TMI Blog2011 (1) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the terms and conditions, including terms of payment, on which the said commercial transaction has been entered into - It appears that the TPO has adopted interest @ 2.19% LIBOR on balances which exceed 30 days, but LIBOR rate is relevant only in the case of lending or borrowing of funds, and not in the case of commercial overdues – Held that the impugned addition of Rs. 12,51,175 is unsustainable in law – Appeal is allowed - ITA No.: 6597/Mum/09 - - - Dated:- 5-1-2011 - D K Agarwal JM, and Pramod Kumar AM K R Laxminaraynan, for the appellant Har Govind Singh, for the respondent O R D E R Per Pramod Kumar: 1. The short issue that we are required to adjudicate in this appeal is whether the Commissioner (Appeals) was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of notional interest was done by adopting interest at 2.19 % LIBOR on overdue amount beyond 30 days. Aggrieved assessee carried the matter in appeal before CIT(A), but without any success. The assessee is not satisfied and is in further appeal before us. 3. We have heard the rival contentions, perused the material on record and duly considered factual matrix of the case as also the applicable legal position. 4. It is only elementary, in terms of the provisions of Section 92, any income arising from an international transaction has to be computed having regard to the arm's length price (ALP), and that this exercise includes the allowance for any expense or interest arising from an international transaction as well. That is the only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f arm's length principles is the commercial transaction itself, as a result of which the debit balance has come into existence, and the terms and conditions, including terms of payment, on which the said commercial transaction has been entered into. The payment terms are an integral part of any commercial transaction, and the transaction value takes into account the terms of payment, such as permissible credit period, as well. The residuary clause in the definition of 'international transaction', i.e. any other transaction having a bearing on the profits, incomes, losses or assets of such enterprises, does not apply to a continuing debit balance, on the given facts of the case, for the elementary reason that there is nothing on record to sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UP) or with the cases in which other enterprises have charged interest, in respect of overdues in respect of similar business transactions, with independent enterprises (external CUP). No such exercise has been carried out in this case, nor is it shown, as is the condition precedent for bringing this continuing debit balance in the ambit of 'international transaction', that as a result of not realizing the debts from associated enterprises, there has been any impact on profits, incomes, losses or assets of the assessee. 6. For all these reasons set out above, as also respectfully following the decision dated 28th January 2010 of the coordinate bench in assessee's own case in the immediately preceding year, we hold that the impugned additi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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