TMI Blog2018 (3) TMI 1613X X X X Extracts X X X X X X X X Extracts X X X X ..... . Choudhary, CIT DR O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : The Appellant, M/s. Inductis (India) Pvt. Ltd. (hereinafter referred to as the taxpayer ) by filing the present appeal sought to set aside the impugned order dated 17.02.2015, passed by the AO in consonance with the orders passed by the ld. DRP/TPO under section 143 (3) read with section 144C of the Income-tax Act, 1961 (for short the Act ) qua the assessment year 2010-11 on the grounds inter alia that :- 1. That on the facts and in the circumstances of the case and in law, the assessment order passed by the Ld. Assessing Officer ( Ld. AO ) is bad in law and void abinitio. 2. That the Ld. DRP erred in confirming the Ld. AO / Ld. TPO's order which provides that the alleged international transactions pertaining to outstanding receivables do not satisfy the arm's length principle envisaged under the Act. In doing so, the Ld. AO/Ld. DRP has grossly erred in: 2.1 re-characterizing the outstanding related party receivable from overseas AEs beyond 30 days period as short term loans advanced to the AEs and imputing interest thereon; 2.2 disregarding the business/ commercial arrangemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditions set out in section 92C(3) of the Act are satisfied in the present case. 6. That the Ld. AO has grossly erred on facts and in law by disregarding judicial pronouncements in India in undertaking the TP adjustment. 7. The Ld. AO / DRP erred in law and on the facts and circumstances of the case by making notional addition of ₹ 22,464 per provisions of section 14A of the Act read with rule 80 of the Income-tax Rules, 1962 ( Rules ). 7.1 The Ld. AO / DRP erred in law and on the facts and circumstances of the case by not taking cognizance of the detailed submission filed by the Appellant and erred in stating in the assessment order that the computation of disallowance of expenditure to be made under section 14A of the Act was submitted by the Appellant and was relied upon by the Assessing Officer. 7.2 The Ld. AO / DRP erred in law and on the facts and circumstances of the case by making an adhoc notional addition without providing reasonable basis of computation of disallowance of expenditure to be made under section 14A of the Act read with rule 80 of the Rules. 7.3 Without prejudice to the above, the Ld. AO has erred in disregarding the fact that the disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivables as short term loan advanced to the AE, proposed to charge an interest @ 14.88% (SBI PLR + 300 basis point) for a period of delay in respect of payment beyond 30 days and consequently made an addition of ₹ 2,16,26,206/-. AO made an addition of ₹ 22,464/- while invoking the provisions contained u/s 14A of the Act read with Rule 8D of the Rules. 4. The taxpayer carried the matter before the ld. DRP by filing objections who has concurred with the findings returned by the ld. TPO and thereby dismissed the objections. Feeling aggrieved, the taxpayer has come up before the Tribunal by way of filing the present appeal. 5. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. GROUND NO.1 6. Ground No.1 is general in nature, hence does not require any specific adjudication. GROUNDS NO.2, 2.1, 2.2, 2.3, 2.4, 2.5, 3, 4 5 7. Undisputedly, the taxpayer entered into the transaction and made exports to the following AE as under :- S.No. Name of the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional interest in order to bring it to tax? 11. The ld. AR for the taxpayer by relying upon the decision rendered by the coordinate Bench of the Tribunal in the cases of Kadimi Tool Manufacturing Co. (P.) Ltd. vs. DCIT (2017) 87 taxmann.com 42 (Delhi Trib.) and M/s. Global Logic India Ltd. vs. DCIT in ITA Nos.1104/Del/2015 1115/Del/2017 for AYs 2010-11 2012-13 order dated 12.12.2017 contended that outstanding related party receivables from AEs beyond a period of 30 days cannot be characterized as a short term loan to the AE for the purpose of charging interest thereon so as to bring it to tax. The coordinate Bench of the Tribunal while deciding the identical issue in Kadimi Tool Manufacturing Co. (P.) Ltd. (supra) returned the findings in favour of the taxpayer, the operative part of which is reproduced as under :- 10. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the DRP and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. The only issue to be decided in the above ground is regarding as to whether the receivables beyond the period mentione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds that the entire focus of the AO was on just one A Y and the figure of receivables in relation to that A Y can hardly reflect a pattern that would justify a TPO concluding that the figure of receivables beyond 180 days constitutes an international transaction by itself. With the Assessee having already factored in the impact of the receivables on the working capital and thereby on its pricing/profitability vis-a-vis that of its comparables, any further adjustment only on the basis of the outstanding receivables would have distorted the picture and re-characterised the transaction. This was clearly impermissible in law as explained by this Court in CIT v. EKL Appliances Ltd. (2012) 345 ITR 241 (Delhi). 12. Consequently, the Court is unable to find any error in the impugned order of the ITAT giving rise to any substantial question of law for determination. The appeal is, accordingly, dismissed. 11. Similar view has been taken by the Co-ordinate Bench of the Tribunal in the case of Teradata India (P.) Ltd. (supra) wherein the Tribunal following the decision of Hon'ble Delhi High Court in the case of Kusum Health Care (P.) Ltd. (supra) has held that no adjustment can be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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