TMI Blog2021 (9) TMI 1422X X X X Extracts X X X X X X X X Extracts X X X X ..... omparables Once the working capital adjustment is given, it subsumes the interest on receivables and no separate benchmark for it has to be made. Respectfully following the view taken by the Hon ble jurisdictional High Court in the case of Kusum Healthcare (supra), we hold that the addition made on account of interest on receivables cannot be sustained. - Decided in favour of assessee. Non-grant of credit of entire TDS - HELD THAT:- Both the counsel agreed on the point that it would be suffice if the learned Assessing Officer is required to verify and grant the credit of TDS as per law. We direct the learned Assessing Officer to verify and grant the TDS under law. - ITA No. 513/Del/2021 And SA No. 92/Del/2021 (in ITA No. 513/Del/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the Ld. TPO erroneously considered the continuing debit balance of the receivables from the AEs as an unsecured interest free loan granted by the assessee to its AE s during the relevant previous year. According to the assessee once the primary transaction of provision/receipt of consultancy services is held to be at arm s length price, then the intercompany receivables arising therefrom (being consequential and closely linked to the main transaction) also conform to the arm s length principle. Case of assessee is that it is a debt free company, and therefore no borrowed funds was utilised to grant extra credit period to the AEs; that no interest was paid by the assessee to its AEs and therefore, consequently the assessee doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elate to the cost of service/product, the agreement in respect of which permits the payment within a stipulated period, whereas the benchmarking of the interest on receivables commences with such interest payable from the expiry of the period prescribed in the agreement. Ld. DRP accordingly negatived the contention of the assessee and while upholding the separate benchmarking of the interest on receivables outstanding for a period beyond 60 days. 5. Aggrieved by the action of the Ld. DRP, assessee approached the Tribunal in this appeal contending that the authorities below failed to appreciate the fact that the assessee has not been charging any interest from third-party customers as an outstanding receivable which represent an arm s len ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithin the purview of TP regulations, was not considered in Kusum Healthcare, whereas it was considered in Patni Computer Systems Ltd (supra) and Bechtel India private limited vs. ACIT(supra). 8. A perusal of the order of the coordinate Bench in Bechtel India (P.) Ltd. v.ACIT [2017] 85 taxmann.com121 (Del-Trib) reveals that heavy reliance was placed by the Tribunal on the decisions in Techbooks International (P.) Ltd. v. Dy. CIT [2017] 63 taxmann.com 114 (Del-Trib). Mckinsey Knowledge Centre (P.) Ltd. v. Dy. CIT [2017] 77 taxmann.com 164 (Delhi-Trib). When the decision in Mckinsey Knowledge Centre (P.) Ltd. v. Dy. CIT [2017] 77 taxmann.com 164 (Delhi-Trib) reached Hon ble Delhi High Court, vide decision reported in [2018] 96 taxmann.com 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide order dated 25.4.2017), the matter requires further examination/scrutiny; the reasons for the credit or delay in payment needs to be examined. The matter is therefore remitted back to the ITAT which may, if deem necessary, file a report in this regard. 10. It is, therefore, clear that even subsequent to the amendment brought by the Finance Act, 2012, the view taken in Kusum Healthcare Private Limited reported in [2017] 398 ITR 66 (Delhi)still holds the field.In Kusum Healthcare Private Limited vs. ACIT in ITA No. 6814/Del/2014, a coordinate Bench of this Tribunal held that no additional imputation of interest on the outstanding receivables is warranted if the pricing/profitability is more than the working capital adjusted margin o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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). 11. From the above, it is, therefore, clear that when once the working capital adjustment is given, it subsumes the interest on receivables and no separate benchmark for it has to be made. Respectfully following the view taken by the Hon ble jurisdictional High Court in the case of Kusum Healthcare (supra), we hold that the addition made on account of interest on receivables cannot be sustained. 12. The other ground argued before us is in respect of non-grant of credit of entire TDS amounting to Rs.3,24,57,359/-as cla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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