TMI Blog2019 (7) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... l adjustment and, therefore, any further adjustment on the outstanding receivables is not required separately in the instant case. Accordingly, we direct the Assessing Officer to delete the adjustment made on account of the outstanding receivables. - Decided in favour of assessee. - ITA No.1530/Del/2016 - - - Dated:- 28-6-2019 - Shri Amit Shukla, Judicial Member And Shri O.P. Kant, Accountant Member For the Appellant : S/shri Gautam Jain Piyush Kamal; Ms. Monika, CA For the Respondent : Shri Sandeep Kr. Mishra, Sr.DR ORDER PER O.P. KANT, A.M.: This appeal by the assessee is directed against order dated 25/01/2016 passed by the Ld. Commissioner of Income-tax (Appeals)-42, New Delhi [in short the Ld. CIT(A) ] for assessment year 2010-11 raising following grounds: 1. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding addition of ₹ 12,74,485/- by bench marking the receivables on transactions of sales/services of the appellant company by adopting the prime lending rate of SB1 plus markup of 300 basis po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and referred the matter of determination of arm s-length price of the International transaction to the Ld. Transfer Pricing Officer (in short TPO . The Ld. TPO noted following international transactions carried out by the assessee and method used for determining the arm s-length price by the assessee as under: Sl. No. Head Value Method Used for Determining the price 1 Import of Raw Materials 294,33,452 TNMM 2 Export of Goods 17075,32,757 TNMM 3 Import of Goods 392,87,821 TNMM 4 Purchase of Fixed Assets 60,22,480 TN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from its Associated Enterprises. The learning TPO rejected the plea of the assessee to adopt the interest rate on LIBOR basis and adopted average prime lending rate of SBI of 11.80% with an additional 300 basis points (to take into account other factors/reasons) as the right benchmark for the interest. The learning TPO accordingly proposed adjustment of ₹ 41,44,702/- 2.4 After incorporating, that adjustment proposed by the Ld. TPO in his order dated 20/01/2014, the Assessing Officer passed a draft assessment order on 17/02/2014. As no objections were filed before the Ld. Dispute Resolution Panel, within the stipulated period, the Assessing Officer passed final assessment order on 18/03/2014 computing the total income as under: (All figures in Rs.) A Income from business/as declared) Profit of the business (as per the computation of income filed by the assessee company) 24,81,97,598 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Sec. 92B of the Act does not mean 'accounts receivable' therefore outstanding balance cannot be treated as an independent transaction. 'Receivable' under clause (c) of explanation to section 92B of the Act apply to loan funds only therefore charging of interest is applicable only in the case of lending or borrowing of funds and not in the case of commercial over-dues. Receivable does not mean that de hors the context every 'receivables' appearing in the accounts which have dealing with AE would automatically be characterized as international transaction. Further allowing the credit period to the AE is not an independent international transaction but it is depending and consequential on the sales made to the AE. Reliance is placed on following judicial pronouncements: - 403 ITR 45 (Del) PCIT vs. B.C. Management Services (P) Ltd. - 34 taxmann.com 298 (Mum) ACIT Vs. Nimbus Communications Ltd. - 94 Taxmann.com (Visakhapatnam) GVK Power Infrastructure Ltd vs. ACIT - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gussa India (P) Ltd - ITANo.3120/Ahd/2010 MASTER Ltd. vs. Addl. CIT - ITA No. 1053 of 2012 (Bom) CIT vs. Indo American Jewellery Ltd. - ITA No. 6597/Mum/09Nimbus Communications Ltd vs. Asstt. Commissioner of Income Tax. 3.4 No adjustment for working capital has been made since appellant earned margin of 23.33% compared to margin of 11.42% of comparable companies; That working capital adjusted margins of appellant have already factored in to account for the impact of delay in receivables therefore separate adjustment on this account was not warranted. Appellant has earned higher margins as compare to the comparable companies and also has lower credit period as compare to the comparable companies Transaction with AE Basis of ALP adopted by appellant Similar bench marking by comparable companies Credit period by appellant Credit period by comparable companies. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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