TaxTMI 
TaxTMI 
2026 (5) TMI 547
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....essed at Rs. 13,53,14,305/- against the returned income of Rs. 11,66,31,020/- as per return of income filed on 11.03.2022 wherein the transfer pricing adjustment of Rs. 1,86,19,885/- is made being interest on delayed receivable from associated enterprises. This is the only issue in this Appeal. 2. The brief fact of the case shows that Assessee filed the return of income as stated above which was selected for scrutiny for verification of large value of international transaction in the nature of technical service fees. The notice u/s. 143(2) was issued to the Assessee on 28.06.2022. Reference was made u/s. 92 CA (1) of the Act to the Deputy Commissioner of Income Tax, Transfer Pricing - 2(2)(1), Bangalore (the Ld. TPO) for determination of....
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.... order u/s. 92 CA (3) dated 28.10.2023. This order was rectified u/s. 154 of the Act and the adjustment of Rs. 1,86,19,885/- was made by rectification order dated 05.04.2024 resulting into a draft Assessment Order u/s. 144C (1) of the Act on 26.12.2023. The same was challenged before the Ld. Dispute Resolution Panel without any success which resulted into the final Assessment Order dated 23.10.2024. 5. As in substance, though Assessee has raised several grounds of appeal, the challenge is to the addition on account of interest on overdue receivables. There is one more issue regarding disallowance of foreign exchange loss of Rs. 63,402/- which was already disallowed in the computation of the total income which has resulted into double add....
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....dinate benches have applied LIBOR plus 200 basis points. 9. Regarding the issue of double addition of foreign exchange loss amounting to Rs. 63,402/-, reference was made to the computation of total income, asserting that this constitutes a double addition. Additional grounds of appeal were noted pertaining to short granting of credit tax paid, tax deduction at source, and not granting foreign tax credit. 10. The Ld. CIT-DR supported the order of the Ld. Transfer Pricing Officer. However, she submitted that arithmetic inaccuracies may be corrected. 11. We have carefully considered the rival contentions and perused the orders of the Ld. Lower Authorities. The main dispute in this appeal is with respect to the interest on overdue rece....
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....te of receipt in some of the cases, which is placed at page no. 651 of the paper book, the Ld. Assessing Officer is directed to verify and correct the dates, if there is any error. 15. Regarding the interest charged on trade receivables at LIBOR plus 450 basis points, as applied by the Transfer Pricing Officer and requested by the Assessee to be reduced to LIBOR plus 200 basis points, neither rate merits acceptance. This is because both the rate chosen by the learned Transfer Pricing Officer and the alternative proposed by the Assessee lack any substantive basis. The appropriate interest rate should align with the credit rating of the associated enterprises receiving the advance and must be benchmarked, unless incorporated within the wor....
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....and, without applying either positive or negative working capital adjustments in the comparability analysis, the international transaction was deemed to be at arm's length. The absence of any claim of working capital adjustment in the Assessee's TPSR precludes granting the Assessee such an adjustment now, as it would undermine the established computation of the arm's length price of international transaction of services, which was accepted by both parties. Furthermore, the Assessee did not provide any justification for omitting consideration of positive or negative working capital adjustment when calculating the arm's length price for the international transaction in its TPSR. Therefore, the request is denied. Consequently, ground no. 2....