2020 (3) TMI 1494

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.... raised three grounds in its appeal however, the crux of the issue is that the Hon'ble DRP had erred in not considering the outstanding balances of its AEs with respect to payables and receivables for estimating the notional interest for the purpose of TP adjustment. 3. The assessee in its cross appeal has also raised three grounds in its appeal however, the crux of the issue is that the ld. AO / Hon'ble Members of the DRP had erred in disallowing Rs. 13,00,56,397/- being reimbursement of salary invoking the provisions of section 194J r.w.s 40(a)(ia) of the Act. ITA No. 222/Hyd/2016 (Revenue's Appeal) 4. At the outset, the ld. DR submitted before us that the ld. Members of the DRP had erred in not considering the interest on the outstand....

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....nd merits in the argument advanced by the ld. AR that interest on outstanding receivables is not an international transaction as per section 92B of the Act. In respect of the application of FIFO method on realization of outstanding receivables with advance received towards certain other transaction with AE, we agree with the Ld. AR's argument that primarily the advance received has to be adjusted against any advance received and thereafter, the interest has to be charged on the outstanding receivables. This methodology shall result in the exact outstanding invoices against which payment is not received. Accordingly, we remit the issue back to the file of Ld. TPO to consider the issue afresh in the light of the observations made by us herein....

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....e DRP have not accepted the same on the ground that the proviso to Sec. 40(a)(ia) of the Act is applicable prospectively and is not applicable to the year before us. The Ld. Counsel for the assessee has relied upon the decision of the Hon'ble Delhi High Court in the case of Ansal Land Mark Township (2014) 61 taxmann.com 45 (Delhi), wherein the said proviso to Sec. 40(a)(ia) of the Act has been held to be curative in nature and therefore applicable retrospectively. The Coordinate Benches of the Tribunal, have been following the said judgment to grant relief in various cases. Therefore, we hold that in the case before us also, if the recipient has offered the receipt as its income, then the disallowance u/s 40(a)(ia) of the At cannot be made.....