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2021 (2) TMI 896 - AT - Income TaxTP Adjustment - delayed payment treated as unsecured loan advanced to AE’s - interest cost to be charged from the AEs for delay in payment beyond the stipulated date - TPO benchmarked the international transactions using CUP method on the delayed payment made by its AEs using LIBOR plus 400 basis points and computed interest at the rate of 4.45% and thereby made an upward adjustment - HELD THAT:- When the assessee has already taken in to account the impact of outstanding receivables on profitability while making working capital adjustment of the tax payer vis-à-vis of its comparables, then any further adjustment on account of delay payment outstanding to AE cannot be recharacterized as unsecured loan. From the perusal of the audited Balance sheet of the assessee which is placed in the paper book filed we find that assessee has no debts on account of secured or unsecured loans meaning thereby that it is a debt free company. We find that Hon’ble Delhi High Court in the case of PCIT vs. Bechtel India Pvt. Ltd. [2016 (9) TMI 196 - DELHI HIGH COURT] has upheld the order of ITAT wherein the Tribunal had held that when the assessee is debt free company the question of receivable does not arise. Revenue had relied on the decision of Hon’ble Delhi High Court in the case of Cotton Natural [2015 (3) TMI 1031 - DELHI HIGH COURT]. We find that the facts in the case of Cotton Natural are different and the question before the Hon’ble High Court was different and in such a situation, we are of the view that the ratio of the aforesaid decision in the case of Cotton Natural (supra) will not be applicable to the case of the assessee in the present case. - Decided in favour of assessee.
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