TMI Blog2022 (3) TMI 1459X X X X Extracts X X X X X X X X Extracts X X X X ..... g assessee is paying interest to AE and not paying any interest to NON AE. Mostly, Internal CUP would provide highly accurate results. In this case, the difference in credit period is a differentiating factor only for the purposes of purchase transaction. For capital financing , the moment the credit period is over, both the outstanding of AE as well as NON AE stands at Par. We note that assessee has submitted before the learned CIT (A) that the facts noted by the learned TPO that in past also the assessee has not paid any interest is incorrect. Submission made before him clearly shows that for Assessment Year 2010-11, the assessee has paid ₹1,92,146/-, for Assessment Year 2011-12 ₹15,02,059/- for Assessment Year 2012-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned CIT(A): 6. erred in confirming the action of TPO/AO in making transfer pricing adjustment on the international transaction of payment of interest on trade credits to its AE and computing the ALP at NIL by adopting Internal CUP method; 7. erred in ignoring the contractual terms of the Appellant with its AE in respect of charge of interest post availing interest period of 90 days; 8. failed to appreciate the fact that the credit period allowed by non-AE (30 days) is less than the credit period allowed by AE (90 days); 9. failed to appreciate the commercial and business realities of the industry in which the Appellant operates and business decision of the appellant of not charging interest from customers; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid any interest to non Associated Enterprises on outstanding balances. The assessee could not submit any document in support of the claim that the credit allowed to non Associated Enterprises was less than the credit period allowed to associated enterprises. He further noted that the charts submitted by the assessee with respect to the interest paid shows the period of credit of less than 30 days. He further noted that assessee gets credit from non Associated Enterprises of 92 to 180 days and does not pay any interest from them. The facts also noted that assessee entered into similar transaction with associated enterprises on similar terms of payments but Associated Enterprises has not charged any interest thereon. Therefore, the payment m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er book submitted on 20 January 2022, wherein the invoices with associated enterprises were placed showing that there is credit period of 90 days. He further referred to some invoices with non-associated enterprises where the terms of payments are 30 days. The learned Authorised Representative therefore stated that the learned Transfer Pricing Officer has erroneously held that there is an internal CUP available despite there being significant difference between credit period allowed to assessee by Non AEs [30 days] and AE [90 days]. He further stated that the assessee has benchmarked the above transaction by aggregating it with other international transactions using Transactional Net Margin Method correctly. He further referred to the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional transaction amounting to ₹29 lacs was aggregate with other transactions and benchmarked adopting the Transactional Net Margin Method as the most appropriate method and found that the profit level of the assessee which was better than comparable companies it was held to be at arm s length. The learned Transfer Pricing Officer hold that assessee has not paid any interest to non Associated Enterprises, therefore internal CUP is available, and therefore he held that the arms length price of such interest payment is nil. The learned CIT (A) without giving any reasons has confirmed the action of the learned Transfer Pricing Officer. We find that the transaction of outstanding payable by the assessee to non- AE is a separate internatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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