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AT & T Global Network Services (India) Pvt Ltd. Versus DCIT, Circle-2 (1) , New Delhi and vice-versa

2017 (9) TMI 1153 - ITAT DELHI

Disallowance 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 y .....

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hholding 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. .....

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e 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 3 .....

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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 wit .....

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ARISHI, A. M. 1. Appeal No 1059/Del/2015 is filed by the assessee against the order of Assistant Commissioner of Income Tax, Circle-3(2), New Delhi (AO) [hereinafter referred to as the ld AO] passed u/s 144C(13) read with section 143(3) of the Income Tax Act, 1961[ herein after referred to as the Act] in pursuance of the direction issued by the ld Dispute Resolution Panel [ hereinafter referred to as the Ld DRP] u/s 144C(5) of the Act dated 16.12.2014. 2. The assessee has raised the following gr .....

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t prejudice to the above ground, on the facts and circumstances of the case and in law, the learned AO has erred in not allowing depreciation under section 32 of the Act on the disallowed interest amount, by not adding the same to the actual cost of the fixed assets. 1.3 Without prejudice to above grounds, on the facts and circumstances of the case and in law, the learned AO has erred in not allowing depreciation under section 32 of the Act on the interest expenditure, amounting to ₹ 2,216 .....

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prejudice to the above grounds, on the facts and circumstances of the case and in law, the learned AO/ Hon'ble DRP has erred in not observing that where any disallowance is made in respect of the aforesaid accruals for the subject assessment year, deduction in respect of the disallowed amount should be allowed in the subsequent year(s) in which such accruals are reversed/ utilized. 3. Ground No. 3 - Disallowance of year-end accruals 3.1. on the facts and in the circumstances of the case and .....

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mount should be allowed in the subsequent year(s) in which such accruals are reversed/ utilized. 4. Ground No. 4 -Disallowance of annual revenue shares based license fee 4.1 On the facts and circumstances of the case and in law, the learned AO/ Hon'ble DRP has erred in disallowing an amount of ₹ 23,10,71,248 by holding that annual license fee is not allowable as a revenue expenditure and it should be amortised under section 35ABB of the Act. 4.2 On the facts and circumstances of the ca .....

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he case and in law, the learned AO/ Hon'ble DRP has erred in making a disallowance of ₹ 10,19,964 treating the same as unexplained investment 6. Ground No. 6 - Grounds relating to Transfer Pricing Matters: That, on the facts and circumstances of the case and in law: 6.1 The learned Transfer Pricing Officer ('TPO')/ AO/ DRP have erred in making an addition of INR 345,442,141 under section 92CA of the Act to the total income of the Appellant on account of adjustment in arm's .....

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ng of intra-group services and payment of royalty with its AEs on a standalone basis by rejecting Transactional Net Margin Method ('TNMM') as the most appropriate method. 6.3 The learned AO/ TPO/ DRP have erred, on facts and circumstances of the case and in law, in arbitrarily selecting Comparable Uncontrolled Price ('CUP') method as the most appropriate method to benchmark the international transactions pertaining to availing of intra-group services and payment of royalty by the .....

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5 The learned TPO/ AO/ DRP have erred in disregarding the supplementary analysis furnished by the Appellant in respect of the international transactions pertaining to availing of intra-group services and payment of royalty during the course of assessment proceedings which further corroborates the arm's length nature of the said international transactions entered into with its AEs. 6.6 The learned TPO / AO / DRP have erred in holding inter-company receivables arising from the international tr .....

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interest on outstanding receivables. 6.9 The learned TPO / AO / DRP failed to appreciate that in similar uncontrolled transactions, the Appellant does not charge interest on delayed payments 7. Ground No. 7 - Levy of interest under section 234B and 234D of the Act 7.1. On the facts and circumstances of the case and in law, the learned AO has erred in charging interest under section 234B and 234D of the Act. 8. Ground No. 8 - Withdrawal of interest under section 244A of the Act 8.1. On the facts .....

