs as unsecured loan advanced to the AEs and charged a rate of interest based Libor plus 300 bps i.e. 4.78% on receivables outstanding for more than 54 days. 8. The TPO has considered delay in payment for receivables as an international transaction in view of the amendment in section 92CA (2A) of the Act introduced by Finance Act 2011 w.e.f. 01.06.2011 and retrospective amendment to section 90CA(2B) introduced by Finance Act 2012 w.e....
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....AEs by way of delay in receipt of receivables. In view of the same the TPO held that even otherwise delay in receipt of receivables is an international transaction under section 92B(1) read with clause (v) of section 92F of the Act. The TPO bench marked the interest rate based on the Libor and added 300 basis points to take into account various factors/risks undertaken by the assessee. 10. Upon assessee's appeal, Ld. CIT(A) found the issue covered in favour of the assessee as under:- "11. The issue is covered in favour of the assessee by the order of the Delhi High Court in the case of Kusum Healthcare Pvt. Ltd. vs. ACIT ITAT (sic) 6814/Del/2014 dated 26.03.2015 where it was held as follows:- "8. Aggrieved by the sa....
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....led transactions. In particular, it was noted under para 3.49 that "a significantly different level of relative working capital between the controlled and uncontrolled parties may result in further investigation of the comparability characteristics of the potential comparable." Mr. Singh submitted that the ITAT erred in disagreeing with the TPO, who had characterised the outstanding receivables as an international transaction by itself which required benchmarking. 10. The Court is unable to agree with the above submissions. The inclusion in the Explanation to Section 92B of the Act of the expression "receivables" does not mean that de hors the context every item of "receivables" appearing in the accounts of an entity, which may hav....
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.... impugned order of the ITAT giving rise to any substantial question of law for determination. The appeal is, accordingly, dismissed." 5.12 The material facts of the case are the same in the instant year also. In accordance with the principle of consistency and respectfully following the order of the Hon'ble Delhi High Court in the case of Kusum healthcare Pvt. Ltd. (supra) it is held that the appellant 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 adjustment only on the basis of the outstanding receivables would have distorted the picture and re-characterised the transaction. In view of the same the transfer....