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2021 (5) TMI 1011 - ITAT HYDERABADTP Adjustment - ALP adjustments pertaining to interest on receivables qua its international transactions with the overseas Associated Enterprise (AE) - CIT-DR’s vehement contention is that the TPO as well as the DRP have rightly taken the foregoing SBI rate’s benchmark involving the short term deposits - HELD THAT:- We find no merit in the instant argument as such a short term deposit cannot be taken at par with an international transaction u/s.92B of the Act since the latter involves foreign currency and overseas market conditions. In addition to this, learned lower authorities have also not adopted any uncontrolled party/comparable in the very segment as well so as to come to the conclusion that the assessee’s receivables in case of overseas AEs involved more than the market practice of reasonable time period. We keep in mind all these clinching aspects and direct the TPO to delete the impugned ALP adjustment in issue. The assessee’s former substantive ground stands accepted in the above terms. Such interest on receivables ought not to have been treated as an international transaction covered under Explanation(c) to Section 92B of the Act, inserted in the Act vide Finance Act, 2012 w.e.f.01-04- 2001 is rejected as per the hon'ble Madras high court’s decision in Redington India Pvt. Ltd., Vs. DCIT, in Tax Appeal No.590 and 591 of 2019 dt.10-12-2020 holding that a corporate guarantee indeed forms an international transaction and covered by the explanation to section 92B with retrospective effect. There is hardly any issue that the departmental authorities have applied the foregoing Explanation with retrospective effect qua issue of a corporate guarantee which also included the impugned interest on receivables. The assessee’s legal argument is declined therefore.
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