TMI Blog2023 (4) TMI 980X X X X Extracts X X X X X X X X Extracts X X X X ..... uld have distorted the picture and recharacterized the transaction. Needless to mention that the law laid down by the Hon'ble High Court in the case of Kusum Healthcare was followed by the ITAT in case of Global Logic India Ltd. v. Dy. CIT [ 2017 (12) TMI 1052 - ITAT DELHI] , [ 2020 (6) TMI 712 - ITAT DELHI] , [ 2021 (11) TMI 1090 - ITAT DELHI] - Hence, keeping in view, the established position, we hereby deleted the addition made by the Assessing Officer. Appeals of the assessee are allowed. - ITA No.366/Del./2022, SA No.69/Del/2022 (in ITA No.366/Del./2022) - - - Dated:- 19-1-2023 - SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER and SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER For the Assessee : Shri Ankul Goyal, Advocate For the Revenue : Shri Rajesh Kumar, CIT DR ORDER PER SHAMIM YAHYA, ACCOUNTANT MEMBER : This appeal by the assessee is directed against the order of the Assessing Officer dated 25.01.2022 passed under section 143(3) r.w.s. 144C of the Income-tax Act, 1961 (for short the Act ) pursuant to the directions of the Dispute Resolution Panel (DRP). 2. Grounds of appeal taken by the assessee read as under :- 1. That on the facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessee's margin. 3.3 That on the facts and circumstances of the case and in law, the Ld. TPO/ Ld. AO/ the Hon'ble DRP have erred in disregarding that Indian TP regulations permit aggregation of closely linked transactions for the purpose of benchmarking under TNMM analysis. Rule 10A(d) of the Income Tax Rules, 1962 ( the Rules ) define the term transaction for the purpose of 'international transaction' as Transaction includes a number of closely linked transactions. 3.4 That on the facts and circumstances of the case and in law, the Ld. TPO/ the Ld. AO/ the Hon'ble DRP have erred in not considering the fact that working capital adjustment factors the impact of receivables on the pricing/ profitability of the Appellant vis-a-vis that of comparable companies. 3.5 That on the facts and circumstances of the case and in law, the Ld. TPO/ the Ld. AO/ the Hon'ble DRP have erred in completely disregarding the fact that the AEs do not charge any interest from the Appellant on outstanding payable due to such AEs. 3.6 That on the facts and circumstances of the case and in law, the Ld. TPO/ Ld. AO have erred in using an SBI Prime Lending R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mended by TPO u/s 92CA of the Income Tax Act, 1961 : During the year under consideration, the assessee company entered into International Transactions 'with Associated Enterprises' within the meaning of Section 92B of the I.T. Act, 1961. The details of said transactions are mentioned in Form 3CEB by the assessee. The case was referred to the TPO as per the provision of Section 92CA(1) of the Act for computation of Arms Length Price in relation to the International Transaction. 4.2 Subsequently, an order u/s 92CA(3) of the Act was passed by the TPO, DC IT, IT TP-1(1)(1), New Delhi on 29.01.2021 wherein an adjustment of Rs.147,38,75,440/- attributable to difference in Arms Length Price of International Transactions entered by the assessee company with its associated enterprises has been made. The details of TP Adjustments as per Para No.8 9 of the TPO order are reproduced as under:- S.No. Nature of international transaction Adjustment u/s 92CA (Rs.) 1 Software Development Services 106,88,84,280 2 Technical Support Services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is submitted by the assessee that outstanding receivables are already a part of the main transaction of provision of support services (under service segment). The assessee further submits that in relation to the service segment, the assessee earns approximately 90% of its total revenue from its AEs and keeping in view the strong presence and volume of business with AEs, no third party would be willing to charge interest on amount receivable from such key customers and would rather invest in relationship by allowing better credit terms in expectation of more business and profits. Based on the aforesaid, non-charging of interest by the assessee on outstanding receivable from its AE is said to be prudent from a businessmen's perspective and does not warrant any adjustment. It is also submitted that the assessee is a debt free company and, therefore, no adjustment towards interest on delayed receivables is warranted. Reliance is placed on Bechtel India Pvt. Ltd. vs. DCIT [I.T.A .No. 1478/Del/2015], Global Logic India Ltd vs DCIT (1104/Del/2015) and Kadimi Tool Manufacturing Co (P) Ltd vs DCIT [2017] 187 taxmann.com 42 (Del-Trib.). It is further submitted that no interest is char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. Per contra ld. DR for the Revenue relied upon the order of DRP and further referred to ITAT decision in the case of Bechtel India Ltd. (supra). 12. We find that ITAT in its recent decision in Orange Business Services India Solutions )P.) Ltd. has elaborately noted similar facts and has held as under :- 10. The Id. DRP held that the assessee's reliance on the Delhi High Court's decision in Kusum Health Care (P) Ltd. (supra) is quite misplaced as in that case an important aspect of the matter was not brought to the notice of their lordships of the High Court that this new explanation to section 92B was specifically inserted to reiterate the fact that the items enumerated in the explanation will ipso facto partake the character of an international transaction and will be subjected to transfer pricing provisions irrespective of whether they have any bearing on profit/loss of the relevant year or their impact on profit/loss account is determinable under normal computation procedures other than the transfer pricing regulations. The ld. DRP quoted legislative intent which has been elucidated in the Explanatory Memorandum to the Finance Bill 2012. 11. This issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon'ble Delhi Tribunal in case of Ameriprise India (P) Ltd. (supra) on issue of interest charged on outstanding receivable and concluded that the assessee's contention that the TTAT erred in concluding that charging of interest on delayed receipt, of receivables is a separate international transaction which requires to be benchmarked independently, is incorrect. 18. Aggrieved, the taxpayer (Mckinsey Knowledge) filed Review Petition before the Hon'ble High Court against the order dated 9-8-2018 and the Hon'ble High Court, vide order dated 16-4-2019 in Review Pet. No. 360/2018, was pleased to recall/correct their order dated 9-8-2018 holding as under: 9. As far as the first argument by the review petitioner, i.e., the answer to the question of bringing to tax the interest amounts goes, this Court is of the opinion that the fact that the order of 7-2-2018 referred to Kusum Health Care had expressly remitted the matter for consideration to the ITAT supports the assessee's submission. All that the court had stated on 7-2-2018 was that the matter required re-examination by the ITAT in the light of the Kusum Health Care (supra). For these reasons, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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