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/2015 for the Assessment Year 2010-11: 1. On the facts and in the circumstances of the case, the ld DRP erred in deleting the addition of ₹ 119912445/- made on account of disallowance of support services expenditure. 4. Assessee filed its original return of income on 14.10.2010 declaring income of ₹ 32.95 crores. The return of income was revised on 03.01.2012 declaring an income of ₹ 34.77 crores. Subsequently, the return was picked up for the scrutiny and notice u/s 143(2) was .....

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icing passed a draft of proposed assessment order u/s 144C read with section 143(3) of the Income Tax Act on 24.03.2014 assessing the total income at ₹ 116,82,99,850/-.The assessee filed its objection before the Dispute Resolution Panel which was disposed of by the Dispute Resolution Panel vide directions dated 16.12.2014.Consequently, the Assessing Officer passed order u/s 144C read with section 143(3) of the Income Tax Act on 29.01.2015 determining the total income of the assessee at  .....

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4,08,492/-) Total Additions 56,03,05,684/- Assessed Income 90,80,55,130/- 5. Therefore, assessee aggrieved with the order passed by the Assessing Officer u/s 144C read with section 143(3) of the Income Tax Act has preferred appeal before us in ITA No. 1059/Del/2015. Now we first come to the appeal of the assessee in ITA No. 1059/Del/2015. 6. The first ground of appeal is with respect to the disallowance of ₹ 80,62,508 towards interest expenditure incurred in relation to the ECBs It was sub .....

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Of this interest expense, an amount of ₹ 2.01 crores was incurred on ECBs outstanding at the beginning of the year (USD) and the balance interest expense of ₹ 80.62 lacs was incurred on ECBs availed during the year.On the other hand the Ld. AO disallowed the interest expense of ₹ 80,62,508 incurred towards ECBs availed during the year by invoking the proviso to section 36(1)(iii) of the Act. 7. We have gone through the relevant facts of the case and arguments and submissions ad .....

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O to disallow the above disallowance. Hence, ground no 1 of the appeal is allowed. 8. The second ground of appeal is with respect of Disallowance of circuit accruals. During the Financial Year 2009-10, the appellant company incurred circuit charges aggregating to ₹ 181.50 crores (Rs. 106.40 crores towards infrastructure cost and ₹ 75.10 crores towards last mile charges for services provided by other telecom operators).The break-up of actual expense and year end accruals are given bel .....

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n to the services rendered during the relevant financial year, estimated on a reasonable and scientific basis, for which bills/invoices are not received during the year.As a practice, accruals for a particular month are reversed in the succeeding month when fresh accruals for the period beginning from the start of the year till such month are made. All the payments made against the aforesaid accruals are accounted for in an account namely prepaid circuit ledgers and later on reduced from the cir .....

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change in the facts and circumstances of the case. Accordingly, the findings given above shall apply to this ground as well. Hence, Ground no 2 of the appeal is allowed. 11. The third ground of appeal is with respect of Disallowance of year-end accruals. The detail of year end provisions outstanding as on 31.03.2010 were submitted by the appellant company. The details of the same are reproduced below: Particulars Accrual as on 31.03.2010 Accrual control account 4.17 crores Salary Payable 0.08 cr .....

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orrect. As regards Provisions made for Salary Payable and SIP Accruals, the AR of the assessee company could not provide documentary evidence, i.e invoices for the payments made even after providing sufficient opportunities. Thus, the amount of ₹ 23,68,651 (Rs. 8,18,364 + ₹ 15,50,287) was added to the income of the assessee company on account of Provisions made during the year under normal provisions as well as under special provisions of the Act in the absence of documentary evidenc .....

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of the sum of ₹ 8,18,364/- towards salary payable and ₹ 15,50,287/- towards SIP accruals, adding up to ₹ 23,68,651/- the Panel holds that the disallowance proposed by the AO on this account is rightly made. 14. The Ld. AR during the course of hearing, submitted as under : 4.1 Appellant follows a mercantile system of accounting. Accordingly, in order to arrive at the correct profit for any given year, it is required to account for all expenses pertaining to the year, in accorda .....

