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2021 (10) TMI 1420 - AT - Income TaxTP Adjustment - Foreign Exchange Fluctuation - international transaction or not? - HELD THAT:- Since the forex difference arises out of an international transaction, it is pertinent for the assessee to pass on the forex fluctuation to its AE. Hence, we hold that the assessee has correctly treated it under the operating income. Interest on Receivables - TPO reclassified the outstanding receivables beyond the credit period of 30 days as deemed loans to the AE and treated them as separate international transaction - TPO by applying a markup of 400 basis points on LIBOR on the receivables made an addition - HELD THAT:- It is settled principle that there is no need to benchmark the interest on receivables wherein the interest has not been charged from either of the parties i.e. payables and receivables. In the instant case, period of 90 days has been allowed and the amounts have been received within the range of 90 to 95 days. In the absence of any fact to prove that the assessee is liable to payment of interest, no adjustment is warranted. There cannot be one straight jacketed formula to allege that the assessee has received interest or the delay was allowed to confer an undue advantage to the other party. There can be a delay in the collection of monies for the supplies made, even beyond the agreed limit, due to various factors which would be investigated on a case to case basis and also the case of Gillette India Limited [2017 (7) TMI 1188 - RAJASTHAN HIGH COURT] wherein as affirmed the order of the Tribunal wherein it was held that the transaction of allowing credit period to the AE for realization of its sale proceeds is not an independent international transaction but is closely linked with the sale transactions of the AE. Decided in favour of assessee. Deduction of Education Cess - Reading the provisions of Section 40(a)(ii), the assessee argued that education cess paid on Income Tax doesn’t come under the purview of the definition as it is levied on the amount of Income Tax but not on profits of business - HELD THAT:- keeping in view the provisions of the Act pertaining to Section 40(a)(ii) and Section 115JB, Circular of the CBDT No. 91/58/66ITJ(19), the orders of Co-ordinate Benches of ITAT and judicial pronouncements of the Hon’ble High Court of Bombay [2020 (3) TMI 347 - BOMBAY HIGH COURT] and Hon’ble High Court of Rajasthan [2018 (10) TMI 589 - RAJASTHAN HIGH COURT], we hereby hold that the assessee is eligible to claim the deduction of the ‘Education Cess’ as per the provisions of Section 37 of the Income Tax Act.
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