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2023 (9) TMI 736 - AT - Income TaxTP Adjustment - interest on outstanding receivables - assessee submitted interest on outstanding receivables cannot be treated as a separate international transaction - HELD THAT:- This issue is no longer res-integra by virtue of the decision of Instrumentation Corporation Ltd. [2016 (7) TMI 760 - ITAT KOLKATA] Therefore this argument by the Ld.AR stands rejected at the outset. Rate that needs to be applied for computing interest in the hands of assessee - As decided in Cotton Naturals (India) Pvt. Ltd. [2015 (3) TMI 1031 - DELHI HIGH COURT] it is the currency in which the loan is to be repaid that determines the rate of interest and hence the prime lending rate cannot be considered. The Ld.AR before us has not provided the details of the outstanding debtors and the delay in respect of the same. As the agreement / invoice grants for 30 days credit period which is observed by the DRP, we direct the Ld.AO/TPO to compute interest on such outstanding receivables that exceeded 30 days credit period, by applying LIBOR rate + 200 basis points. In the event, the receivables get subsumed while computing the net margin of assessee, the same shall stand excluded - We therefore remand this issue to the Ld.AO to compute the disallowance if any in accordance with law. Disallowance of deduction claimed u/s. 80G - donations made in pursuance of the CSR policy - HELD THAT:- As decided in assessee’s own case for A.Y. 2016-17 [2022 (11) TMI 1320 - ITAT BANGALORE], wherein, this Tribunal followed the decision of First American (India) Pvt. Ltd. [2020 (5) TMI 187 - ITAT BANGALORE] authorities below have erred in denying claim of assessee under section 80G of the Act. We also note that authorities below have not verified nature of payments qualifying exemption under section 80G of the Act and quantum of eligibility as per section 80G(1) of the Act. Under such circumstances, we are remitting the issue back to Ld.AO for verifying conditions necessary to claim deduction under section 80G of the Act. Assessee is directed to file all requisite details in order to substantiate its claim before Ld.AO. Ld.AO is then directed to grant deduction to the extent of eligibility. Disallowance of provision for gratuity u/s. 40A(7) - assessee claimed leave encashment and gratuity that was disallowed in earlier years and claimed in the year under consideration on payment basis this year - AO disallowed the claim as the same was not verifiable with respect to Form 3CDB - HELD THAT:- Assessee has not provided satisfactory explanation with reference to documentary evidence to substantiate its claim of gratuity having paid during the year under consideration. It is also an admitted position that the contributions made by assessee was towards unapproved gratuity fund and therefore the disclosure of the actual payment of gratuity to the employees would not be reported in coln. 26 of form 3CED. The deduction in respect of gratuity is to be allowed either in the year in which the gratuity is actually paid on retirement / termination or in the year in which the contributions are made to a gratuity fund which may be approved or unapproved. In support, we take strength from the decision of Hon’ble Supreme Court in case of Shree Sajjan Mills Ltd. [1985 (10) TMI 2 - SUPREME COURT] and the decision of Commonwealth Trust Pvt. Ltd. [2004 (4) TMI 51 - KERALA HIGH COURT] We therefore remand this issue to the Ld.AO for necessary verification in respect of the disallowance made by the assessee towards the gratuity in any of the previous year and subsequent payment to the extent it is paid should be allowed.
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