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s. 4.4 Accordingly, since the year-end accruals created by appellant represent accruals towards normal business expenditure incurred by appellant for the financial year relevant to the subject assessment, deduction in respect thereof should be allowed to appellant. 4.5 Appellant has been able to produce documentary evidence supporting payment/reversal of more than 94.5% of the expenses represented by year - end accruals, it substantiates the fact that even the balance accruals have also been cre .....

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thholding tax liability on the part of the Appellant. 4.7 The Bangalore Bench of Hon'ble Tribunal in the case of DCIT vs. Telco Construction Equipment Co. held that year end provisions did not attract tax withholding provisions as the tax payer credited the amount of commission payable to provision account and not to respective agents account. 4.8 It is further submitted that the machinery/ procedural provisions specified in relation to tax deduction at source such as issuance of TDS certifi .....

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facts of the case. The assessee has explained the basis of creating the provisions for year-end accruals. As explained by the appellant, we note that the assessee has been creating the provision on any year on year basis in accordance with the mercantile system of accounting otherwise correct expenditure would not be captured as per the matching principle. The assessee has demonstrated through evidences that the provision so created is either reversed or expensed off in the subsequent year. The .....

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. Hence, in accordance with the mercantile provisions it should be allowed in the year of creation itself.The assessee has also drawn reference to the principles laid down by the Hon'ble Apex Court in the case of M/s Rotork Controls India (P) Ltd (314 ITR 62) and M/s Bharat Earth Movers (245 ITR 428). We agree with the argument of the assessee that the provision for yearend accruals is made in compliance of accounting standards issued by the Institute of Chartered Accountants of India and al .....

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that the provisions made at the year- end are reversed in the beginning of the next accounting year goes to show that there was no income accrued. The existence/accrual of income in the hands of the identified payee is a pre- condition to fasten the liability of tax deduction at source in the hands of the payer. The Hon'ble Apex Court in the case of M/s GE India Technology Centre P. Ltd. Vs. CIT and another 327 ITR 456 (SC) held that if payment is not assessable to tax there is no question .....

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ollowing the above decisions and in light of the factual matrix of the case we are of the considered view 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 .....

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owards revenue share based license fee for maintenance and usage of the telecom license payable to the Department of Telecom ( DoT ). It was submitted that the assessee acquired the telecom licenses in the Financial Year 2006-07 by way of agreements with the Department of Telecom ( DoT ), keeping in view with the New Telecom Policy ( NTP') of 1999 separately for telecommunication services rendered under the NLD, ILD and ISP line of services. Apart from the above, it was submitted by the appe .....

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and is being amortized as per the provisions of Section 35ABB of the Act. The main contention of the appellant is that the sum of ₹ 24.55 crores paid by the Appellant during the Financial Year 2009-10 towards revenue share based license fee incurred for maintenance and usage of the telecom license is allowable u/s 37(1) of the Act. It was submitted by the appellant that this very issue of allowability of the revenue based license fees u/s 37(1) of the Act was a subject matter of dispute a .....

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y considered merely for the reason that the Revenue has filed a Special Leave Petition before the Hon'ble Supreme Court of India against this favourable ruling of the Delhi High Court. Further the assessee also submitted that the license fees has been allowed by the DRP in the subsequent year. The AO disallowed the Appellant's claim of revenue share based license fee as an allowable expense u/s 37(1) of the Act on the premise that the same is liable to be amortized as per the provisions .....

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e to the Appellant's case and to keep the issue alive The AO in the draft assessment order made the following findings: The reply of the assessee was considered. In its submission, the AR of the assessee company, relied upon the decision of Hon ble High Court of Delhi in the case of M/s Bharti Airtel Limited. The said decision was not accepted by the Department and proposal for filing SLP before the Hon ble Supreme Court of India was moved from this office. The same is pending for litigation .....

