TMI Blog2018 (5) TMI 2142X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion that this period is reasonable and so no interest can be levied, just because amounts are shown as 'outstanding'. Accordingly, we cancel the interest levied and allow assessee's contentions - thus we set aside the order of CIT(A) and allow the grounds raised by the assessee on this issue. - ITA No. 1927/Hyd/2017 - - - Dated:- 11-5-2018 - Smt P. Madhavi Devi, Judicial Member And Shri S. Rifaur Rahman, Accountant Member For the Assessee : Shri R. Vijayaraghavan. For the Revenue : Shri J. Sirikumar. ORDER PER S. RIFAUR RAHMAN, A.M.: This appeal filed by the assessee is directed against the order dated 22/09/2017 of CIT(A) 5, Hyderabad for AY 2013-14. In the appeal, the assessee is contesting the ALP adjustment on account of interest on receivables by raising the following grounds of appeal: 1. That on the facts and circumstances of the case and in law, the Ld. Commissioner of Incometax (Appeals) [ CIT(A) ) erred in confirming the transfer pricing adjustment on account of interest on outstanding receivables from Associated Enterprise ( AE'). 2. The on the facts and circumstances of the case and in law, the Ld. CIT (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 143(2) and 142(1) were issued and served on the assessee. 2.1 During the year under consideration, assessee has entered into international transactions and accordingly, the case was referred to Transfer Pricing Officer (TPO) for determining ALP. Assessee has entered into following international transactions: AE Nature of transaction Amount (Rs. USP Holding LLC, USA Provision of testing certification services 57,78,86,457 Provision of customer outreach services 3,77,57,019 Interest on ECB Loan 1,33,79,306 Repayment of ECB Loan 3,89,62,000 ECB Loan outstanding 30,45,80,080 Interest on ECB loan outstanding 11,39,224 Investment in equity shares 21,54,99,996 Reimbursement of expenses 1,95,58,980 Payables 2,98,77,923 Receivables 13,95, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 254 12/7/2012 156097 11/13/2013 341 311 19219 255 12/11/2012 194700 11/13/2013 337 307 23664 256 12/11/2012 131611 9/17/2013 280 250 13026 278 12/21/2012 245244 9/17/2013 270 240 23302 279 12/21/2012 358270 9/17/2013 270 240 34041 280 12/21/2012 254677 9/17/2013 270 240 24198 301 1/9/2013 198680 9/17/2013 251 221 17383 302 1/9/2013 121846 9/17/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 186 6306 348 2/24/2013 181959 9/17/2013 205 175 12606 349 2/25/2013 331152 11/13/2013 261 231 30284 388 2/27/2013 161132 9/17/2013 202 172 10972 389 2/27/2013 120305 9/17/2013 202 172 8192 390 2/27/2013 64070 9/17/2013 202 172 4363 391 2/27/2013 217837 9/17/2013 202 172 14833 415 3/14/2013 123533 9/17/2013 187 157 7678 416 3/14/2013 17515 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vables would not constitute international transaction. b. Receivables are not in the nature of capital financing and hence would not constitute international transaction even as per the amended provisions. c. When the primary service transactions are found to be at arm s length, adjustment could be made on account of deferred receivables. d. Receivables are closely linked with the principal transaction of provision of service, and not an independent international transaction. Re-characterising the transaction as loan transaction is not permissible. e. Notional interest cannot be imputed on receivables when there is no finance cost to the assessee and when it has no external borrowings or when the assessee is a debt free company. 5. After considering the submissions of the assessee, the CIT(A) has confirmed the findings of TPO with regard to interest on receivables as ALP adjustment. However, he has given some concession with regard to rate of interest to be charged. He has remitted this matter back to AO/TPO to consider the rate of interest on domestic term deposit of SBI instead of 14.45% with a clear cut direction to restrict the interest up to the end of the yea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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