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2024 (5) TMI 1080 - ITAT HYDERABADTP Adjustment - interest on outstanding receivables - international transaction or not? - Determination of Arm's Length Price (ALP) - HELD THAT:- The issue is no longer res integra. Hon'ble Bombay High Court took a view in the case of CIT Vs. Patni Computer Systems [2013 (10) TMI 293 - BOMBAY HIGH COURT] on the amendment to Section 92B of the Act by way of Finance Act, 2012 with retrospective effect from 01/04/2002 that, the interest on outstanding receivables is an international transaction, and it certainly requires separate benchmarking. There is no dispute that the learned DRP in the directions dated 08/06/2022 directed AO to adopt the SBI short term deposit interest rate for the subject year as the ALP interest rate and re-compute the adjustment to be made to the total income by applying credit period of thirty days or as per the agreement or invoice. There is no appeal by the Revenue as to this direction in respect of application of credit period of thirty days or as per the agreement of invoices. AO is, therefore, under the obligation to verify the invoices and apply the credit period of either thirty days or as per agreement or invoices, whichever is longer. Rate of interest - We are of the considered opinion that the ends of justice would be met by accepting the interest rate on similar foreign currency receivables/advances as LIBOR+200 points, by applying the credit period of thirty days or as per agreement or invoice. Accordingly, we direct AO/TPO to re-compute the same. Grounds are allowed in part accordingly.
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