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2016 (10) TMI 1040 - AT - Income TaxTPA - computing the operating margin of the company by considering non-operating cost as operating such as reimbursement of expenses - Held that:- Considering the submission of the assessee that these amounts were adjusted without any mark up as having perused the relevant clauses of the agreement, we do find that this contention of the assessee is correct and there is no mark-up in the reimbursements. We direct the Assessing Officer/TPO to exclude the reimbursement costs while working out the operating costs. This ground is allowed. Charging of notional interest - Computation of the ALP of the international transaction of delayed payments arising during the course of business - TPO has calculated the TP adjustment on account of interest on outstanding debts beyond a period of 45 days - Held that:- This issue has been discussed in detail by the decision of the coordinate ‘I’ Bench of ITAT Delhi in the case of Ameriprise India P. Ltd.[2015 (8) TMI 652 - ITAT DELHI] held that non charging or undercharging of interest on the excess period of credit allowed to the AE for the realization of invoices amounts to an international transaction and the ALP of such an international transaction is required to be determined. From the table given on pages 107 to 109 of the TPO’s order it is seen that the delay in realization ranges from a lowest of five days to the highest of 119 days. We do agree with the contention of the department that the non realization of the invoice value beyond the stipulated period is a separate international transaction whose ALP is required to be determined. The non charging or under charging of interest on the excess period of credit allowed to the AE for the realization of invoices amounts to an international transaction and the action of the TPO in this regard cannot be faulted with. However, while rejecting the assessee’s contention that the interest on receivables should not be bench-marked, we restore the issue to the file of the TPO for the limited purpose of verifying the calculation/working of interest after allowing a reasonable opportunity of being heard to the assessee.
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