TMI Blog2022 (3) TMI 1503X X X X Extracts X X X X X X X X Extracts X X X X ..... ing for computing its ALP. This Bench referred to decision of Special Bench of this Tribunal in case Of Instrumentation Corpn. Ltd. [ 2016 (7) TMI 760 - ITAT KOLKATA] held that outstanding sum of invoices is akin to loan advanced by assessee to foreign AE., hence it is an international transaction as per explanation to section 92B of the Act. We also perused decision relied upon by the Ld.AR. In our considered opinion, these are factually distinguishable and thus, we reject argument advanced by the Ld.AR. Alternatively, it has been argued that working capital adjustment subsumes sundry creditors. In such situation computing interest on outstanding receivables and loans and advances to international transaction would amount to double taxation. We deem it appropriate to set aside the impugned order on this issue and remit the matter to the file of the Ld.AO/TPO for deciding it in conformity with the above referred judgment ORANGE BUSINESS SERVICES INDIA SOLUTIONS PVT. LTD. VERSUS DCIT, CIRCLE-3, GURGAON [ 2018 (2) TMI 1151 - ITAT DELHI] Needless to say, the assessee will be allowed a reasonable opportunity of being heard in such fresh proceedings. Appeal filed by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outstanding receivables forms part of the working capital adjustment and therefore no separate adjustment should be made on notional interest. 4. Without prejudice, the learned AO/ learned TPO/ Hon'ble DRP erred in ignoring the fact that as on 31 March 2017, there exists outstanding payables pertaining to the dues owned by the Appellant to various AEs (wherein no interest has been charged by or paid to the AEs) which ought to have been netted off from the outstanding receivables from AEs before proposing TP adjustment in connection with notional interest on outstanding receivables from AEs. 2. Brief facts of the case are as under: The assessee is a company providing Assembly / Manufacturing activity and Engineering Design Services to its Associated Enterprises ( AE ). The assessee adopted TNMM as the MAM for the Manufacturing segment, which was accepted by the TPO. However, the Ld.TPO imputed cost to the outstanding receivables and computed interest for the same. 3. The Ld.TPO held that the outstanding receivables from the AE are of the nature of loan facility given to the AEs and imputed interest at the rate of 6 month LIBOR plus 400 basis points, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Bechtel India v. Dy. CIT reported in (2016) 66 taxmann.com 6, which subsequently upheld by Hon'ble Delhi High Court vide order dated 21/07/16 in ITA No. 379/2016, also upheld by Hon'ble Supreme Court vide order dated 21/07/17, in CC No. 4956/2017. 6. It has been submitted by Ld.Counsel that outstanding receivables are closely linked to main transaction and so the same cannot be considered as separate international transaction. He also submitted that into company agreements provides for extending credit period with mutual consent and it does not provide any interest clause in case of delay. He also argued that the working capital adjustment takes into account the factors related to delayed receivables and no separate adjustment is required in such circumstances. On the contrary Ld. CIT DR submitted that interest on receivables is an international transaction and Ld. TPO rightly determined its ALP. 7. He referred to decision of Hon ble Delhi Tribunal in Ameriprise (supra), in which this issue has been discussed at length and eventually interest on trade receivables has been held to be an international transaction. Referring to discussion in said order, it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. We note that expression 'debt arising during the course of business' refers to trading debt arising from sale of goods or services rendered in course of carrying on business. Once any debt arising during course of business is an international transaction, he submitted that any delay in realization of same needs to be considered within transfer pricing adjustment, on account of interest income short charged or uncharged. It was argued that insertion of Explanation with retrospective effect covers Assessment Year under consideration and hence under/non-payment of interest by AEs on debt arising during course of business becomes international transactions, calling for computing its ALP. 11. This Bench referred to decision of Special Bench of this Tribunal in case of Special Bench of ITAT in case of Instrumentation Corpn. Ltd. v. Asstt. DIT in ITA No. 1548 and 1549 (Kol.) of 2009, dated 15- 7-2016, held that outstanding sum of invoices is akin to loan advanced by assessee to foreign AE., hence it is an international transaction as per explanation to section 92 B of the Act. We also perused decision relied upon by the Ld.AR. In our considered opinion, these are factually d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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