TMI Blog2023 (1) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... efies such an argument. Assessee has also failed to show any evidence that due to recession the interest was not charged. Evidence were not laid down that , there was recession in the business of the assessee in this year or when there was boom , assessee was charging interest on such advances. We reverse the orders of the lower authorities; direct the learned Transfer Pricing Officer/ Assessing Officer to delete the above adjustment. Accordingly, ground no.1 of the appeal is allowed. Assessee has given advances - HELD THAT:- As assessee has the share capital of ₹ 9.80 crores and reserves and surplus of ₹117 crores which is much more than the amount advanced for fixed assets. It is the claim of the assessee that it has not incurred any interest expenditure which is covered by the Provision of Section 36(1) (iii) of the Act. We find that assessee has interest free funds available which were more than the amount of advance for capital asset. Therefore, the issue is squarely covered by the decision of Reliance Industries Ltd. [ 2019 (1) TMI 757 - SUPREME COURT] . In view of this, we direct the learned Assessing Officer to delete the disallowance and accordingly, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act has retrospective effect. 2.1.3 in not considering that Ld. TPO/AO has made impugned transfer pricing adjustment without selecting any of the method prescribed in s. 92C(1) of the Act and thereby impugned transfer pricing adjustment, not being in accordance with law, is bad in law and deserves to be deleted. 2.1.4 in not holding that receivables being closely linked with cut and polished diamonds sales transactions, there is no requirement to conduct separate and independent benchmarking for such receivables independent of determination of ALP for cut and polished diamonds sale transactions which have been benchmarked applying the Transactional Net Margin Method (TNMM) 2.1.5 in not appreciating that the appellant does not charge interest to non-associated enterprise customers also for delayed receivables, and hence, the practice of not charging interest to AES for delayed receivables is an arm's length practice applying the comparable uncontrolled price method, not warranting any such adjustment for notional interest when the terms of sale do not stipulate charge of interest for payment beyond credit period. 2.1.6 in not appreciating that working capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ually included in Trade and other receivables and financed from the operating profits of the year. 1.4. without prejudice to above, He erred in confirming calculation of proportionate disallowance of interest of Rs.5,79,000/- considering the entire investment in the property of Rs. 3,16,96,826/-as on 31.3.2010 instead of investment made during the year of Rs. 38,30,523/-. The appellant craves leave to add, alter, amend or delete all or any of the grounds of appeal before or during the course of hearing. 02. The brief fact of the case shows that assessee is a Private Limited Company engaged into the business of manufacturing and marketing of cut and polished diamonds. It filed its return of income on 29th September, 2010 at ₹ 20,97,29,090/-. It was found that assessee has entered into an international transaction therefore the matter was referred to the learned Transfer Pricing Officer for determination of Arms Length Price. 03. During the course of assessment proceedings, it was found that for A.Y. 2009-10 adjustment of ₹1.51 crores was made on account of delayed realization of export proceeds beyond invoice credit period from its Associated Enterpri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able from Associated Enterprises. He further held that for A.Y. 2009-10, the learned CIT (A) has confirmed identical addition. On the issue of disallowance of interest of ₹5,79,000/-, he further rejected the contention of the assessee raised before the learned Assessing Officer of interest free funds availability and confirmed the disallowance. Therefore, the assessee is aggrieved and is in appeal before us. 07. The learned Authorized Representative submitted that the learned CIT (A) has relied upon the decision of the learned CIT (A) in A.Y. 2009-10. The order of the learned CIT (A) was challenged by the assessee before the Tribunal in ITA No.79/Mum/2015 which was decided on 3rd August, 2020, wherein the identical addition was deleted vide paragraph no. 14 and 15 of that order. His argument was that non-charging of interest is trade practice, and no interest is charged on outstanding of independent third party and therefore, same was deleted in A.Y. 2009-10. He submitted that the decision of the co-ordinate Bench requires to be followed. 08. Even independently, he submitted that there is internal CUP available as the credit period of non-Associated Enterprises and Asso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of export. Thus there is an international transaction of overdue outstanding of export receivable from AE which is separate from international transaction of export of goods. 012. As it is a separate transaction it needs to be benchmarked on the facts of the case, we find that the export dues are outstanding for similar period from non Associated independently. If the assessee has kept the export proceedings outstanding for similar period from a non associated enterprises and did not charge interest thereon, and has also not charged interest on similar period overdue period on overdue outstanding of AEs, then there is a comparable instances available to state that Arms length price of international transaction of overdue export proceeds of AE is at Arm s length. In the present case on the bills/ invoices itself assessee has mentioned the credit period on export receivable of AE and Non AE. In case of independent third parties on similar transaction with similar credit period of similar goods no interest is charged. This fact is proved by the assessee for this year by producing the bills of AE as well as Non AEs. Therefore, We find that non-charging of interest on advances be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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