TMI Blog2015 (10) TMI 2733X X X X Extracts X X X X X X X X Extracts X X X X ..... ions made by the Ld. AR. The Ld. AR has failed to bring on record any distinguishing feature between the present case and case of the assessee for the assessment year 2008-09. In the assessment year 2008-09, an identical issue came up for consideration before the ITAT, Cochin Bench in assessee’s own case wherein the assessee had charged interest at the rate of 5% on the advances made to its AE Suntec Germany and charged no interest on the advances made to its AEs in USA and UK. The Bench in para 9.4 (extracted above) held that commercial expediency cannot be a ground for not charging interest on the advances given to Suntec US and Suntec UK and upheld the charge of interest at the rate of 5% on the advances made to its AEs in USA and UK. Non-allowance of tax credit in the case of the assessee by the Revenue - The assessee has submitted that it was given a tax credit of ₹ 8,50,979/- only instead of ₹ 35,95,891/-. - The assessee has further given details of ₹ 27,44,912/- for which the tax credit were not given - Held that:- Assessing Officer is directed to grant tax credits due to the assessee in accordance with law as reflected in income tax records. Thus, Groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjustment of ₹ 1,08,35,641/- by applying the internal comparable of 5% available in the case of the assessee in its transactions with AE, Germany. 4. The AO proceeded to pass the draft assessment order u/s. 144C of the I.T. Act dated 14/03/2014. Aggrieved by the same, the assessee filed objections before the DRP, which, upheld the order of the TPO. Before us, the assessee has challenged the order of the DRP with the following grounds of appeal: Erroneous imputation of interest on transactions outside the purview of Transfer Pricing regulations in India. The Transfer Pricing Officer ( TPO ) erred in considering transactions with the foreign branch of an Indian Company as transactions falling within the purview of transfer pricing regulations in India. Further the learned TPO has erred in imputing interest on transactions entered by the Indian Company with its foreign branches. 2. Erroneous imputing of interest on advances. The learned TPO has erred in imputing interest on advances granted by the Appellant to its subsidiaries, without considering the fact that the same was advanced in the normal course of business and interest has not been charged on the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AEs, viz., SunTec US, SunTec UK and SunTec Germany. The TPO noticed that the assessee had collected interest against the advance given to SunTec Germany @ 5%, but did not collect interest from other two AEs. Even, the quantum of interest collected from SunTec Germany was found to be incorrect by the TPO. Accordingly, the TPO computed interest @ 5% in respect of advances given to all the three AEs cited above and accordingly made an upward adjustment of ₹ 55,53,352/-. By following the order of TPO, the AO also added the above said amount to the total income of the assessee under the head Income from other sources and the DRP also confirmed the said addition. 9.1 The Ld A.R submitted before us that the amounts given to AEs are not in the nature of loans, but represented pure trade advances given against the the product support services to be rendered by them. He further submitted that the quarterly invoices raised by the AEs were adjusted against the said advances. The Ld A.R placed reliance on the decision of Mumbai bench of Tribunal in the case of Nimbus Communications Ltd (132 TTJ 351) and submitted that the residuary class in the definition of international transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AEs. The contention of the assessee relating to Commercial expediency existed in all the three cases and hence in our view, it cannot be a ground for not charging interest on the advances given to SunTec US and SunTec UK. No other convincing explanation was given by the assessee. Accordingly, we uphold the order of the AO on this issue. 6. With respect to Ground No.1, the assessee has submitted that the imputation of interest on international transactions carried out by the assessee was outside the purview of Transfer Pricing Regulations in India. He has further asserted that the foreign branch and the Indian company were to be treated as one legal entity. The Ld. AR relied on the decision by the ITAT, Hyderabad Bench in the case of Semantic Space Technologies Ltd. vs. DCIT in I.T.A. No. 824/Hyd/2010 dated 07/03/2012 and ITAT, Delhi Bench in the case of Aithent Technologies (P) Ltd. vs. ITO in I.T.A. No. 3512(Delhi)/2013 dated 03/02/2015 to canvass his submissions. 7. We have heard the Ld. AR and the Ld. DR on the aforesaid issue. We disagree with the submission made by the Ld. AR that the view taken by the ITAT, Cochin Bench in assessee s own case for the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opposite of the earlier judgment. This judgment is also set aside only for the reason that it did not follow an earlier binding judgment. In view of the above, Ground No. 1 raised by the assessee is dismissed. 8. With respect to Ground No. 2, the Ld. AR submitted that the advances made by the assessee to USA, UK, Singapore and UAE were not in the nature of loans and therefore, the assessee did not charge interest on the same. He further submitted that notwithstanding the contrary order passed by the Cochin Bench in assessee s own case, i.e., order dated 29/11/2013 (A.Y. 2008-09), the advances were business related advances and therefore, no interest was leviable. He further asserted that LIBOR/EURIBOR rate of interest was considered and allowed by the ITAT Mumbai Bench E in the case of Tata Autocomp Systems Ltd. vs. ACIT in I.T.A. No. 7354/Mum/2011 vide order dated 30/04/2012 (2012) 21 taxmann.com 6 (Mum), ITAT, Hyderabad Bench in the case of Mylan Laboratories Ltd. vs. ACIT in I.T.A. No. 1616/Hyd/2010 vide order dated 16/01/2015 and by the ITAT, Cochin Bench in the case of Apollo Tyres Ltd. in I.T.A. No. 616/Coch/2011 vide order dated 20/12/2013. The Ld. DR, on the other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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