TaxTMI 
TaxTMI 
2024 (5) TMI 1080
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....er section 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (for short "the Act"), assessee filed this appeal. 2. Brief facts of the case are that the assessee is a software company. It filed its return of income for the assessment year 2018-19 on 29/11/2018, declaring total income of Rs. 12,62,08,530/-. In view of the international transactions conducted by the assessee with the Associated Enterprises (AEs), determination of Arm's Length Price (ALP) was referred to the learned Transfer Pricing Officer (learned TPO). Learned TPO proposed an adjustment in respect of software development segment to the tune of Rs. 7,55,37,404/- and also interest receivable on delayed payment at Rs. 2,06,79,781/-. 3. Aggrieved, assessee filed objections be....
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....invoice. Post DRP's direction, the learned TPO/learned Assessing Officer computed the ALP interest rate by adopting SBI short term deposit interest rates. 5. Contention of the learned AR is threefold. Firstly, that outstanding receivables shall not be considered as a separate international transaction. Secondly, that since the AO is not charging interest on payables, by applying the internal CUP no interest be benchmarked in respect of interest on receivables. Thirdly, that the interest rate shall be adopted at LIBOR, since the transactions with AEs are undertaking in foreign currency and that too for the period beyond the agreed contractual period, which is 180 days. Learned AR placed reliance on the decisions of PCIT vs. Technimont (P.) ....
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....te the adjustment to be made to the total income by applying credit period of thirty days or as per the agreement or invoice. There is no appeal by the Revenue as to this direction in respect of application of credit period of thirty days or as per the agreement of invoices. Learned Assessing Officer, is, therefore, under the obligation to verify the invoices and apply the credit period of either thirty days or as per agreement or invoices, whichever is longer. 9. Now, coming to the issue in respect of the rate of interest, while placing reliance on the decisions reported in Tecnimont ICB House Vs. DCIT [2015] 60 taxmann.com 143 (Mumbai - Trib.), Hon'ble Bombay High Court in PCIT Vs. Tecnimont (P) Ltd., (supra) and CIT Vs. CottonNatura....
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....rise is required to pay interest on delayed payment, it would examine the cost of interest and if the same is higher, then the amount of interest payable on funds obtained locally, it would take a loan from local sources and pay the amounts payable for exports and expenses within time. Therefore, extending of credit beyond the normal period of sixty days is in substance a granting of loan to an AE so as to enjoy the funds, which the AE would otherwise have to repay within the period of sixty days. On this premise the Hon'ble High Court upheld the Tribunal computing interest at LIBOR rates as the rate prevailing in country where the loan is received/consumed by the AE by observing that the same cannot be faulted. 11. In the case of CIT ....