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2020 (11) TMI 1018 - AT - Income TaxTP Adjustment - treating outstanding receivables from AEs as a separate international transaction and making adjustment by way of imputation of interest thereon - HELD THAT:- As outstanding receivables from AEs would constitute a separate international transaction on which imputation of interest is to be made by applying LIBOR + 200 basis points as under:- a. In respect of invoices raised in earlier years by the assessee on its AEs, where the amounts were realized during the year under consideration but beyond the agreed credit period, imputation of interest is to be made from first day of April or from the expiry of the agreed credit period (i.e 30 days as accepted by ld DRP) whichever is later till the date of realization of debts. b. In respect of invoices raised during the year on its AEs, where the amounts were realized during the year itself but beyond the agreed credit period, imputation of interest is to be made from the date of expiry of agreed credit period till the date of realization of debts. Accordingly, the grounds raised by the assessee for A.Yrs. 2013-14 and 2014-15 with regard to transfer pricing adjustment made on account of imputation of interest on outstanding receivables from AEs are disposed off in the aforesaid manner. Determination of ALP @5% of reimbursement from AE - Marking up@5% on the expenses being the travel cost of deputed employees paid on behalf of AE and recovered the same at cost from AEs as related to provision of services - HELD THAT:- We find that no arguments were advanced by the ld. AR with regard to these grounds. We find that the ld. DRP had dismissed this issue on the ground that assessee has not filed any details to demonstrate that these were mere reimbursements on cost to cost basis. Accordingly, the ld. DRP found it appropriate to direct the ld. TPO to apply mark up of 5% (as against 10% adopted by the ld. TPO) and recompute the adjustment. No efforts were taken by the assessee before us to improve its case beyond what was stated before ld. DRP with regard to this issue. Hence, we do not deem it fit to interfere with the directions of ld. DRP and consequentially in the final assessment order passed by the ld. AO pursuant to directions of ld. DRP in respect of this ground. Accordingly, the ground raised on mark up on reimbursements is hereby dismissed. Direction of the ld. DRP to adopt mark-up of 10% on the reimbursement received by the assessee from AEs - HELD THAT:- We find that the ld. TPO had adopted on adhoc basis of 10% mark-up on reimbursement from AEs which was reduced by the ld. DRP to 5%. We have already held in assessee‟s appeal in respect of this issue that assessee had not provided any further details to prove that the reimbursement from AE was done on cost to cost basis. In the absence of those details, there is nothing wrong in adopting mark-up on some reasonable basis. We find that mark-up of 5% adopted by the ld. DRP is reasonable in the facts and circumstances in the instant case and does not warrant any interference thereon. Accordingly, the ground No.1 raised by the revenue is dismissed.
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