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TMI Blog2021 (3) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... tantial justice between the parties. We are aware of the position of law that where an additional evidence has been allowed to be adduced, the interests of justice demand that the other side must be given an opportunity to explain or rebut such additional evidence as held in the case of Smt. Urmial Ratilal v. CIT, [ 1981 (6) TMI 25 - GUJARAT HIGH COURT] - we set aside the order of the Ld. CIT(A) on the above grounds of appeal and restore the matter to the file of the TPO/AO to make an order afresh after giving reasonable opportunity of being heard to the assessee. We direct the assessee to file the relevant documents/evidence before the TPO/AO. - ITA No. 3181& 4608/MUM/2019, ITA No. 3182 & 4607/MUM/2019 - - - Dated:- 5-3-2021 - Shri Vikas Awasthy (Judicial Member) And Shri N.K. Pradhan (Accountant Member) For the Assessee : Mr. M.P. Lohia, AR For the Revenue : Mr. Sushil Mishra, DR ORDER PER N.K. PRADHAN, A.M. The captioned appeals filed by the assessee are directed against the order of the order of the Commissioner of Income Tax (Appeals)-57, Mumbai [in short CIT(A) ] and arise out of the assessment completed u/s 143(3) r.w.s. 144C(3)of the Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c adjudication. The 3rd, 4th, 5th grounds of appeal relate to adjustment on account of payment for IT license maintenance cost of ₹ 5,89,732/- as reproduced as under : 3. The Ld. CIT(A) erred in violating the principle of natural justice by not granting an opportunity of being heard to the Appellant by disallowing the payment for IT license maintenance cost on ground of non-deduction of tax at same and treating as payment of royalty as per explanation 2(i) of section 9(1)(vi) of the Act. 4. The Ld. CIT(A) erred in disregarding the submission of the appellant wherein the appellant has stated that tax has been deducted by the appellant under section 206AA of the Act at the rate of 21.115 percent and accordingly, disallowance on account of non-deduction of tax at source is uncalled for; 5. The Ld. CIT(A) erred in not giving a clear finding that transfer pricing adjustment on account of payment of IT license maintenance cost is not required even though same is accepted on earlier years also. 4. The assessee filed its return of income for the AY 2012-13 on 28.09.2012 declaring total income at ₹ 36,72,757/-. The assessee is a Company which was incorporated on 28.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 29,79,359/- and these are reproduced as under : 6. The Ld. CIT(A) erred in confirming the action of TPO/AO in making transfer pricing adjustment on the international transaction of payment of interest on trade credits to its AE and computing the ALP at NIL by adopting Internal CUP method; 7. The Ld. CIT(A) erred in ignoring the contractual terms of the Appellant with its AE in respect of charge of interest post availing interest period of 90 days, 8. The Ld. CIT(A) failed to appreciate the fact that the credit period allowed by non-AE (30 days) is less than the credit period allowed by AE (90 days); 9. The Ld. CIT(A) failed to appreciate the commercial and business realities of the industry in which the Appellant operates and business decision of the appellant of not charging interest from customers; 10. Without prejudice to above, the Ld. CIT(A) erred in not relying on external comparable data for determining the arm's length interest rate for the said transaction, 11. The Ld. CIT(A) failed to appreciate that payment of interest on trade credits is linked to the transaction of import of goods and hence should be aggregated with the said transaction. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged from debtors/Non AEs though allowable credit period 90 to 180 days to maintain cordial relation. The assessee has not benchmarked this transaction independently. The TPO apparently used internal CUP comparing the interest payments to AE vs. non AE. Looking into the entirety of the facts, in my opinion, there is an internal CUP available in respect of interest payment to AE vs. non AE and the assessee has failed to give any FAR analysis in respect of this transaction therefore this addition is upheld. 10. Before us, the counsel submits that for the year under consideration the assessee had paid interest amounting to ₹ 29,79,359/- on outstanding trade credit to its AEs ; the interest was paid to AE after 90 days from the date of invoice @ 5.5% per annum. It is submitted by him that the assessee wishes to file supporting evidence in the form of Circular issued by the Peri Gmbh (Parent Company of the appellant) to all its subsidiaries, communicating that interest at rate of 5.5% p.a. would be charged to all the subsidiaries (including the appellant), on outstanding trade payable to Peri Gmbh. It is thus stated that the supporting evidence be admitted for adjudication. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that corporate guarantee fee has been determined considering average cost of interest that AE has paid on its non-liquid financing instruments obtained from independent third parties. 5. The Ld. CIT(A) failed to appreciate that guarantee was provided to Appellant for the entire amount of credit/OD facility irrespective of the same being partly utilized by the Appellant 6. The Ld. CIT(A) failed to appreciate that payment of corporate guarantee is linked to transaction of import of goods and hence should be aggregated with the said transaction. 15. For the AY 2013-14, the assessee-company filed its return of income on 29.11.2013 declaring total income of ₹ 2,72,98,000/-. The TPO has made adjustment on account of fees on corporate guarantee of ₹ 7,23,100/- by determining ALP of guarantee fees paid at Nil as against 2% by the assessee to its parent company (Peri GMbh). The AO has followed the order of the TPO. 16. In appeal, the Ld. CIT(A) confirmed the order of the AO by observing that : I have gone through the TPO's order and also appellant's submission. The TPO in his order pg17 to 19 has explained in details why the assessee's contention is ..... 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