AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (12) TMI 485
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....hip Technology (India) Private Limited (MTIPL), the learned Assessing Officer passed the assessment order on a non-existent entity, consequent to its merger. In so far as the merits are concerned, the learned AR's submission is that the assessee has both trade receivables as well as payables and therefore, charging interest only in respect of trade receivables for the purpose of ALP is incorrect. Now, we shall proceed to appreciate these contentions in the light of the material on record. 3. In this matter, notice u/s 143(2) of the Income tax Act, 1961 ("the Act") was issued on the Microsemi India Private Ltd. (MIPL) on 22/09/2019; that a scheme of amalgamation came to sanction on 21/12/2010 by the National Company Law Tribunal, Hyderabad, under which MIPL and other group entities were amalgamated with Microchip Technology (India) Private Limited (MTIPL); that 01/04/2019 happened to be the appointed date for merger; that letters dated 08/03/2021, 08/04/2021 and 15/04/2021 were filed with the learned Assessing Officer/Transfer Pricing Officer, intimating the merger of MIPL and MTIPL; that on 30/07/2021, the Transfer Pricing Order was passed on the name of MIPL; that draft assessmen....
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....dence, namely, the transferee company. Therefore, it is essential to look beyond the mere concept of destruction of corporate entity which brings to an end or terminates any assessment proceedings. Hon'ble Apex Court also held that whether corporate death of an entity upon amalgamation per se invalidates an assessment order ordinarily cannot be determined on a bare application of section 481 of the Companies Act, 1956 (and its equivalent in the 2013 Act), but would depend on the terms of the amalgamation and the facts of each case. 7. Viewing in the light of these observations of the Hon'ble Apex Court, the facts of the present case clearly present a picture, where the amalgamated as well as the amalgamating company to be in existence, despite the fact of amalgamation, because for the purpose of concluding the litigations and exhausting the demands against the amalgamating company, the continuance of the said entity with its PAN AAHCL7379L was necessary. This situation created nuanced picture as to the existence or to the continuance of the entity, M/s Microsemi India Pvt. Ltd. for the purpose of litigation, demands etc. Having clarified that such a continuance is essentia....
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....ks. 10. Learned DR further argued that the credit period as per the invoice with the AE cannot be contemplated as a comparable in TP regime as it is a controlled transaction and lacks arm's length characteristic as held by the ITAT in the case of M/s. Technimont ICB P. Ltd., vs. Addl. CIT 138 ITD 23 (Mum); whereas apart from placing reliance on the view taken by the learned DRP for the assessment year 2018-19 which became final, the learned AR also placed reliance on a decision of the Mumbai Bench of the Tribunal in the case of DCIT vs. Indo American jewellery Ltd in ITA No. 5872/mum/2009 for the principle that if an entity is engaged in commercial transactions with the group entity as well as third-party unrelated customers, and if the entity is giving credit facility ranging up to 352 days to both group entity as well as the third-party unrelated customers, in such case, no addition on account of interest adjustment can be made. 11. On the quantification of the interest on trade receivables, learned DR, while placing reliance on the view taken by a coordinate Bench in assessee's own case for the assessment year 2018-19 in ITA No. 485 /Hyd/ 2022 by order dated 27/4/2023, submitt....
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....es in an international transaction is requiring separate benchmarking time and again. 14. Next issue remains to be considered is 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. Cotton Naturals (I) (P.) Ltd. [2015] 55 taxmann.com 523 (Delhi), learned AR prayed that LIBOR+200 basis points may be adopted. This aspect is no longer res integra and dealt with by the Mumbai Bench of the Tribunal in the case of Tecnimont ICB House (supra) and confirmed by the Hon'ble Bombay High Court. Cotton Naturals (I) (P.) Ltd. (supra) is also on the same aspect. 15. In the case of the Tribunal, Tecnimont ICB House Vs. DCIT [2015] 60 taxmann.com 143 (Mumbai - Trib.) considered the view taken in Everest Kanto Cylinder Ltd. v. Asstt. CIT (LTU) [2014] 52 taxmann.com 395 (Mum.); PMP Auto Components (P.) Ltd. v. [IT Appeal No. 1484 (Mum.) of 2014, dated 22-8-2014]; Hinduja Global Solutions Ltd. v. Addl. CIT [2013] 145 ITD 361/35 taxmann.com 348 (Mum.); Tata Autocomp Systems Ltd. v. Asstt. CIT [2012] 52 SOT 48/....
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....dent upon the fiscal policy of the Central bank, mandate of the Government and several other parameters; that the interest rates payable on currency specific loans/ deposits are significantly universal and globally applicable; that the currency in which the loan is to be re-paid normally determines the rate of return on the money lent, i.e. the rate of interest. While referring to the Klaus Vogel on Double Taxation Conventions (Third Edition) under Article 11 in paragraph 115, the Hon'ble High Court held that the PLR rate, therefore, would not be applicable and should not be applied for determining the interest rate and the PLR rates are not applicable to loans to be re-paid in foreign currency. Hon'ble Court accordingly held that whatever the principle that is applicable to the case of outbound loans, would be equally applicable to inbound loans given to Indian subsidiaries of foreign AEs, that the parameters cannot be different for outbound and inbound loans, and a similar reasoning applies to both inbound and outbound loans. 17. In the case of PCIT vs. Tecnimont (P.) Ltd. [2018] 96 taxmann.com 223 (Bombay) AY. 2009-10, Hon'ble Bombay High Court held that interest charge....