Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (12) TMI 1052 - AT - Income TaxAdjustment on account of arm’s length on interest on receivables - TPA - Held that:- When the taxpayer has not been making any distinction between AE and non-AE in charging any interest on outstanding receivables, the adjustment made by the TPO/DRP/AO on account of arm’s length interest is not sustainable. Moreover the interest can be charged only on loaning or borrowing of money and not in case of sale. Particularly when there is no penal clause in the agreement entered into between the taxpayer and its AE/non-AE to charge the interest on delayed receivables. Even otherwise, a transaction cannot be recharacterized merely on ground of delay in payment of receivables. Identical issue has also been examined by coordinate Bench of the Tribunal in Kadimi Tool Manufacturing Co. Pvt. Ltd. vs. DCIT [2017 (9) TMI 1578 - ITAT DELHI] and has been decided in favour of the taxpayer by relying upon Kusum Healthcare Pvt. Ltd. vs. ACIT [2015 (4) TMI 180 - ITAT DELHI] and Bechtel India Pvt. Ltd. (2016 (9) TMI 196 - DELHI HIGH COURT ) wherein SLP filed in the Hon’ble Supreme Court has been dismissed. TPO/DRP/AO have erred in making adjustment on account of arm’s length interest which is not sustainable in the eyes of law, hence no adjustment on account of interest on receivables can be made Not allowing credit of advance tax, TDS, foreign tax and tax paid under MAT provision while computing the tax liability on assessed income - Held that:- While calculating the tax paid under MAT provision, it is required to be deducted from gross tax payable. Similarly, while calculating the tax credit of advance tax, TDS and foreign tax is also required to be set off first in computing the overall tax liability by the taxpayer. Particularly when tax liability of the taxpayer is higher as per peak profit computed under MAT provision of the Act, so AO is directed to recomptue the tax liability by considering the credit of advance tax, the TDS, the foreign tax and tax paid on MAT provision in the light of the decision rendered by Hon’ble Allahabad High Court in the case of CIT vs. Vacment India (2014 (10) TMI 787 - ALLAHABAD HIGH COURT ) - Decided in favour of assessee.
|