2024 (12) TMI 709

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....we note that one of the principal issues which would arise for consideration would be whether the asserted deferral of payments would fall within the ambit of clause (c) of Explanation (i) placed at the end of Section 92B of the Income Tax Act, 1961 ["Act"]. The appellants seek to draw support from the following observations as rendered by the Court in PCIT vs Kusum Health Care Pvt. Ltd. [(2017 SCC OnLine Del 12956]: "10. The Court is unable to agree with the above submissions. The inclusion in the Explanation to Section 92B of the Act of the expression "receivables" does not mean that de hors the context every item of "receivables" appearing in the accounts of an entity, which may have dealings with foreign associated enterprises ....

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....nces Ltd. (2012) 345 ITR 241 (Delhi)." 2. Mr. Agarwal, learned counsel for the appellants, has additionally submitted that the practice of deferred payment is one which is being continuously replicated and provided by the assessee right from Assessment Years ["AYs"] 2010-11 to 2017-18. According to learned counsel the aforesaid conduct would itself be indicative of a practice adopted by the assessee and consequently the payments being liable to be viewed as an international transaction. 3. We, however, note that the instant appeals pertain to the first year of operation and consequently the pattern as is alluded to would have to be examined not merely on the basis of the orders passed for subsequent AYs' but also in light ....

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....id thereon for the purpose of carrying on the business would have been regarded as a permissible allowance; but that is wholly irrelevant in considering the applicability of clause (iii) of sub-section (2) to the problem arising in this case. The legislature has under clause (iii) permitted as an allowance interest paid on capital borrowed for the purposes of the business; if interest be paid, but not on capital borrowed, clause (iii) will have no application." 5. It was further submitted that the words 'deferred payment' or 'receivable' would have to be interpreted ejusdem generis with the other services and lending facilities which are spoken of. 6. In order to enable Mr. Agarwal, learned counsel to address further submi....

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....n the taxpayer is undisputedly a debt free company, as it is not the case of the ld. TPO that borrowed funds have been appropriated enabling the AE to make the delayed payment on receivables. So when outstanding receivables is not a separate international transaction, the delay in realization of the sale proceeds is incidental to the transaction of sale and as such no notional interest can be levied by treating the same as unsecured loan. 18. Furthermore it is the case of the taxpayer that when the taxpayer is not charging interest from unrelated third party/non- AE, in case of such delay, no adjustment on interest in case of AE can be made and drew our attention towards the details of invoices raised qua unrelated parties availabl....