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2017 (9) TMI 1153 - AT - Income TaxDisallowance of interest incurred on External Commercial Borrowings (ECBs) - Held that:- Since there is no change in facts in this year from the facts in preceding year accordingly, the findings given therein para no 18 of that order where the claim of the assessee is allowed . hence for this year too we direct the ld AO to disallow the above disallowance. Hence, ground no 1 of the appeal is allowed. Disallowance of circuit accruals - Held that:- Since there is no change in facts in this year from the facts in preceding year where in this claim is allowed and ld AO was directed to delete the disallowance. We also direct similarly for this ground in this year also as there is no change in the facts and circumstances of the case. Accordingly, the findings given above shall apply to this ground as well. Disallowance of year-end accruals - Held that:- Since creation of the year end accruals does not result accrual of income to an identified vendor, the same cannot trigger a withholding tax liability on the part of the appellant. However as the ld AO has disallowed the above amount as the assessee has not produced the relevant basis of making the above provision the issue needs to be set aside to the file of the ld AO with a direction to the assessee to produce the basis of above provisionsing before the ld AO , who may verify the same and if found in accordance with the above finding and if pertaining to the impugned assessment year allow the claim of the assessee. Disallowance of annual revenue shares based license fee - Held that:- We agree with the contention of the assessee that the expense incurred towards revenue share based license fee for maintenance and usage of telecom license payable to Department of Telecom is a recurring fee paid by the license holder on periodic basis towards maintenance and use of the license and the benefit of the same does not extend beyond the close of the year. Further, it is also relevant to note here benefit of the revenue share based license fees paid during one financial year cannot be extended to the subsequent financial year, for which license fee is to be paid separately upon the adjusted gross revenues of such subsequent year. Therefore, payment of the aforesaid annual fee cannot be said to confer any right of an enduring nature upon appellant. It is also important to note that in the immediately succeeding year on same facts, the DRP has allowed the claim of the licence fees on revenue basis u/s 37(1) of the Act. Transfer Pricing Matters - non-charging of interest (on overdue receivables) from AEs as well as Non- AEs - main crux of assessee's submission is that the transfer pricing officer could not have re-characterized the over-due receivables as loan - Held that:- We disagree with the views of the assessee that outstanding receivables is not an international transaction. According to us the explanation (i) (c) covers this transactions. However as assessee has raised contention that assessee as a policy, is not charging any interest either from AE or non AE, then notional interest should not be included on the outstanding dues from the AEs and further the claim of the assessee that no interest is charged on outstanding receivables from unrelated parties even in the cases where the payment is not received for more than 6 months, these issues needs to be examined by the ld TPO afresh , therefore we set aside this issues to the file of the ld TPO for fresh examination with a direction to the assessee to support its contentions with the documents and workings . Accordingly this ground of appeal is allowed with above direction.
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