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e direction dated 16.12.2014 has held as under:- 9.4 We have considered the facts of the case and have gone through the submissions. The AO has proposed to disallow the annual amount paid but the expenditure is proposed to be amortized over the remaining period of the term of license i.e. 17 years. Accordingly, only the net amount of ₹ 23,10,71,248/- has been proposed to be disallowed. It has been further mentioned by the AO that against the decision of Hon'ble Delhi High Court in the .....

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ng upon the appellate authorities. Moreover, unless the additions are made by the assessing authority at the first stage of assessment, there would be no occasion at a later stage to disallow the claim if the decision of Hon'ble Supreme Court is in favour of the revenue. The Ld. AR of the taxpayer has also not highlighted if the provisions of section 158A of the Act have been complied by it or not. In view of these, the claim of the taxpayer cannot be accepted and the action of the AO is uph .....

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Act. 5.2. The benefit of the license annual revenue share based license fee (payable on a quarterly basis) is exhausted at the end of the relevant financial year and does not extend beyond the close of such year. 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 ca .....

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apital expenditure, section 35ABB of the Act is not applicable. The relevant extracts of Section 35ABB of the Act is as under: Expenditure for obtaining licence to operate telecommunication services. 35ABB(1) In respect of any expenditure, being in the nature of capital expenditure, incurred for acquiring any right to operate telecommunication services either before the commencement of the business to operate telecommunication services or thereafter at any time during any previous year and for w .....

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defines 'obtain' as "To get hold of by effort; to get possession of; to procure; to acquire, in any way." - According to Webster, the word 'obtain' signifies (i) to gain or attain possession of disposed of, usually by some planned action or method; (ii) to bring about or call into being etc. 5.5. The word 'acquire' according to Judicial Dictionary by K J Aiyar 13th Ed. means as under:- "The word 'acquire' signifies the obtaining of a title as a resu .....

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the license. Hence, the revenue share based license fee is not covered by the provisions of section 35ABB of the Act. It is submitted that the said provision, being an enabling and not a disabling provision, needs be confined to that consideration which would otherwise be disallowed as being capital expenditure. 5.7. The Appellant's case is squarely covered by the decision of the Hon'ble Delhi High Court in the case of CIT vs. Bharti Hexacom Limited [2014] 265 CTR 130 (Delhi) pronounced .....

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paid on revenue sharing basis under the 1999 policy as a capital expense made to acquire an asset. As observed in Empire Jute Co. Ltd. (supra), the enduring benefit test has limitation and cannot be mechanically applied without considering the commercial or business aspects. Practical and pragmatic view and considerations rather than juristic classification is the determinative factor. The payment of yearly licence fee on revenue sharing basis is for carrying on business as cellular telephone op .....

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business with the aid of the capital asset. Non- payment will prevent and bar an assessee from providing services. 45. The effect thereof is that we are treating about 20% of the expenditure in terms of the tenure as per the 1999 Policy as capital in nature, whereas if we apply the 1994 Agreement, we would be treating about 40% of the expenditure as per the tenure as payable towards establishing or setting up of cellular business. By the time 1999 Policy was implemented in the case of the respon .....

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nwards is treated as revenue. 5.8. The Hon'ble jurisdictional Delhi Tribunal in the case of Hutchison Essar Telecom vs. JCIT ITA 1751&1752/MDS/2004 has approved the treatment of subscriber based license fee as an allowable expenditure under section 37 of the Act. Relevant extract of the decision is as follows: In our considered view, the license fee, paid yearly, cannot be said to be enduring in nature for the simple reason that if Assessee did not pay the license fee in subsequent year, .....

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irect link with the revenue generation. The Assessing Officer has also noticed in his order that merely because the quantification of license fee was done on a specified formula and is linked to the revenue earned by the Assessee, does not ipso facto make the license fee a revenue expenditure. Once it is established that license fee is linked to the revenue earned by the Assessee then it cannot be said that this is a capital expenditure in nature because the same is linked with the revenue gener .....

