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2023 (2) TMI 195 - AT - Income TaxTP Adjustment - addition being interest imputed by TPO on outstanding receivables from the Associated Enterprises (AE) - whether delay in receivable would fall within definition of international transaction ? - assessee is a non resident corporate entity engaged in the business of providing consultancy and advisory services (including project construction and execution thereof) in the field of water management industry and in the year under dispute, the assessee entered into various international transactions with its overseas Associated Enterprises (AE’s) - HELD THAT:- In the facts of the present appeal, on perusal of material available on record it is evident, in a number of instances the delay in receiving outstanding amounts against the invoices raised varied between minimum of 17 days to maximum 334 days. Thus, in our view, by permitting the AE to hold on to the payments, the assessee has allowed the AE to reap financial benefit at the cost of assessee, as, the assessee is incurring interest cost. Therefore, interest cost has to be imputed on delay in receiving outstanding invoice amounts. We find merit in the alternative submissions made by the assessee as regards non charging of interest beyond 31.03.2013 and charging interest after allowing normal credit period of 60 days. This is so because, the assessee has demonstrated before us that it has allowed credit period of 60 days to non AE’s and other customers. Before us, the assessee has furnished the computation of interest charged for delays relating to the period 01.04.2010 to 31.03.2013 considering normal credit period of 60 days. As per the said computation, the total interest chargeable on six months LIBOR + 400 basis points works out to Rs.2,25,276/. We direct the Assessing Officer to factually verify the aforesaid computation furnished by the assessee and restrict the addition to Rs.2,25,276/-. The ground is partly allowed. Addition to the contract revenue - adopting accounting policy as per accounting standard (AS)-7 the assessee recognized contract revenue from construction contract on percentage of completion basis - HELD THAT:- Assessing officer estimated the budgeted contract cost in an indirect manner by adopting gross margin of 6.9% with regard to all activities of the assessee including all contracts. While deciding the objections on the issue Ld. DRP directed the Assessing Officer to adopt the budgeted contract costs by reducing from the contract the gross profit based on the gross margin of 6.9% alongwith other operating expenses. Before us, it is a common point between the parties that the issue is squarely covered by the decision of the Tribunal in assessee’s own case in assessment year 2011-12. [2019 (10) TMI 1261 - ITAT DELHI] wherein as held Assessing Officer has been consistent in accepting the methodology of the assessee adopted consistently following AS-7. Considering the facts of the case in totality in the light of the orders mentioned hereinabove, we do not find any merit in the appeal filed by the Revenue. We also do not find any merit in the methodology adopted by the DRP while dismissing the appeal of the revenue. We direct the Assessing Officer to delete the addition. Disallowance u/s 43B - leave encashment benefit paid to employees during the previous year relevant to assessment year under dispute - deduction was not claimed by the assessee in the return of income - HELD THAT:- Departmental authorities have refused to entertain assessee’s claim simply on the ground that the assessee had not claimed the deduction by way of a revised return of income. Now, it is fairly well settled that a claim not made by the assessee in the return of income due to inadvertence can be claimed at appellate stage. In view of the aforesaid, we are inclined to restore the issue to the AO for examining the claim on merits and decide it in accordance with law. We make it clear, we have not expressed any opinion in so far as the merit of the issue is concerned. Assessing Officer must afford a reasonable opportunity of being heard to the assessee while deciding the issue. This ground is allowed for statistical purpose.
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