TaxTMI 
TaxTMI 
2025 (9) TMI 648
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....has preferred the appeal before us on the following grounds of appeal:- That on the facts and circumstances of the case and in law: General grounds 1. The impugned orders passed by the Ld. AO/ Transfer Pricing Officer ("Ld. TPO") and the directions of the Hon'ble DRP are based on incorrect appreciation of facts of the case and incorrect interpretation of law therefore erroneous, bad in law. 2. The Ld. AO/ DRP erred in assessing the total income of the Appellant at INR 81,69,44,040/- as against the returned income of INR 78,61,52,120/-. Grounds relating to Transfer pricing matters: 3. Adjustment on account of interest on outstanding receivables amounting to INR 1,98,60,669/-. 3.1 The Ld. AO/ TPO/ DRP grossly erred in determining a transfer pricing adjustment on account of the interest on outstanding receivables amounting to INR 1,98,60,669/-. Without prejudice to our ground of objection 3.1 above, the Ld. AO/TPO/DRP erred in law and in facts: a) By not appreciating that the outstanding trade receivables from AEs are arising from provision of software development services ("SWD") & information technology e....
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....he case in disallowing the deduction of INR 76,48,794/-claimed by the Appellant under Section 80G of the Act. 9. The Ld. AO has erred in levying interest of INR 3,38,11,128/- under Section 234B. The Levy of interest under section 2348 of the Act is consequential in nature. 10. The Ld. AO has erred in levying interest of INR 8,162/- under Section 234C. The Ld. AO ought to have appreciated that interest liability under Section 234C of the Act is to be computed based on the returned income and cannot be increased based on the assessed income as per Section 143(3) r.w.s 144C(13) r.w.s 1448 of the Act. Grounds relating to other matter : 11. The Ld. AO has erred in law and in fact, in initiating penalty proceedings under Section 270A of the Act 3. The brief facts of the case show that assessee is a private limited company incorporated on 28.6.2013 as a joint venture between LHIC Netherlands and ANSR NC JV Holdings LLC with Lowe's US, being ultimate parent entity of Lowe's group. It provides software development services and ITeS business support services to Lowe's US to help Lowe's Group further in its transformation to be an Omni-channel retailer w....
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....of late payment to Provident Fund [PF]. A further addition of Rs. 76,48,794 was made by disallowing deduction u/s. 80G of the Act out of CSR expenditure. Thus, total income was assessed at Rs. 130,39,86,570. While computing the total income, the AO took the income processed u/s. 143(1) of the Act of Rs. 78,93,01,750 against the returned income of Rs. 78,61,52,120. 9. The assessee aggrieved with the same preferred objections before the ld. Dispute Resolution Panel [ld. DRP], who passed the direction on 7.6.2024. Based on this, the ld. TPO gave effect to the said direction vide order dated 8.7.2024 wherein the adjustment of Software Development Services segment and ITeS segment was deleted. Further the interest on delayed receivable adjustment of Rs. 4,65,02,032 was determined at Rs. 1,98,60,669. This is due to the direction of the ld. DRP to charge interest rate on the basis of LIBOR rate at 5.817% p.a. 10. Based on this, the final assessment order was passed on 19.7.2024 wherein the only Transfer pricing issue of interest on overdue receivable remained with upward TP adjustment of Rs. 1,98,60,669, deduction claimed u/s. 80G of Rs. 76,48,794 and disallowance u/s. 36(1) (va) of....
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....domestic currency i.e., Rupees, the interest rate is supposed to be charged on the basis of average SBI PLR of 13.62% p.a. and if the invoices have been raised in foreign currency, the interest rate is supposed to be charged on the basis of mark-up on prevailing LIBOR rate during the year. Based on this, the ld. TPO pointed out that the invoices are prepared in Rupees adopting 13.62% interest rate. 16. The assessee challenged the same before the DRP wherein at para 17.10 the ld. DRP directed the TPO to adopt LIBOR based rates. The DRP at para 17.10.6 has held that RBI Master Circular on ECB dated 23.6.2019 specifies a cost ceiling of 6 months LIBOR+350 Basis Points where the average maturity period is between 3 & 5 years. The DRP held that as there is no credit rating furnished by the assessee, it directed to take ceiling rate of 6 months LIBOR+350 Basis Points as the most suitable CUP and then adjust it for other risks and costs. Based on this, the TPO passed OGE on 8.7.2024. The TPO computed US $ LIBOR 6 months average at 2.317% and added there a mark-up of 350 Basis Points resulting in the interest rate of 5.817%. We find that the DRP has directed the TPO to charge adhoc rate....
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....eserves to be deleted, we direct to delete the disallowance. Ground No.4 is allowed. 21. Ground No.5 is with respect to the incorrect amount of book profit computed by the AO while computing the income tax liability u/s. 115JB of the Act. It was submitted that book profit computation as per s. 115JB is of Rs. 118,10,19,785 against which the ld. AO computed the same at Rs. 158,55,16,806. 22. After hearing both the parties, we find that in the draft assessment order we do not find any such computation. We also do not find any direction of the ld. DRP on the same. While looking at the final assessment order, we find that in the tax computation sheet, the deemed income computed u/s. 115JB at sl.No.19 is at Rs. 158,55,16,806. First of all, if there is adjustment to the book profit of the assessee, it was not made in the draft assessment order. As the assessee says that the correct book profit is Rs. 118,10,19,785, the ld. AO could not have made any adjustment to the book profit in the final assessment order without first putting it into the draft assessment order. As there is no adjustment to the book profit in the draft assessment order, the ld. AO is directed to take the book pr....