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2022 (3) TMI 1503 - AT - Income TaxTP adjustment - interest imputed on outstanding receivables - TPO computed interest on outstanding receivables at the rate equal to 5.87 % PLR (6 months LIBOR +400 basis points) - DRP directed the Ld.AO to apply short term deposit rate of SBI prevailing for financial year relevant to assessment year under consideration that lead to enhancement - HELD THAT:- We note that expression 'debt arising during the course of business' refers to trading debt arising from sale of goods or services rendered in course of carrying on business. Once any debt arising during course of business is an international transaction, he submitted that any delay in realization of same needs to be considered within transfer pricing adjustment, on account of interest income short charged or uncharged. As argued that insertion of Explanation with retrospective effect covers Assessment Year under consideration and hence under/non-payment of interest by AEs on debt arising during course of business becomes international transactions, calling for computing its ALP. This Bench referred to decision of Special Bench of this Tribunal in case Of Instrumentation Corpn. Ltd. [2016 (7) TMI 760 - ITAT KOLKATA] held that outstanding sum of invoices is akin to loan advanced by assessee to foreign AE., hence it is an international transaction as per explanation to section 92B of the Act. We also perused decision relied upon by the Ld.AR. In our considered opinion, these are factually distinguishable and thus, we reject argument advanced by the Ld.AR. Alternatively, it has been argued that working capital adjustment subsumes sundry creditors. In such situation computing interest on outstanding receivables and loans and advances to international transaction would amount to double taxation. We deem it appropriate to set aside the impugned order on this issue and remit the matter to the file of the Ld.AO/TPO for deciding it in conformity with the above referred judgment ORANGE BUSINESS SERVICES INDIA SOLUTIONS PVT. LTD. VERSUS DCIT, CIRCLE-3, GURGAON [2018 (2) TMI 1151 - ITAT DELHI] Needless to say, the assessee will be allowed a reasonable opportunity of being heard in such fresh proceedings. Appeal filed by the assessee stands allowed for statistical purposes.
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