2024 (7) TMI 41

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....Tax Act, 1961 (for short "the Act"), assessee filed this appeal. 2. Facts of the case are that the assessee is engaged in providing information technology enabled services (ITeS) to its Associated Enterprise (AE). For the assessment year 2012-13, the assessee filed the return of income on 28/11/2012, declaring an income of Rs. 3,06,54,190/-. In view of the international transaction of provision of ITeS to the AEs, determination of Arm's Length Price (ALP) was referred to the learned Transfer Pricing Officer (learned TPO). Learned TPO by order dated 30/01/2016, suggested upward adjustment of Rs. 2,76,41,892/- in respect of ITeS and Rs. 2,18,42,606/- in respect of interest on receivables. Accordingly, the learned Assessing Officer passed the....

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.... the learned AR to include three entities, the assessee failed to satisfy the Revenue authorities in respect of their functions and, therefore, they are justified in excluding the same. In respect of the interest on receivables, learned DR submitted that interest on receivables is certainly an international transaction and notional interest has to be computed. 6. We have gone through the record in the light of the submissions made on either side. As a matter of fact, the suitability of the entities, namely, Eclerx Services Limited, Infosys BPO Limited, and TCS E-Serve Limited to be compared with the assessee was considered in assessee's own case for the assessment year 2007-08 by the Co-ordinate Bench of the Tribunal and these three entiti....

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....ts for financial year can reasonably be extrapolated then the comparable cannot be excluded solely on the ground that the comparables have different financial year endings. Following this dictum respectfully, we direct the learned Assessing Officer to permit the assessee to extrapolate the results for the relevant financial year and consider the same as a good comparable. 9. Coming to ACE BPO Services Private Limited and Crystal Voxx Ltd., originally the assessee did not select these comparables. As could be seen from the order of the learned TPO at paragraph No. 3 and page No. 7. Learned DRP, however, considered these two entities and declined to include these two entities. According to the learned DRP, ACE BPO Services Private Limited wa....

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....he Revenue. We, therefore, direct that negative working capital adjustment to the arithmetic mean margin of the comparables shall not be made. Ground No. 8 is allowed accordingly. 12. Now coming to the issue relating to the interest on outstanding receivables, the assessee placed reliance on the decision of the Co-ordinate Benches of the Tribunal in the case of M/s. Albany Molecular Research Hyderabad Research Center Private Limited vs. DCIT in ITA No. 425/Hyd/2015 and batch, dated 26/11/2020, in support of its contention that prior to 2013-14, no TP adjustment could be made on outstanding receivables by way of imputation of notional interest as they do not fall under the category of international transaction for such year. 13. We have go....