TaxTMI 
TaxTMI 
TaxTMI 
2023 (11) TMI 190
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....ntered into international transactions with its Associated Enterprises (AEs) as well as domestic related parties for providing essentially accounts payable services, sourcing and procurement services, inter-company accounting services, concur/travel expense reporting services and finance closing services. 3. Assessee filed the return of income for the assessment year 2017-18 on 23/03/2018, declaring total income of Rs. 1,77,52,150/-. Determination of the Arm's Length Price (ALP) of the transactions referred to in form No. 3CEB was referred to learned Transfer Pricing Officer (learned TPO). By order dated 30/01/2021, learned TPO suggested an upward adjustment of Rs. 18,46,834/- on account of interest on delayed receivables. Learned Assessing Officer passed the draft assessment order dated 25/03/2021 by incorporating the same, and assessed the income at Rs. 1,95,98,984/-. 4. Assessee filed objections before the learned DRP. Assessee pleaded before the learned DRP that the deferred receivables do not constitute a separate international transaction requiring benchmarking and such a treatment is bad under law. Assessee further pleaded that working capital adjustment would take into ac....
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....est on any of their AEs, or that note-32 shows interest to suppliers and, therefore, assessee does not pay interest to vendors or AEs is not correct. Assessee further submitted that though all the information was submitted and the learned TPO verified the sample evidences, they failed to carry out the directions of the learned DRP. Argument of the learned AR is, therefore, that the learned TPO should not have made any adjustment on account of the notional interest on delay in collection of dues from the associated enterprise, and if for any reason such an adjustment has to be made it has to be made only in respect of the debt outstanding for more than a reasonable period, that too at the rate of LIBOR +1.5%. 7. Learned DR submitted that this issue is no longer res integra. She placed reliance on the decisions of the Hon'ble Delhi High Court in the cases of McKinsey knowledge Centre India (P) Ltd (2018) 96 Taxmann.com 237 (Delhi), decision of the Hon'ble Karnataka High Court in the case of PCIT vs. M/s AMD India Pvt. Ltdin ITA No. 274/2018 dated 31/08/2018, view of the coordinate Bench of this Tribunal in the case Zeta Infrastructure in ITA No. 1812/Hyd/2017 dated 07/06/2022, such ....
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....ssing Officer failed to comply with the same though the sample evidence is produced, the learned Assessing Officer insisted for the production of the entire thing. 10. We deem it relevant to refer to the observations of the learned TPO while giving effect to the directions of the learned DRP, which read as follows: "... Hon'ble panel directed that the TPO may verify the complete information relating to payables to A Es and non-A Es such as date of invoice, credit period, date of payment, period of delay with supporting invoices and adopt the interest rate as directed in computing the delay on receivables beyond credit period of 30 days from date of invoice. In this respect some submissions were made on behalf of the taxpayer and the same were examined. It was noted that with respect to the interest on trade payables, a calculation was provided as per which an interest of Rs. 20,21,537/- was payable to third parties as interest on delayed payables. Further, another amount of Rs. 1,84,4031/- was claimed as payable to AEs on account of interest on delayed payables. It was argued on behalf of the taxpayer that the interest payable to both AEs and non-AEs is to be adjusted agains....
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.... been followed. Further as per the note 32 to the financial statements of the taxpayer, interest to suppliers has actually been paid or recognized as payable, thus the claim that no interest has been paid on delayed payables does not appear genuine. Thus as per the directions of hon'ble DRP, the claim made on behalf of the taxpayer that no interest has been paid on the delayed payables, was examined and on being found not acceptable for non-submission of complete information and the findings as noted above, is to be rejected. The Assessing Officer may pass a final order accordingly Further on the issue of calculation of adjustment on account of interest on delayed receivables to be calculated using S81 Short Term deposit rate as the CUP after allowing a credit period of 30 days, it was found that the TPO had already taken S81 short term deposit rate for calculation of interest and a credit period of 30 days, has already been allowed. In this respect it was further noted that a fresh argument was made on behalf of the taxpayer that when the delay beyond the credit period of 30 days is less than 7 days the interest rate is to be taken at 0% as is the S81 short term deposit rate. ....