AI Drafter 
TaxTMI 
TaxTMI 
2024 (10) TMI 250
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....of appeal; Ground No.7 is further sub-divided into sub-grounds when we take up for hearing. 3. At the outset, the learned counsel for the assessee pointed out that the assessee has entered into bilateral advance pricing agreement(BAPA) with CBDT on 28.03.2024 and hence only Ground Nos.3, 4, 6 & 7 are required the consideration of the Hon'ble Bench. 4. The facts leading to the filing of present appeal are as under : 4.1 The assessee is a company engaged in the business of providing computer software development and Information Technology Enabled Services (ITES) to its Associated Enterprise (AE), the Assessing Officer referred the matter to the Transfer Pricing Officer (TPO)/A.O. The TPO vide its order dt. 30.07.2021 made certain adj....
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....ities below and argued that the assessee failed to produce evidences vis-à-vis the claim of expenses made by the assessee. 7. So far as the issue involved in Ground No.7 i.e. bench marking of interest receivable on outstanding towards the AE, the learned counsel fairly submitted that this issue may kindly be decided as per the order of Hon'ble ITAT in assessee's own case for the Assessment Year 2017-18 decided in ITA No.95/Hyd/2022 order dated 09.09.2024. 8. The Ld. DR relied upon the orders of authorities below in respect of the issue involved in Ground No.7. Here it is relevant to mention that the assessee had fairly conceded the Ground No.7.1 i.e. whether interest receivable on outstanding is an international transaction....
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....p; (Amount in INR Lakhs) Sl.No. Particulars AY 2018-19 AY 2017-18 1 Total revenue from operations (A) 126,200.12 117,582.70 2 Total other expenses (B) 24,702.54 23,145.16 3 Employee training expenses (C) 458.48 251.25 4 Percentage of total other expenses (C / B * 100) 1.86 1.09 5 Percentage of total revenue from operations (C/A * 100) 0.36 0.21 10.3. Thus, as evident from the above table, employee training expenses are minuscule expenses and there is only marginal percentage increase in these expenses as compared to last year. Considering the above-mentioned facts, the claim of the Ld. AO that the expenses were exorbitant, was arbitrary a....
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....reference. 10.8 In case your Honour requires any further information on this matter for adjudication, the Assessee shall provide the same upon hearing from you. 10.9 Without prejudice to the above, the Assessee submits before your kind Honour that the Assessee is a captive service entity, and the business model of the Assessee works on Cost plus profit model. Without admitting, even if there is unreasonable increase in expenses, then the same results in additional income being offered to tax and would be in the interest of revenue. No prudent businessman would have a thought as to on one hand increase the expenses and on other hand for the same increase pay additional taxes to the exchequer". 10. We observe that DRP while deciding ....
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.... "7. After considering the rival submissions, we observe that LIBOR is a rate applicable in the transactions entered into between banks and the loans advanced by these banks are secured by securities. However, in the case of assessee, the transaction is between the assessee and its AE and that too for delayed recoveries i.e. beyond the period agreed for credit. Further a reference can be made to the decisions of Coordinate Bench in the case of Albany Molecular Research VS DCIT dated 26.11.2020, wherein it is held that where assessee has to receive outstanding from its AE then LIBOR +200 points is the correct rate for determining ALP. 8. Further we observe that in the case of S&P Capital IQ (supra), the co-ordinate bench in par....