TaxTMI 
TaxTMI 
TaxTMI 
2022 (6) TMI 1386
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....essee did not charge any interest for trade receivables from Non-AEs also. 4. The AO / TPO / DRP erred in not considering the alternate ground of the assessee that even if interest is charged, such interest should only be at LIBOR and not SBI short term deposit rates. 2. The captioned appeal filed by the assessee is barred by limitation by 72 days. The assessee has moved a petition requesting the bench to condone the delay. In this connection, the assessee has filed an affidavit for condonation of the said delay wherein, it was, inter-alia, affirmed that due to lock down imposed by the central government as preventive measures to contain the spread of Covid-19 form 23/03/2020, caused the impugned delay in filing the appeal belatedly. We rely on Case law Collector Land Acquisition Vs. Mst. Katiji & Ors, 1987 AIR 1353 (SC) and University of Delhi Vs. Union of India, Civil Appeal No. 9488 & 9489/2019 dated 17 December, 2019, hold that such a delay; supported by cogent reasons, deserves to be condoned so as to make way for the cause of substantial justice. We accordingly hold that impugned delay in filing the appeal is neither intentional nor deliberate but due to the circumstance....
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.... It is pertinent to note that account payable to AE and its affiliates are Rs. 28,58,98,204 compared to account receivables from AE and its affiliates of Rs. 26,88,97,856. We find that the account payables are more than the account receivables from AE. Hence, charging of notional interest does not arise. Therefore, we are inclined to remit the issue back to the file of DRP to give their findings clearly in this matter after going through the material available on record and give their findings according to the provisions of the Income-tax Act." 6. The ld.AR thereafter has submitted that the DRP has recorded a finding in para 3.1.6 to 3.1.9 whereby the DRP has applied the interest rate as applicable to SBI short term fixed deposit as the Transfer Pricing Officer (TPO) is directed to calculate the interest @ 14.75% for the amount receivables. It was submitted that the interest rate charged by the SBI as short term fixed deposit cannot be charged and Libor +200% rate can be applied. "3.1.6 From the above, it is evident that the receivables are related to both domestic and international related parties. As held by the earlier DRP, the domestic receivables amounting to Rs. 6,60,32,0....
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....rest. Accordingly, the TPO is directed to adopt the SBI short term deposit interest rate @ 14.75% for the subject year as the ALP interest rate and re-compute the adjustment to be made to the total income. 3.1.9 With regard to the 90 days credit period, we note that the assesses has not submitted the Intercompany Agreements entered with the AEs related to the entities where there is receivable. There is no information before us to consider 90 days credit period for the receivables. In the absence of specific information as to credit period, it is reasonable to allow credit period of 30 days. We also note that the Hon'ble Delhi ITAT in the case of BT e-serve India Private Limited held that where the agreement does not specify any credit period for payment, then adopting a reasonable credit period of 30 days is justified. Accordingly, we consider that the TPO has allowed reasonable credit period of 30 days. However, the AO/TPO is directed to verify the delay invoice-wise and recompute the notional interest in the case of delay exceeding 30 days." 7. On the other hand, ld.DR has submitted that Libor +200% rate cannot be applied. He further relied upon the orders of lower auth....
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....yed outstanding by the lower authority. In the present case, the learned CIT (A) in the facts of present case, noticed that 60% of the total turnover were receivables from the AE alone, CIT(A) had held that the interest rate at 8% was reasonable . In the present case, the assessee has not filed its transfer pricing study at the outset. However, the assessee has only filed TP study to benchmark the transaction in respect of two segments i.e. ITeS and SDW only after receipt of show cause notice and no separate study was filed with respect to interest chargeable from the AEs. Assessee has not submitted any details of raising of invoices and subsequent receipts of the receivables from the AE despite the receipt of the show cause notice before the TPO. The TPO, in the light of non cooperation of the assessee and also no objection of the taxpayer had computed the interest by applying interest @ 12%. However, the said rate of 12% was reduced as mentioned herein above to 8% by the learned CIT (A). In our considered opinion, the application of 8% interest, though in strict sense, would be contrary to the principles of TP analysis as the transfer pricing officer was required to bring the com....