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2019 (9) TMI 1694 - ITAT JAIPURTP Adjustment in respect of the payment of interest to related parties - interest paid to the related parties is at 15% per annum whereas the interest paid to the unrelated parties varies from 13.20% to 15.60% - assessee claimed that the Specified Domestic Transaction interest to the related parties at 15% is at Arm’s Length - HELD THAT:- We find that for rejecting the Internal CUP as most appropriate method by the TPO, no plausible reason have been given except the statement that for the purpose of benchmarking, he proposed External CUP as most appropriate method. Once the transaction of interest paid to the unrelated parties is available on record, then the Internal CUP should be preferred as against the External CUP as most appropriate method for determination of Arm’s Length Price. Assessee has paid interest to 16 related parties and 15 unrelated parties. Therefore, almost equal numbers of transactions of payment of interest to related parties as well as unrelated parties have been entered into by the assessee during the year under consideration. Once the average effective rate of interest paid to the unrelated parties is not in dispute at 15.36%, then the Specified Domestic Transactions of payment of interest to the related parties have to be tested with the Internal CUP being average rate of interest paid to the unrelated parties. The assessee has also taken a plea before the authorities below that the payment of interest to the unrelated parties is bi-monthly/quarterly as against annually to the related parties. This is also a cost adding factor in respect to the unrelated party payment of interest. Assessee has paid the effective average rate of interest inclusive of brokerage at 15.36%, then the payment of interest to related parties at 15% is at Arm’s Length. It is also pertinent to note that even by applying the Arm’s Length Interest at 14.50% based on the Internal CUP which is an average of 15 transactions then the tolerance range provided under second proviso to section 92C(2) is also applicable in the case of the assessee and, therefore, in any case the Specified Domestic Transactions price falls in the tolerance range of (+)(-) 3%. Accordingly, the addition sustained by the ld. CIT (A) is deleted. Disallowance of Employees Contribution to PF & ESI paid after the due date as provided under the relevant Acts. However, it was paid before the due date of filing the return of income under section 139(1) - HELD THAT:- As this issue is decided in favour of the assessee and the addition made by the AO on account of payment of employees contribution to PF and ESI before the due date of filing the return under section 139(1) is deleted.
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