TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 2072
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.... said transactions, the A.O referred the matter to the TPO u/s 92CA of the Act. 2.1 The TPO, vide orders dated 30.01.2016, suggested certain transfer pricing adjustments. He held the transaction of provision of Information Technology Engineering Services (ITeS in short) to be within (+/-) 5% of the average margin of the comparables and hence he did not propose any adjustment. Further, with regard to reimbursement of expenses also the transaction was held to be at arm's length price. The A.O, thereafter, observed that the assessee has not charged interest on receivables from associated enterprises. The assessee submitted that he did not charge interest on receivables from non-associate enterprises as well, and therefore, the same is treated to be at arm's length price. The TPO, however, did not agree with the assessee and held that the SBI PLR rate of 14.75% p.a should be the interest chargeable on receivables. Accordingly, he proposed an adjustment of Rs. 75,70,716/-. 2.2 In accordance therewith, the draft assessment order was passed, wherein the A.O also examined the allowability of reimbursement of expenses made by the assessee to M/s. Satyam Computer Services Ltd without makin....
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....ricing adjustment u/s 92CA(3) 4. The Ld. A.O / TPO / DRP erred in making transfer pricing adjustment of Rs. 61,61,031/- for the unrealized interest on trade receivables from foreign associated enterprises. 5. The Ld. A.O / TPO / DRP ought to have appreciated that the trade receivables are resultant of international transactions which were already subjected to transfer pricing regulation and hence ought to have considered that secondary adjustment was not necessary. 6. The Ld. A.O /TPO/DRP erred in re- characterization of the trade receivable transaction to that a loan, when the terms of contract does not provide for such treatment. 7. The Ld. A.O / TPO / DRP ought to have considered that, when the assessee did not charge any interest on similar trade receivables from non-associated enterprises, adjustment is not warranted by applying comparable uncontrolled price method. 8. The Ld. A.O / TPO / DRP erred in apply Indian Banks' fixed deposit rates, instead of LIBOR as the transaction is with a party outside India. 2.4 As far as ground of appeal No. 2 is concerned, the Ld. Counsel for the assessee explained that the assessee had taken the assistance of the employees o....
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....nce on the ground that the proviso to Sec. 40(a)(ia) of the Act is applicable prospectively. He further commented that certain part of the expenditure is not allowable and the DRP confirmed the order of the A.O only on the ground that the proviso is applicable prospectively. Thus, we find that the A.O has already considered evidence filed by the assessee but has not given any finding as to whether the recipient has offered the said income to tax. Therefore, we deem it fit and proper to remand the issue to the file of the A.O with a direction to the assessee to file the relevant evidence before the A.O and the A.O shall then verify if the recipient had paid taxes on such sum and if it is found to be paid then no disallowance u/s 40(a)(ia) of the Act shall be made in the hands of the assessee. Thus, the ground of appeal No. 2 is dismissed and Ground of appeal No. 3 is treated as allowed for statistical purposes. 3. As regards the transfer pricing adjustment, the Ld. Counsel for the assessee submitted that the assessee has not charged interest on trade receivables either from the associate enterprises or from the non-associate enterprises and therefore the said transaction should not....
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....No. 864/Hyd/2018, A.Y 2013-14 4. This appeal is against the order the CIT(A)-11, Hyderabad dated 18.04.2018. The only issue involved in this appeal is the transaction of interest on receivables. Since, the issue is the same as in the A.Y 2012-13 and for the detailed reasons given above in para No.3, we are remitting this issue also to the file of the TPO to follow the direction given in para No. 3 above. Accordingly, ground raised by the assessee is allowed for statistical purposes. 4.1 In the result the assessee appeal is allowed for statistical purposes. ITA No. 865/Hyd/2018, A.Y 2014-15 5. This appeal is against the order the CIT(A)-11, Hyderabad dated 18.04.2018 issue is common as for the A.Y 2013-14 that is interest on receivables. In this appeal the assessee has also raised the following additional ground of appeal:- "Notwithstanding to the other grounds of appeal, already raised and on the facts and circumstances of the case, the Ld. A.O erred in making addition of Rs. 32,20,765 towards interest receivable from foreign associates under normal provisions of the IT Act, 1961. 5.1 The Ld. Counsel for the assessee submitted that during relevant assessment year, though ....