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2024 (1) TMI 164 - AT - Income TaxTP adjustment - addition towards interest at a rate of 2% - TPO was of the view that the assessee has provided excess credit period to its US AE over and above the stipulated credit period and called on the assessee to explain why an adjustment should not be made on account of excess grace period - TPO also observed that the assessee has charged 10% interest from its German AE for Euro denominated loan granted by the assessee and called on the assessee to also explain as to why interest @10% should not be charged on the delayed receipts on account of software services provided to the US AE HELD THAT:- We notice that the co-ordinate bench in assessee’s own case [2023 (6) TMI 1349 - ITAT MUMBAI] A.Y. 2005-06 has considered a similar issue to hold that adjustment is required to be made towards interest on the delayed receipts from US AE. It is relevant to note that the department had filed a cross appeal for AY 2004-05 [2011 (6) TMI 140 - ITAT, MUMBAI] on the same issue against the decision of CIT(A) to apply LIBOR rate as against 10% rate charged by the TPO. The coordinate bench vide order dated 30.06.2011, though has dismissed the revenue's appeal on the issue of rate to be applied had made a specific observation that though the CIT(A)'s action with regard to rate is upheld, it does not imply that the ALP adjustment in principle is upheld too. Accordingly the issue of determination of ALP by imputing interest on the delayed receipts from US AE is left open which we have adjudicated in the current appeal. Appeal is allowed in favour of the assessee.
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