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regard: "Since the license fee does not confer any enduring benefit, the license granted can be revoked on the breach of any of the conditions subject to which it was issued or any default of payment of any fee payable for the license and the license is non-exclusive, non-transferrable and it is open to the Government of India to grant similar licenses to other persons as well by virtue of powers conferred upon it under section 4 of the Telegraph Act, thus there is no monopoly right conferr .....

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enue in nature, allowable under section 37(1) of the Act." 5.10. However, contrary to the above settled position on the identical issue under consideration, the Ld. AO has disallowed an amount of ₹ 23.10 crores merely for the reason of maintaining consistency in the Revenue Department's stand till the matter is sub-judice before the Hon'ble Supreme Court of India. Your Honours would note that neither the Ld. AO nor the DRP have made any other observation regarding the merits o .....

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ies including the Ld. AO unless the is reversed or stayed by the Apex Court [UOI vs. Kamlakshi Finance Corporation Ltd AIR 1992 SC 711 (SC)]. Accordingly, it is the most humble submission of the Appellant that the action of the Ld. AO in disallowing the annual revenue based lisence fee ought to be reversed and liable to be quashed. 20. However, the ld DR vehemently relied upon the finding of the draft assessment order. 21. We have carefully considered the rival contentions and also perused the f .....

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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. We are convinced that the appellant's case is squarely covered by the decision of Hon'ble Delhi High Court in the case of CIT .....

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jurisdictional High Court we allow the claim of the assessee. In the result the ground No. 4 of the appeal is allowed. 22. The fifth ground of appeal is with respect of Disallowance of unexplained investments. This ground of appeal was not pressed by the Ld. AR and hence, dismissed. 23. The sixth ground of appeal is with respect to Transfer Pricing Matters. Ground 6.1 to 6.7 deals with availing of intra group services and payment of royalty. During the year, the assessee provided network connec .....

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price of the said transactions to be Nil. 24. The parties before us submitted that above ground of appeal on identical facts and circumstances was also involved in appeal of the assessee for AY 2009-10. The arguments of the parties also remained the same. 25. We have gone through the relevant facts of the case and arguments and submissions advanced by both the parties. The same are not repeated here for the sake of brevity as the said issue has already been dealt with in detail in ground no 8 in .....

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tanding receivables amounting to ₹ 5,91,755. The assessee made detailed submissions contending that the TPO/DRP erred in treating the inter-company receivables as loan given by the assessee to its AE. Assessee further argued that the TPO/DRP did not appreciate the bonafide nature of the agreement i.e. Provision of network connectivity services between the assessee and its AE and proceeded to benchmark the same by applying CUP. The summary of the submissions made by the assessee are as unde .....

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hmark the same separately. 6.2 The Ld. TPO/Hon'ble DRP erroneously treated inter- company receivables as stated above as loan given by the assesse to its AEs ignoring the bona-fide nature of the agreement (i.e. provision of network connectivity services) between the assesse and its AEs and proceeded to benchmark the same by application of CUP. (Refer page no. 367-368 of the Appeal Set for TPO Order) 7. Legal Submission Re-characterisation of overdue receivables as loan by the TPO is incorrec .....

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2 It is clear from the expanded meaning of the international transaction as contemplated under clause (i) (c) of explanation to Section 92B(1) of the Act, the delay in realization of dues from AE in comparison to non-AE would certainly falls in the ambit of international transaction and hence, the action of the AO in re-characterising the transaction as loan is bad in law. No interest is charged from unrelated third parties 7.3 The Appellant submits that no interest is charged on outstanding rec .....

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e receivables) from AEs as well as Non- AEs since the service agreements do not contain any penal interest clause towards delayed payments. Where such a practice of not charging any interest to both AEs and non-AEs is consistently followed, imputation of notional interest is not warranted. The Appellant places reliance on the following decisions: -CIT vs. Indo American Jewellery Ltd. (ITA No. 1053/2012) (Bom.) (Refer Para 5 on Page no. 208 of the Case Law Compendium) -VIP Industries Ltd. Vs. ACI .....

