TMI Blog2023 (2) TMI 195X X X X Extracts X X X X X X X X Extracts X X X X ..... voice amounts. We find merit in the alternative submissions made by the assessee as regards non charging of interest beyond 31.03.2013 and charging interest after allowing normal credit period of 60 days. This is so because, the assessee has demonstrated before us that it has allowed credit period of 60 days to non AE s and other customers. Before us, the assessee has furnished the computation of interest charged for delays relating to the period 01.04.2010 to 31.03.2013 considering normal credit period of 60 days. As per the said computation, the total interest chargeable on six months LIBOR + 400 basis points works out to Rs.2,25,276/. We direct the Assessing Officer to factually verify the aforesaid computation furnished by the assessee and restrict the addition to Rs.2,25,276/-. The ground is partly allowed. Addition to the contract revenue - adopting accounting policy as per accounting standard (AS)-7 the assessee recognized contract revenue from construction contract on percentage of completion basis - HELD THAT:- Assessing officer estimated the budgeted contract cost in an indirect manner by adopting gross margin of 6.9% with regard to all activities of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions of Learned Dispute Resolution Panel (DRP). 2. In ground No.1, the assessee has challenged the addition of Rs. 9,21,217/-, being interest imputed by the Transfer Pricing Officer (for short TPO) on outstanding receivables from the Associated Enterprises (AE). 3. Briefly the facts relating to this issue are, the assessee is a non resident corporate entity engaged in the business of providing consultancy and advisory services (including project construction and execution thereof) in the field of water management industry. In the year under dispute, the assessee entered into various international transactions with its overseas Associated Enterprises (AE s). The assessee suo-motu undertook benchmarking of international transactions and reported the price charged for such transactions to be at arm s length. After verifying the TP study report of the assessee, though the TPO accepted most of the transactions with the AE to be at arm s length, however, on verifying details he found that in certain instances couple of AEs have not remitted the amount receivable by the assessee within the agreed credit period of 30 days. Therefore, he called upon the assessee to explain why the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rking capital of the assessee vis a vis the comparables has already been factored in the pricing / profitability, which is more than the working capital adjusted margin of the comparables. Therefore, no further adjustment is required on account of outstanding receivables. Without prejudice, the learned Counsel submitted that since previous year relating to assessment year under dispute is 2012-13, interest must be calculated for delays relating to the said year i.e. for the period 1st April, 2012 till 31st March 2013 and not beyond that. Further, he submitted, 60 days credit period given to non AEs and customers should also apply to AE. In support of such contentions learned Counsel relied upon the following decisions :- 1. Pr. Commissioner of I. Tax v Vs. Kusum Health Care Pvt. Ltd. (Delhi HC) ITA 765/2016 DOJ 25.04.17 2. Pr. Commissioner of I. Tax 2 vs Bechtel India Pvt. Ltd. (Delhi HC) ITA 379 /2016 DOJ 21.07.16 3. Global Logic India Ltd Vs. DCIT (ITAT Del) ITA No.8726/Del/2019 DOJ 29.06.20 (AY 2015-16) 4. Global Logic India Ltd. Vs. DCIT (ITAT Del) ITA No.7621/Del/2017 DOJ 07.09.20 (AY 2013-14) 5. Sony Ericsson Mobile Communication India P. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ards non charging of interest beyond 31.03.2013 and charging interest after allowing normal credit period of 60 days. This is so because, the assessee has demonstrated before us that it has allowed credit period of 60 days to non AE s and other customers. 8. Before us, the assessee has furnished the computation of interest charged for delays relating to the period 01.04.2010 to 31.03.2013 considering normal credit period of 60 days. As per the said computation, the total interest chargeable on six months LIBOR + 400 basis points works out to Rs.2,25,276/. We direct the Assessing Officer to factually verify the aforesaid computation furnished by the assessee and restrict the addition to Rs.2,25,276/-. The ground is partly allowed. 9. In ground No.3, the assessee challenged addition of Rs.1,36,37,528/- to the contract revenue. 10. Briefly the facts are, by adopting accounting policy as per accounting standard (AS)-7 the assessee recognized contract revenue from construction contract on percentage of completion basis. As per the said method, the estimated contract cost is worked out by considering actual contract cost (both direct and other operating costs) incurred till the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following AS-7. Considering the facts of the case in totality in the light of the orders mentioned hereinabove, we do not find any merit in the appeal filed by the Revenue. We also do not find any merit in the methodology adopted by the DRP while dismissing the appeal of the revenue. We direct the Assessing Officer to delete the addition of Rs.21,70,079/- for Project Kanhan and Rs.4,051/- for project Demo Zone. Accordingly, Ground No.3 with all its sub grounds of the assessee s appeal is allowed and Ground No1. of the Revenue is dismissed. 11. Respectfully following the decision of the Coordinate Bench on the issue, we direct the Assessing Officer to delete the addition. 12. In the result, ground No.3 is allowed. 13. In ground No.4, the assessee has challenged the disallowance of Rs.15,61,108/- under section 43B of the Act representing leave encashment benefit paid to employees during the previous year relevant to assessment year under dispute. 14. Before us, Ld. Counsel appearing for the assessee submitted that the deduction was not claimed by the assessee in the return of income. He submitted, in course of assessment proceedings the assessee had claimed the deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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