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2020 (12) TMI 294 - AT - Income TaxTP Adjustment - Addition relating to Arm’s Length Price Adjustment towards interest on receivables from AE’s - Finding on the No.of days delay in receivables - HELD THAT:- Coordinate bench of this tribunal in the case of Infor (India) Pvt. Ltd [2020 (12) TMI 235 - ITAT HYDERABAD] held that with the introduction of Explanation to section 92B, interest on receivables constitute international transaction and separate adjustment is required to be made on account of interest on delayed payments. Therefore we, hold that the Ld. DRP/TPO/AO is justified in imputing the interest on deferred receivable as international transaction accordingly we, uphold the order of the DRP/AO and dismiss the assessee's appeal in these grounds. Interest on receivables - receivables represent the trade receipts and the same are required to be received in foreign exchange - The Tribunal in the case of M/s. Value Labs Technologies [2020 (9) TMI 1149 - ITAT HYDERABAD] has held that in the case of export turnover, which required to be received in foreign exchange, the international transaction shall be considered at LIBOR + 200 basis points rate after the expiry of credit period. Also in the case of Cambridge Technology Enterprises Ltd [2019 (11) TMI 1112 - ITAT HYDERABAD]Tribunal held that notional interest has to be charged at LIBOR + interest rates as the receivables are in foreign exchange - we hold that interest rate should be charged on receivables at LIBOR + 200 points. Accordingly, we direct the AO/TPO to charge interest at LIBOR + 200 basis points. Credit period - TPO has allowed 30 days and no agreement was placed by the assessee before us. However, in the case of M/s. Value Labs(Supra), on which reliance was placed by the assessee, this Tribunal held that interest to be charged in the case of delay between 90 to 120 days and in the case of Infor (India) Pvt. Ltd., ITAT allowed 90 days. Considering the facts and merits of the case, we hold that 120 days is reasonable period in this case, hence, we direct the AO/TPO to allow 120 days credit period and charge interest over and above the outstanding period of 120 days. Netting of interest - counsel argued that interest on payables is to be netted against the outstanding receivables - HELD THAT:- This issue has been considered by the DRP and in the absence of details, the assessee's request for adjustment was rejected. No details are furnished by the assessee even before us with regard to netting of payables against receivables. We, therefore, reject the ground of the assessee on this issue of netting out of payables against the receivables.
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