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2023 (2) TMI 1052 - AT - Income TaxTransfer pricing adjustment - outstanding receivables of the assessee by charging interest thereon - As per assessee account of unbilled revenues having not accrued to the assessee itself, there was no question of charging notional interest on the outstanding amount on account of unbilled revenue - HELD THAT:- Until bill is raised the assessee has no right to recover any amount from the other party, because it is the bill which notifies the other party of fixing liability on it to pay certain amounts. Until then, the assessee has no right to recover any amount. Therefore, with no right of recovery with the assessee, the amounts outstanding on account of unbilled amounts cannot be said to be outstanding “debtors” since no debt has accrued on the other party on account of these amounts. The other party having neither received the bill and as a consequence not accepted the same also, therefore, there is no debt which is accrued on the other party. These outstanding amounts on account of unbilled revenues cannot be termed as outstanding debtors and there is no question of charging any interest for the delayed recovery of the same. The unbilled revenue is therefore, we hold not to be treated as accounts receivable for the purposes of making any adjustment on account of notional interest earned thereon. No adjustment on account of notional interest was warranted since it had been demonstrated that even vis-à-vis non-AE the assessee was not charging any interest - As far as outstanding receivables are concerned, in the case of the amount outstanding with respect to AE it is only an amount which is to be considered, being the amount actually billed to the AE and outstanding as at the end of the year. It is a fact on record that with respect to non-AE also the assessee has not charged any interest on the outstanding balance, and again it is a fact that on record that the amount invoiced to non-AE is to the tune of Rs.4.12 crores. Therefore, even going by volume, the billed revenue with non-AE is much more than the AE and the outstanding receivable from AE and non-AE can be reasonably compared, even as per the reasoning of the ld.DRP. In the present case, no interest having been charged by the assessee to the non-AE outstandings, its transaction of outstanding receivables with AE without charging any interest on the same is therefore held to be justified to be at arm’s length. No adjustment, we hold therefore ,is to be made on account of non charging of interest on outstanding receivables of AE. And the adjustment made on account of the same is therefore directed to be deleted. Denial of grant of credit of TDS - HELD THAT:- Since the assessee has raised this issue for the first time before us after noting the fact of short credit of TDS given in the demand notice issued to the assessee after passing of the assessment order, We consider it fit to restore the issue back to the AO to consider the contentions of the assessee, verify all the documents placed by the assessee in support of its contention and thereafter allow the credit of TDS to the assessee in accordance with law.
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