2023 (5) TMI 64

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.... assessment year 2011-12, under section 143(3) r.w.s. 92CA(3) r.w.s. 144C(5) of the Income Tax Act, 1961 (for short "the Act") assessee filed this appeal. 2. Briefly stated relevant facts are that the assessee is engaged in the business software development, lab services and sale of oligonucleotides and Microarray chips. For the assessment year 2011-12 it filed the return of income on 30/11/2011 declaring an income of Rs. 49,83,773/-. Since the assessee conducted certain international transactions with its Associated Enterprises (AEs), determination of the Arm's Length Price (ALP) of such transaction was referred to the learned Transfer Pricing Officer (TPO). By order dated 30/12/2014, learned TPO suggested upward adjustment of Rs. 14,10....

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.... cost basis. Learned TPO, however, opined that no independent party would render such services without any markup. On this assumption, learned TPO proceeded to make the addition of Rs. 27,38,773/- on an estimate of 10%. 6. Before the learned DRP, the assessee's case was same but the learned DRP, without going into the fact whether or not the assessee actually received any markup, followed the view taken by the Co-ordinate Bench of this Tribunal in the case of M/s. Kirbi Building Systems India Ltd., in ITA No. 1759/Hyd/2012 and ITA No. 262/Hyd/2014 for the assessment year 2008-09, upheld the levy of the reimbursement cost at 5%. 7. It is submitted before us that there is no dispute that the assessee and Ocimum Biosolutions (Inc) are AE....

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.... the learned Assessing Officer to verify the facts and if this amount is not routed through the P&L Account, and remained only a balance sheet entry, then the addition shall be deleted. Grounds No. 7 to 13 are answered accordingly. 11. Now coming to grounds No. 14 to 23 relating to business advances, learned Assessing Officer referred the same as trade advances of Rs. 9,03,97,252/- and Rs. 40,61,921/- advanced to Ocimum Biosolutions B.V. and Ocimum Biosolutions (Inc) respectively. Assessee explained that the transactions are not in the nature of purchase, sale or lease of tangible or intangible property, or provision of sales, or lending or borrowing money, or any other transaction enumerated under section 92B of the Act, and, therefore,....

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....dings of the learned TPO that interest has to be calculated in respect of the receivables considering clause (c) of explanation to section 92B of the Act with retrospective effect. Following the decision of the Bangalore Bench of the Tribunal in the case of M/s. Logics Micro Systems Ltd., in ITA No. 524/Bang/2009, learned DRP examined the issue whether there was any potential loss due to receivables and held that if the amounts were collected in time, the assessee would have saved substantial financial cost and, therefore, the adjustment is justifiable. But learned DRP directed the learned Assessing Officer to compute ALP at 5% instead of 12%. 15. Learned AR contended that the transactions with Ocimum Biosolutions (Inc) and Ocimum Biosol....

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....and does not fall within the scope of the term 'international transaction' even after the insertion of explanation to section 92B of the Act by Finance Act, 2012 with effect from 01/04/2002, and, therefore, there is no requirement of such transaction to be reported in form No. 3CEB. 19. Learned DR, however, submitted that this issue is no longer available to be agitated by the assessee and it is descended by the Hon'ble Madras High Court in the case of PCIT Vs. Redington (India) Ltd., (2020) 122 taxmann.com 136 (MAD). 20. Learned AR in the alternative, pleaded that corporate guarantee at 1.75% determined by the learned DRP is too high and cannot be sustained. Basing on the view taken by the Co-ordinate Benches of this Tribunal in the ....