TMI Blog2022 (6) TMI 1386X X X X Extracts X X X X X X X X Extracts X X X X ..... da, Accountant Member And Shri Laliet Kumar, Judicial Member For the Assessee : Sri CA S Subrahmanyam. For the Revenue : Dr. Rajendra Kumar, CIT. ORDER PER LALIET KUMAR, J.M. This appeal is filed by the assessee feeling aggrieved by the order of ld.ACIT, Circle 3(2), Hyderabad dt.30.04.2021 for the assessment year 2010-11 on the following grounds : 1. The order of the learned Assessing Officer / Transfer Pricing Officer / Dispute Resolution Panel is erroneous in law and on the facts of the case. 2. AO / TPO / DRP erred in making transfer pricing adjustment of Rs.3,59,67,697 towards interest on trade receivables balances from associated enterprises by applying interest rate of 14.75% being SBI short term deposit interest rate. 3. The AO / TPO / DRP erred in not considering the fact that no transfer pricing adjustment to be made for trade receivables from AEs, since the assessee did not charge any interest for trade receivables from Non-AEs also. 4. The AO / TPO / DRP erred in not considering the alternate ground of the assessee that even if interest is charged, such interest should only be at LIBOR and not SBI short term deposit rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before ITAT. 4. At the outset, ld.AR for the assessee has submitted that assessee is only pressing ground No.4 in the present appeal. The ground No.4 of the present appeal provides as under : 4. The AO / TPO / DRP erred in not considering the alternate ground of the assessee that even if interest is charged, such interest should only be at LIBOR and not SBI short term deposit rates. 5. In this connection, the ld.AR for the assessee has drawn our attention to Para 18 of the order of Tribunal dt. 30.11.2015 in the appeal of the assessee for A.Ys 2005-06 2010-11. 18. We have heard the arguments of both the parties and perused the material on record as well as the orders of revenue authorities. From the above, it may be perceived that assessee has not charged any interest to AE as well as non-AE entities. Moreover, the TPO has considered only the account receivable of AE without considering the account payable to AEs. It is pertinent to note that account payable to AE and its affiliates are Rs. 28,58,98,204 compared to account receivables from AE and its affiliates of Rs. 26,88,97,856. We find that the account payables are more than the account receivables from AE. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we are of the view, that the SBI short term fixed deposit interest rate may be the appropriate ALP rate to measure the interest compensation in these type of transactions. In this regard, we place reliance on the principle held by the Honourable Bangalore ITAT in the case of Logix Microsystems Ltd (ITA No. 423/Bang/2019 dated 07.10.2010) (2010-TI-50-ITAT Bang-TP), under similar factual circumstances, wherein it was observed, While adopting the Indian rate, it is not proper to rely on PLR of the State Bank of India. This is because if the funds were brought in time and those funds were properly deployed, the assessee company may earn an income at the maximum rate applicable to deposits and not at the rate applicable to loans. We find it appropriate to adopt a reasonable rate that would be available to the assessee on short-term deposits . 3.1.8 This, Panel has been consistently applying the SBI PLR rate for the computation of notional interest. Accordingly, the TPO is directed to adopt the SBI short term deposit interest rate @ 14.75% for the subject year as the ALP interest rate and re-compute the adjustment to be made to the total income. 3.1.9 With regard to the 90 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of manufacturing or delivering of the services/goods to its AE, failing to receive Rs.5.86 crores from AE in time had economic consequences, hence assessee is required to be compensated for delay in receiving its outstanding. It needs no business sense, if a person rendering services or supply the goods after making the afront payment, then the services/goods would be available at a lower rate and in case of converse situation of delayed payment goods/services would be available at higher value, as the cost of delay/ upfront payment would be factored in the price. In the present case, TPO as well as the assessee have determined the ALP of the international transactions after considering the price charged by the assessee from its AE, albeit without factoring in interest to be chargeable on the delay in receiving the outstanding amount from the associated enterprises. Therefore, we do not find any error in bench marking the interest to be charged on delayed outstanding by the lower authority. In the present case, the learned CIT (A) in the facts of present case, noticed that 60% of the total turnover were receivables from the AE alone, CIT(A) had held that the interest rate at 8% ..... 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