2024 (2) TMI 1400

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.....2022 pertaining to Assessment Year 2018-19. 2. The only issue raised in the appeal is that computing of interest amounting to Rs.5,68,919/- on the receivables from AE by way of Transfer Pricing Adjustment. 3. Against the order of the Assessing Officer, the assessee has filed appeal before us. 4. We have heard both the parties and perused the records. The ld. Counsel for the assessee submitted that the DRP has erred in distinguishing the decision of the Hon'ble Delhi High Court in the case of PCIT vs Kusum Healthcare Pvt. Ltd. 398 ITR 66 (Del). The ld. Counsel for the assessee submitted this issue is covered in favour of the assessee. He submitted that the notional interest cannot be added to the receivables from the AE. He submitt....

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.... transaction and will be subjected to transfer pricing provisions irrespective of whether they have any bearing on profit/loss of the relevant year or their impact on profit/loss account is determinable under normal computation procedures other than the transfer pricing regulations. The ld. DRP quoted legislative intent which has been elucidated in the Explanatory Memorandum to the Finance Bill 2012. 11. This issue has been adjudicated by the Tribunal examining the decisions in the case of Kusum Healthcare, Mckinsey Knowledge, Ameriprise India (P.) Ltd. The details are as under. 12. The Delhi Tribunal in case of Kusum Healthcare (P) Ltd. v. Asstt. CIT [2015] 62 taxmann.com 79 held that the working capital adjustment takes ....

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....eivables would have distorted the picture and re-characterized the transaction. 16. In the appeal filed by the assessee in the case of Mckinsey Knowledge, the Hon'ble High Court vide order dated 7-2-2018, while admitting the appeal on the other issue, remitted the issue of interest charged on outstanding receivables to ITAT, following their decision in the case of Kusum Healthcare. 17. However, vide order dated 9-8-2018, the Hon'ble High Court in the case of Mckinsey Knowledge, while deciding the appeal of the assessee on other issue, also referred to the decision of the Hon'ble Delhi Tribunal in case of Ameriprise India (P) Ltd. (supra) on issue of interest charged on outstanding receivable and concluded that ....

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....ITAT on its own merits." 19. In view of the aforesaid sequence of events, it would be noted that the decision of Hon'ble Delhi High Court in the case of Kusum Healthcare is still the binding precedent on the issue of interest on outstanding receivables. Needless to mention that the law laid down by the Hon'ble High Court in the case of Kusum Healthcare was followed by the ITAT in case of Global Logic India Ltd. v. Dy. CIT [2019] 102 taxmanl1.com 115(Delhi - Trib.), Global Logic India Ltd. v. ACIT [2020] 117 taxmann.com 6401185 ITD 795(Delhi - Trib.) and Global Logic India (P) Ltd. v. Dy. CIT [2022] 134 taxmann.com 35(Delhi - Trib.). Hence, keeping in view, the established position, we hereby deleted the addition made by the....