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2023 (2) TMI 1188 - AT - Income TaxTP Adjustment - Comparable selection - TPO has not accepted these companies only on the basis of persistent loss company - HELD THAT:- Since in this case the TPO has not accepted these companies only on the basis of persistent loss company, the assessee has provided functional results for 3 companies i.e 31/03/2014, 2015 & 2016 as above and in which we observe that in case of Sundram Business Service Ltd. , the assessee has shown profit of Rs.69,000/-. Further in case ACE Software Ltd., the assessee has shown profit continuously. In case of Hurton Communication Ltd., the assessee has calculated profit for three consequent financial years but while the filter applied, the TPO has observed it as persistent loss company. However, form the order of the TPO/DRP, we did not find any where that the assessee raised any specific objection . Since the assessee raised this issue before us, and these were included as comparables by the assessee and filed financial statements also, therefore, considering the totality of facts, the issue is remitted back to the AO/TPO/DRP for a fresh consideration. The assessee is given liberty to file necessary documents for substantiating its case. The AO/TPO/DRP is directed to decide the issue as per law. Transfer pricing adjustment relating to notional interest on outstanding trade receivables - assessee has raised that the interest on receivable should not be made adjustment because the TPO himself allowed 90 days credit period and all the receivables were received within the period of 90 days then why the TPO has made adjustment under this head and he also submitted that this company is a debt free company, therefore, the adjustment should not be made - HELD THAT:- We noted from the documents of the assessee that the TPO has allowed 90 days period in all the invoices are received within the 90 days of the period no adjustment can be made but the TPO has applied 6 months LIBOR + 450 basis points as per many decision of the Tribunal with the interest on receivable beyond he credit period is an international transaction and it is termed as capital financing to its AEs. We remand this issue to the file of TPO/AO for the recalculation of the notional interest receivables if the TPO found that the invoices raised by the assessee is not received within the credit period of 90 days. The interest may be charged LIBOR rate of 6 months + 350 points, the assessee directed to provide necessary details for earlier disposal of the case, therefore this issue is allowed for statistical purposes.
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