2018 (1) TMI 1733

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....g, marketing and exporting pharmaceutical products to its overseas associated enterprise ("AE") as well as non-group companies. During the assessment year 2011-12, the assessee exported finished pharmaceutical products worth Rs. 96,26,51,291/- to its Associated Enterprises (AEs) and benchmarked the said international transaction with Transactional Net Margin Method ("TNMM") as the Most Appropriate Method ("MAM"). For the purposes of undertaking economic analysis, the AE of the assessee i.e. Glad Pharm Ltd., Ukraine ("Gladpharm") was selected as the tested party. The profitability of the tested party was compared with margin earned by comparable companies engaged in performing similar functions respectively and the result of the benchmarking....

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.... submitted that the issue could be boiled down to the question - whether the TPO is justified in treating the outstanding receivables from the overseas AEs as unsecured loans and to impute interest thereon. He submitted that the working capital adjustment undertaken by them took into account the trade receivables outstanding as such no additional imputation of interest on the outstanding receivables is warranted. Nextly, he also submitted that the assessee is not charging any interest on the outstanding receivables from non-AEs also as such it is at arm's length not to impute such interest in respect of receivables from AEs. He further submitted that for an earlier year i.e. assessment year 2010-11 such an issue was considered by the Tribun....

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....held by the Hon'ble Jurisdictional High Court in assessee's own case for this same assessment year by holding that no error was found in the order of ITAT giving rise to any substantial question of law for a determination. 8. Relevant findings have been given by the Hon'ble High Court in the aforesaid order dated 25/04/2017 in para No. 10 and 11 read as under:- "10. The Court is unable to agree with the above submissions. The conclusion in the explanation to section 92B of the Act of the expiration receivables does not mean that de hors the context every item of receivables appearing in the accounts of an entity, which may have dealings with the foreign AEs would be characterised as an international transaction. There may be a d....