TMI Blog2019 (4) TMI 1298X X X X Extracts X X X X X X X X Extracts X X X X ..... - assessee has paid interest at LIBOR plus 200 basis points - HELD THAT:- The computation of interest by the Transfer Pricing Officer on the basis of RBI ECB rate is flawed since the interest paid by the assessee are to AEs located in foreign countries. In view of the aforesaid, we hold that the interest paid by the assessee to the AEs is at arm's length. The decisions relied upon by the learned Authorised Representative also support this view. Accordingly, the addition made is deleted. Ground is allowed. Addition on account of bad debt - embezzled by one of the employees of the company - Non filing of FIR before the Police - HELD THAT:- The auditors have specifically mentioned about the embezzlement of fund by the employee. Further, the internal note of the company also bears testimony to the fact of the embezzlement. Non filing of FIR before the Police may be due to various reasons. Therefore, for that reason alone, assessee s claim that the amount in question was embezzled cannot be rejected. Having held so, it is seen from the auditor s report that out of the amount of ₹ 15,23,996, the company could recover an amount of ₹ 4,70,000, and the balance amount of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee claimed the price charged to the AE to be at arm's length. The Transfer Pricing Officer, however, did not accept the claim of the assessee. After verifying the transfer pricing study report, the Transfer Pricing Officer observed that the search process adopted by the assessee to select comparables is not reliable. Therefore, rejecting the transfer pricing study report of the assessee and many of the comparables selected, the Transfer Pricing Officer undertook a fresh search in the databases to select comparables by using the data for financial year 2005 06. In this process, the Transfer Pricing Officer selected 13 comparables with arithmetic mean of 24% as against the margin shown by the assessee at 16.04%. This resulted in an upward adjustment of ₹ 66,55,541, to the price charged by the assessee to the AE. The adjustment to the arm's length price suggested by the Transfer Pricing Officer was considered for addition by the Assessing Officer in the draft assessment order. 7. Though, the assessee raised objections before the DRP against the transfer pricing adjustment, however, the DRP rejected the objections of the assessee. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various other decisions of not only different High Courts but different Benches of the Tribunal as submitted in the legal paperbook filed before us. That being the case, following the consistent view expressed in the judicial precedents cited before us, we direct the Assessing Officer to exclude this company from the list of comparables. 12. As regards comparability of Maple e solutions Ltd., it has now been well settled through various judicial precedents that this company cannot be treated as comparable due to unreliability of its financial data. In this context, we may refer to the following decisions: i) CIT v/s Cummins Turbo Technologies Ltd., [2018] 91 taxmann.com 307 (Bom.); ii) Stream International Services Pvt. Ltd. v/s ADIT, [2013] 31 TAXMANN.COM 227 (Mum.); iii) Deutsche Networking Services Pvt. Ltd. v/s DCIT, ITA no.8972/Mum./2010, dated 14.09.2018; iv) Franklin Templeton International Services India Pvt. Ltd. v/s DCIT, [2018] 89 taxmann.com 439 (Mum.); v) Goldman Sachs Services Pvt. Ltd. v/s DCIT, [2015] 63 taxmann.com 9 (Bang.); and vi) HSBC Ele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Representative submitted, the assessee has computed interest on delayed payment to AEs at LIBOR plus 200 basis points. He submitted, in similar nature of transactions the chargeable interest rate varies between LIBOR plus 200 basis points to LIBOR plus 300 basis points. In support of such contention, learned Authorised Representative relied upon the following decisions: i) Tricom India Ltd. v/s ITO, ITA no.322/Mum./2014, dated 03.09.2014; and ii) M/s. Fire Star International Pvt. Ltd. v/s CIT, ITA no.488/ Mum./2015, dated 31.07.2015. 18. Thus, he submitted, the rate at which the assessee has paid interest to AEs is at arm's length. Further, the learned Authorised Representative submitted, RBI ECB rate of interest cannot be applied to the payments made by the assessee. 19. The learned Departmental Representative relied upon the observations of the DRP and the Transfer Pricing Officer. 20. We have considered rival submissions and perused material on record. As could be seen, the dispute is only with regard to the rate of interest. While the assessee has paid interest at LIBOR plus 200 basis po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mployee, however, the balance amount of ₹ 10,53,996, could not be recovered from the concerned employee resulting in a loss to the company. He submitted, though the assessee had not lodged any FIR against the concerned employee, however, his services were terminated. The learned Authorised Representative submitted, though the assessee has wrongly claimed the deduction as bad debt, however, it has to be allowed as business loss. 24. The learned Departmental Representative relying upon the observations of the departmental authorities submitted that the assessee has not furnished any evidence to prove that the amount in dispute was embezzled. He submitted, assessee initially claimed the amount as bad debt, whereas, subsequently he claimed it as business loss. Thus, he submitted, assessee s claim cannot be allowed. 25. We have considered rival submissions and perused material on record. As could be seen from the facts on record, assessee has claimed the deduction of ₹ 11,24,899, as bad debt. However, subsequently, it was explained to the Assessing Officer that the amount in dispute was actually embezzled by one of the employees of the company ..... X X X X Extracts X X X X X X X X Extracts X X X X
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