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2023 (3) TMI 189 - AT - Income TaxTP Adjustment - Adjustment done to manufacturing segment - Non-consideration of Internal TNMM Analysis undertaken by the appellant - HELD THAT:- As decided in assessee’s own case [2022 (2) TMI 1351 - ITAT BANGALORE] direct the Ld.TPO to carry out detailed analysis of the international transactions using TNMM as MAM, based on the materials filed by assessee related to internal comparables. In the event the details filed are satisfactory, the determination must be confined to the internal comparables so filed by assessee. In the event, the details filed by assessee is not verifiable or not in accordance with law, the Ld.AO/TPO is open to carry out analysis in accordance with law. Thus we send back this issue to the file of AO/TPO for de-novo consideration in the above terms and decide the issue as per law. Needless to say reasonable opportunity of hearing to be given to the assessee and the assessee is directed not to seek unnecessary adjournments for early disposal of the case. Delayed trade receivables from AEs - Assessee contested interest on delayed receivables should not be considered as international transactions and notional interest computed by the AO/TPO/DDRP which is libor +450 basis points, therefore the adjustment should not be made for the interest on delayed receivables - HELD THAT:- We reject the plea of the assessee that the interest on receivable is not an international transactions after relying on the judgments as cited by the DRP in his order and the order of the coordinate bench in the case of Outsource partners International (P.) Ltd.. [2022 (6) TMI 1361 - ITAT BANGALORE] We also uphold that the interest on delayed receivables is an international transactions, accordingly the adjustment should be made on those receivables which were not realized within the agreements period.. During the course of hearing, it was brought into the notice of both the parties that in respect of rate for calculation of interest is to be considered by the AO/TPO/DRP at libor + 350 basis points considering the nature of business and location of the receivables with the consent of AR. Accordingly this issue is also remitted back to the file of the AO. Deduction u/s 35(2AB) - weighted average deduction - HELD THAT:- ITR was filed on the basis of certificate issued by the auditors. The form No.3CL was issued in the month of December 2019 and the DSIR certified sum of Rs.1104.60 lakhs was admissible for deduction. Accordingly the difference was not approved by the DSIR which relates to certain miscellaneous revenue expenditure incurred in connection with research and development work, therefore, the AO disallowed the weighted average deduction and added into the total income of the assessee - we are remitting this issue back to the file of the AO for verification of the nature of expenditure incurred by the assessee in terms of sec.37(1) of the Act, if the AO finds that these expenditures are covered u/s 37(1), he may allow the actual expenditure incurred by the assessee which is not part of the weighted average deduction allowed as per sec.35(2AB) of the Act. The assessee had undertaken during the course of hearing that assessee will be able to prove with the necessary documents for substantiating his case. Accordingly, the assessee is directed to produce necessary documents. This issue is allowed for statistical purposes.
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