TMI Blog2022 (1) TMI 1320X X X X Extracts X X X X X X X X Extracts X X X X ..... eparate international transaction. Also an un-disputed fact that before the authorities below the assessee had submitted the working capital adjustment vis- -vis the comparable companies before the TPO / AO which if factored into then no adjustment on account of receivables form AE is required. This working capital adjustment has not been accepted. If the working capital adjustment is accepted, then the differential impact of working capital of the Assessee vis- -vis the comparables stands already factored in the pricing/profitability, which herein this appears to have been done and it has been stated that the working capital adjusted margin of the comparables is around 4% whereas assessee s margin is around 9% and thus, no further adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SHRI AMIT SHUKLA, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER Assessee by : S/Shri Rahul Mitra, Ninin Narang Amit Arora, C.A.; Department by: Shri Mrinal Kumar Das, Sr. D. R.; ORDER PER AMIT SHUKLA, J. M. The aforesaid appeals have been filed by the assessee against the separate impugned order, passed by the Commissioner of Income Tax (Appeals) 13, New Delhi (hereinafter referred to [CIT (Appeals)] for assessment year 2012-13 and order dated 31.01.2018 passed by the CIT (Appeals) 34, New Delhi, for the assessment year 2013-14 for the quantum of assessment under Section 143(3)/144C of the Income Tax Act, 1961 (the Act). 2. In both the appeals, common grounds are involved arising out of id ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us submissions that, firstly, the said transaction cannot be treated separately as it was part of primary transaction; and secondly, if the TPO is separately bench marking transaction then it has to be benchmark using the aggregate approach with the principal international transaction entered with its AE and, in such scenario, the receivables are already factored in the price charged to the AE. Here in this case if the principal international transaction has been accepted at arm s length, then no separate addition can be made. Apart from that, another alternative contention has been raised vide ground No. 8 in assessment year 2012-13; and ground No. 4 in assessment year 2013-14, that working capital adjustment irons out the credit period ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee or given before the authorities below. However, in this case the assessee had given working capital adjustment before the TPO / AO himself which is evident from the comments submitted in the paper book at page 115 and 129. Thus, in this year direction should be given to give the working capital adjustment and in that case the interest receivables from the AE will get subsumed and no separate adjustment is required to be made, because admittedly the assessee s adjusted margin was far more than comparable companies. 7. On the other hand, the ld. DR strongly relied upon the order of the CIT (Appeals) and the order of the ITAT in assessment year 2011- 12. On the issue of computation of working capital adjustment he submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also an un-disputed fact that before the authorities below the assessee had submitted the working capital adjustment vis- -vis the comparable companies before the TPO / AO which if factored into then no adjustment on account of receivables form AE is required. This working capital adjustment has not been accepted. Now it is well settled law by the judgement of Hon ble jurisdictional High Court in the case of Pr. CIT Vs. Kusum Healthcare Private Limited (2017) TII 28 HC (Del.) in ITA. 765/Del/2016 wherein the Hon ble High Court had observed and held as under:- Aggrieved by the said order, the Assessee filed an appeal before the ITAT. By the impugned order dated 31th March 2015, the ITAT set aside the assessment order. The ITAT noted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving already factored in the impact of the receivables on the working capital and thereby on its pricing/profitability vis- vis that of its comparables, any further adjustment only on the basis of the outstanding receivables would have distorted the picture and re-characterised the transaction. This was clearly impermissible in law as explained by this Court in CIT v. EKL Appliances Ltd. (2012) 345 ITR 241 (Delhi). 9. This judgement has also been followed in catena of judgements by the Tribunal, a compilation of which has been filed before us separately. If the working capital adjustment is accepted, then the differential impact of working capital of the Assessee vis- -vis the comparables stands already factored in the pricing/profi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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