Latest - TMI e-Newsletter
New User/ Regiser
2022 (1) TMI 1275 - Income Tax
TP Adjustment - Comparable selection - functional dissimilarity - HELD THAT:- Companies functionally dissimilar with that of Assessee ITES segment need to be deselected from final list.
Also if a company is making profit in any one of the 3 immediate preceding years, then it should be considered as a comparable.
Re-characterizing certain trade receivables as unsecured loans and computing notional interest on such trade receivables - main contention of the ld. AR is that deferred receivables would not constitute a separate international transaction and need not be benchmarked while determining the ALP of the international transaction - HELD THAT:- We are of the opinion that deferred receivables would constitute an independent international transaction and the same is required to be benchmarked independently as held in PCIT v. AMD (India) Pl. Ltd. [2018 (8) TMI 2094 - KARNATAKA HIGH COURT]
Once we have held that the transaction between the assessee and AE was in foreign currency with regard to receivables and transaction was international transaction, then transaction would have to be looked upon by applying the commercial principles with regard to international transactions and accordingly proceeded to take into account interest rate in terms of London Inter Bank Offer Rate [LIBOR] and it would be appropriate to take the LIBOR rate + 2%. For this purpose, we place reliance on the judgment of the Bombay High Court in the case of CIT v. Aurionpro Solutions Ltd.[2017 (6) TMI 1087 - BOMBAY HIGH COURT] It is ordered accordingly.