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2023 (6) TMI 1349 - AT - Income TaxTP adjustment - granting extended credit periods to the associated enterprises of the assessee without charging any interest on delayed payments - TPO has made adjustment to the amount on account of arms length price in respect of credit period extended by the assessee to its associates Enterprises in USA - TPO had taken the stand that for extending credit period to its associated enterprises the assessee was required to charge the interest and has taken the LIBOR rate of 3.40% and the amount loaded on it was plus 300 points (6.40%) - CIT(A) has partly allowed the grounds of appeal of the assessee, holding that USD LABOR rate at that point of time being 3.40% with a mark up of 80 basis point would be adequate for determining ALP interest for trade credit which can reasonable to charged to the Associates Enterprises - HELD THAT:- Considering the undisputed fact that assessee has also extended credit period to its non-associated enterprises without charging any interest on delayed payment, therefore, after following the decision of Hon’ble Jurisdictional High court as referred in M/s Indo American Jewellery Ltd. [2013 (1) TMI 804 - BOMBAY HIGH COURT] and Mr Livingstone Ltd. [2016 (11) TMI 1647 - BOMBAY HIGH COURT] this ground of appeal of the assessee is allowed that in such circumstances the AO/TPO is not required to make the adjustment on notional basis. Claim of deduction u/s 10A - assessee submitted that for the purpose of computing the export turnover u/s 10A and AO has incorrectly reduced the expenditure incurred in foreign currency on telecommunication charges and expenses incurred in foreign currency in providing technical services outside of India - HELD THAT:- As perused the decision of Jurisdictional High Court of Bombay in the case of assessee/Tech Mahindra Ltd. [2014 (8) TMI 71 - BOMBAY HIGH COURT] wherein held that expenses incurred in foreign currency on telecommunication charges and providing technical services outside India should be excluded from total turnover for the purpose of computation of deduction u/s 10A. During the course of assessment proceedings, assessee has also placed on record written submission that it has not separately recovered any freight telecommunication charges or insurance attributable to the delivery of the article or computer software outside of India or expenses, if any incurred in foreign exchange in providing the technical services outside India from its customer. The assessee has also furnished the annexure 1 along with written submission showing working of deduction u/s 10A of without including the above referred expenses. After considering that it has never recovered foreign currency expenses from the customers and it was not part of its total turnover, therefore, we allow the appeal of the assessee that expenditure incurred on foreign currency on telecommunication charges and provision of technical services outside of India should not be excluded from export turnover for the purpose of computing u/s 10A, since this expenditure were not included in the export turnover of the assessee. Decided in favour of assessee.
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