TaxTMI 
TaxTMI 
2025 (1) TMI 1486
X X X X Extracts X X X X
X X X X Extracts X X X X
....t issue in this appeal of assessee as regards to the order of AO passed inconsequence to directions issued by DRP making TP Adjustment of Rs.1,68,25,273/- on account of delay in receiving the trade receivables is a separate international transaction akin to unsecured loan entered by the assessee with its Associate Enterprises(AE) and, accordingly, charged interest @ 5.068% for 93.6 days as being number of days over and above 30 days. For this assessee has raised following grounds No.2 to 2.5 which are exhaustive, argumentative and need not be reproduced. 4. Brief facts are that the assessee company is engaged in the business of design, develop, manufacture, prepare, process, buy, sell, re-sell, import, export, deal in all kinds of brake pads/friction products of passenger cars and other motor vehicles. The assessee filed its return income for the relevant Assessment Year 2017-18 and the same was processed CPC, Banglore u/s 143(1)(a) Act vide intimation dated 02/02/2019. Subsequently, assessee's case was selected for scrutiny assessment for the reason that the assessee has entered into international transactions with respect of lending or borrowing of money with its AE. The AO no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l faineance, including any type of long-term or short term borrowing, lending or guarantee, purchase or sale of marketable securities or any type of advance, payments or deferred payment or receivable or any other debt arising during the course of business." The assessee moved to DRP against TPO's order and raised objection before DRP. The DRP after going through the details like invoices of sale and purchase and also period of payment, period of accruing of trade receivables during the financial year 2015-16, which are realized during the Financial Year 2016-17 relevant to this Assessment Year 2017-18 and considering remand report dated 21.03.2022 directed TPO to consider the additional evidences vide para. 4.3.2 as under:- "4.3.2 The Panel takes a note from the remand report that the assessee did not respond to the notices of the TPO properly but this is also a fact that the determination of ALP of expenses and also the assessment proceeding u/s 144C are at pre-stage of finalization of the assessment. The Panel also takes a note that the AO's action for not accepting the outstanding receivables on account of sales as unsecure loan is correct. But the spirit of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... debts concluded with effect from 01/04/2016 which are enclosed at assessee's paper book pages 163 to 173. He stated that the maximum outstanding period is 126 days. He drew our attention to the invoices enclosed at page 192 i.e., purchase order dated 12/01/2016 wherein the nomenclature given is as "EX WORKS 120 NET". He explained that time allowed for trade receivables is 120 days net. He stated that this is on example basis and almost as per invoices the period allowed is 95 days + 1 month i.e., total time allowed is 125 days. He stated that there may be variation of 1 or 2 days in receiving the amount of trade receivables. Alternatively also, he made submission that once DRP has allowed working capital adjustment, in that eventuality, the issue now stands covered in favour assessee by decision of Delhi High Court in the case of Kusum Health Care (P.) Ltd. [2018] 99 taxmann.com 431 (Delhi). He also pointed out that reliance placed by TPO & Ld CIT-DR on the decision of Hon'ble Delhi High Court in the case if McKinsey Knowledge Centre India Pvt. Ltd. (supra) and stated that Hon'ble Delhi High Court for Revenue petition 360/2018 in ITA 461/2017: Dated 16/04/2019 has recalled the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er ("Order") is the entire contract between the entity named as Buyer on the face of the Order, herein referred to as Buyer, and the Seller named on the face of the Order herein referred to as Seller, with respect to the goods or materials ordered and any related services (collectively, "Goods"). None of the terms and conditions in this purchase order may be added to, modified, superseded, or otherwise altered written instrument signed by except by an authorized representative of Buyer and delivered by Buyer to Seller. Any documents incorporated or referred to in this Order or in any releases issued to Seller hereunder are a part of this Order, except that any references. to Seller's quotation or other form of offer for the Goods is for information purposes only and Buyer hereby rejects all terms and conditions proposed by Seller therein. These Terms and Conditions ("Terms") will apply to all purchases made by Buyer under this Order and any related releases unless modified or waived by any specific different terms stated the face of the Order or release, or by written Supply Agreement signed by an authorized representative of Buyer, regardless of any course in these Terms are o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e focus of the Assessing Officer was on just one assessment year and the figure of receivables in relation to that assessment year can hardly reflect a pattern that would justify a Transfer Pricing Officer concluding that the figure of receivables beyond 180 days constitutes an international transaction by itself. With the assessee having already factored in the impact of the receivables on the working capital and thereby on its pricing/profitability vis-a-vis that of its comparables, any further adjustment only on the basis of the outstanding receivables would have distorted the picture and re-characterised the transaction. This was clearly impermissible in law as explained by this court in CII v. EKL Appliances Ltd. [2012] 209 Taxman 200/345 ITR 241/345 ITR 241(Delhi). Hence, we are of the view that this issue is covered by the decision of Hon'ble Delhi High Court in the case of Kusum Health Care Pvt. Ltd. (supra). As regards to merits of the case, we need not to go into the same as we have accepted the alternative contention of the assessee. 8. Next issue as regards to Corporate Taxation i.e., addition made by disallowance the provisions of gratuity u/s 43B of the Act amou....