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nd the same is evidenced by its margins which is higher than the arithmetic mean of margins of comparable companies selected in the TP Study. This would mean that though the AEs in certain situations may be making the payments beyond the normal credit period offered, there is no impact on the profitability of the Appellant. Thus the Appellant submits that as a result of not realizing the debts from AEs within a specified period, there has been no impact on the Appellant's profits or income. .....

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average credit period allowed to the third party customers is more than the normal credit period allowed to the customers of AE i.e. 30 days. Without prejudice to this, the Appellant's operating margin during the relevant period is significantly higher than the comparable company which reiterates the fact that the impact of credit period allowed to the customers of AEs is already embedded in the sale price of services. Therefore, the Appellant humbly submits that the outstanding receivables .....

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st on outstanding balances is to be made, the delay period should not be calculated till the date of realisation of payment falling in the subsequent years. The Appellant submits that interest on outstanding receivable can be calculated only for the delay during the relevant financial year of 2009-10 i.e. in the scenario wherein the outstanding amount has been received during the year, the interest should be calculated from the due date till the date of realization; in the scenario that the outs .....

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on such a facility would need to be calculated from the perspective of the borrower (in our case the AEs) since a borrower would take a decision to borrow based on the rates and commercial terms prevailing in the international market, and specifically his own jurisdiction. 7.10 Accordingly, if an Indian enterprise is providing any funding to an overseas enterprise, the interest rate would need to be based on the currency of the loan (for e.g. LIBOR), the comparable interest rates in the oversea .....

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he rate of SBI Base rate plus 150 basis points instead of 300 basis points since the aggregate amount of receivables does not exceed INR 50 crores. 7.13 In this connection, we wish to draw your attention to the following Tribunal rulings, wherein the principle of interestbeing calculated from the borrower's perspective (i.e., using currency LIBOR rate), has been upheld: -DCIT vs Tech Mahindra Ltd (ITA No. 1176/Mum/2010) (Refer Para 6 on Page no. 567 and 568 of the Case Law Compendium) -M/s S .....

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d (formerly Satnam Overseas Ltd) vs ACIT (ITA No.3688/ Del/2012 and 3689/Del/2012) (Refer Para 68.2 on Page no. 271 of the Case Law Compendium) -Apollo Tyres Ltd vs ACIT (ITA No. 616/Coch/2011) (Refer Para 45 on Page no. 17 of the Case Law Compendium) -M/s Aurobindo Pharma Ltd vs ACIT (ITA No. 2073/Hyd/2011) (Refer Para 30 on Page no. 25 and 26 of the Case Law Compendium) -TTK Prestige Ltd vs ACIT (ITA No.1257/Bang/2011) (Refer Para 37 and 38 on Page no. 619 to 622 of the Case Law Compendium) 7. .....

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ant for GBP denominated invoices). Source: http://www.global-rates.com/ Conclusion: 7.15 In view of the above facts and judicial precedents, the Appellant submits that the transfer pricing adjustment made by the TPO/DRP should be deleted for the following reasons as explained above: • No interest cost incurred by the Appellant during the year since it has no borrowing. • No interest is charged from the third parties i.e. in an uncontrolled transaction. • Moreso, there is no agreem .....

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ed the over-due receivables as loan. In view of the assessee the provisions of clause (i)(c) of Explanation to Section 92B(1) specifically covers delay in realization of dues from its AE as an international transaction and hence the same could not be re-characterised as loan as done by the TPO/DRP. The assessee also argued that since it did not charge any interest on the outstanding receivables from the unrelated parties in cases where the payment was not received for more than six months, it ca .....

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arties customer is more than normal credit period allowed to its AE. Assessee also disputed the separate benchmarking of this transaction by applying CUP. 30. 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 inclu .....

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is allowed with above direction. 31. The seventh ground of appeal is with respect to Levy of interest under section 234B and 234D of the Act. The eighth ground of appeal is with respect withdrawal of interest under section 244A of the Act. The ninth ground of appeal is with respect to initiation of penalty proceedings. 32. As these grounds are consequential in nature. No arguments were advanced by the parties on these issues. The appeal by assessee on these grounds is therefore premature and no .....

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