TMI Blog2019 (9) TMI 1694X X X X Extracts X X X X X X X X Extracts X X X X ..... verage effective rate of interest paid to the unrelated parties is not in dispute at 15.36%, then the Specified Domestic Transactions of payment of interest to the related parties have to be tested with the Internal CUP being average rate of interest paid to the unrelated parties. The assessee has also taken a plea before the authorities below that the payment of interest to the unrelated parties is bi-monthly/quarterly as against annually to the related parties. This is also a cost adding factor in respect to the unrelated party payment of interest. Assessee has paid the effective average rate of interest inclusive of brokerage at 15.36%, then the payment of interest to related parties at 15% is at Arm s Length. It is also pertinent to note that even by applying the Arm s Length Interest at 14.50% based on the Internal CUP which is an average of 15 transactions then the tolerance range provided under second proviso to section 92C(2) is also applicable in the case of the assessee and, therefore, in any case the Specified Domestic Transactions price falls in the tolerance range of (+)(-) 3%. Accordingly, the addition sustained by the ld. CIT (A) is deleted. Disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of payment of interest to the related parties. Accordingly the AO made a reference under section 92CA to the TPO for determination of Arm s Length Price in respect of the Specified Domestic Transactions entered into by the assessee with the Associated Enterprises. The assessee filed its Transfer Pricing Study Analysis under Rule 10D of IT Rules before the TPO and submitted that the transactions of payment of loan to the related parties are at Arm s length as the interest paid to the unrelated parties along with brokerage is more than the interest paid to the related parties. Thus the assessee adopted Internal CUP comparable as most appropriate method to benchmark its Specified Domestic Transactions. The assessee pointed out that the effect cost of loans taken from unrelated parties comes at an average rate of 15.36% in comparison to the interest paid to the related parties @ 15%. Accordingly, the assessee contended before the TPO that the Specified Domestic Transactions of payment of interest on loans taken from the related parties are at Arm s Length and no adjustment is called for. The TPO did not accept this contention of the assessee as well as the benchmarking and proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the unrelated parties being interest and brokerage at 15.36% in comparison to the interest paid to the related parties at 15%. Therefore, the ld. A/R has submitted that the transaction of payment of interest to the related parties is at Arm s Length and no adjustment/addition is called for on this account. Therefore the addition made by the AO and sustained by the ld. CIT (A) is unjustified. 4. On the other hand, the ld. D/R has submitted that the ld. CIT (A) has followed the Arm s Length Interest as applied for the immediate preceding year at 14.5% which was accepted by the assessee and, therefore, the ld. CIT (A) has taken a reasonable and consistent view on this issue. He has relied upon the orders of the authorities below. 5. We have considered the rival submissions as well as the relevant material on record. The assessee has paid interest to 16 related parties @ 15% per annum. Therefore, the transaction of payment of interest falls in the category of Specified Domestic Transactions required to be examined as per the provisions of Transfer Pricing. Before the TPO, the assessee filed its Transfer Pricing Study Analysis and claimed that as per the Internal CUP of payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y 15% 297,714 - 15% Annually 15% 6. Atul Agrawal 23- 24 Y 15% 578,513 - 15% Annually 15% 7. Atul Agrawal HUF 25 Y 15% 327,449 - 15% Annually 15% 8. Deepali Garawal 26 Y 15% 356,401 - 15% Annually 15% 9. Himanshi Agarwal 27 Y 15% 80,114 - 15% Annually 15% 10. Purva Agarwal 28 Y 15% 239,577 - 15% Annually ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rekha Tiwari 38 N 14.40% 74,200 1.20% 15.60% Bi-monthly 16.65% 21 Amrita Bajaj 39 N 13.20% 5,500 - 13.20% Quarterly 13.87% 22 Vinod Kumar Agrawal HUF 40 N 14.40% 74,200 1.20% 15.60% Bi-monthly 16.65% 23 Usha Bajaj 41 N 13.20% 112,860 - 13.20% Quarterly 13.87% 24 Anuradha Rawla N 12.00% 180,000 3.60% 15.60% Bi-monthly 16.65% 25 Dhurlabhji Properties Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies. The assessee has also taken a plea before the authorities below that the payment of interest to the unrelated parties is bi-monthly/quarterly as against annually to the related parties. This is also a cost adding factor in respect to the unrelated party payment of interest. Having regard to the undisputed fact that the assessee has paid the effective average rate of interest inclusive of brokerage at 15.36%, then the payment of interest to related parties at 15% is at Arm s Length. It is also pertinent to note that even by applying the Arm s Length Interest at 14.50% based on the Internal CUP which is an average of 15 transactions then the tolerance range provided under second proviso to section 92C(2) is also applicable in the case of the assessee and, therefore, in any case the Specified Domestic Transactions price falls in the tolerance range of (+)(-) 3%. Accordingly, the addition sustained by the ld. CIT (A) is deleted. Ground No. 2 is regarding disallowance of Employees Contribution to PF ESI paid after the due date as provided under the relevant Acts. However, it was paid before the due date of filing the return of income under section 139(1) of the Act. 6. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this issue and in case of Rajasthan Cottage Industries vs. ITO (supra) the Tribunal after considering the decision of Hon ble Jurisdictional High Court in case of PCIT vs. M/s. Rajasthan Renewable Energy Corporation Limited in DB IT Appeal No. 10, 11 12/2018 dated 13.03.2018 which was followed by the ld. CIT (A) while passing the impugned order, has decided this issue in favour of the assessee in para 2 as under :- 2. The only issue in this appeal is regarding disallowance of employees contribution to PF ESI after the due date of payment as per respective Acts PF ESI however, it was paid before the due date of filing of return of income U/s 139(1) of the Act. The ld. CIT(A) has accepted the fact that the assessee has paid the contribution towards to PF ESI prior to due date of filing of return of income U/s 139(1) of the Act but the claim was disallowed on the basis of the decision of Hon ble jurisdictional High Court in case of in case of PCIT vs. M/s Rajasthan Renewable Energy Corporation Limited in DB ITA No. 10,11 12/2018 dated 13.03.2018 which was misunderstood by the ld. CIT(A). We note that there was typographical mistake in the said decision of the Hon ble ju ..... X X X X Extracts X X X X X X X X Extracts X X X X
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