TaxTMI 
TaxTMI 
2023 (4) TMI 980
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.... the factual matrix of the Appellant as well as the nature of the transactions undertaken by the Appellant. 1.2 That the Ld. AO failed to appreciate the submissions made/ contentions raised by the Appellant and .further erred in making several observations and inferences in the impugned assessment order which are factually incorrect and legally untenable. Transfer Pricing Grounds 2. That, in framing the impugned assessment order, the reference made by the Ld. AO, under section 92CA(1) of the Act suffers from jurisdictional error, as the Ld. AO, had not recorded any reasons nor he had any material whatsoever on the basis of which he could even reach a prima- facie opinion, that it was 'necessary or expedient' to refer the matter to the learned Deputy Commissioner of Income Tax & Transfer Pricing - 1 (1)(1), New Delhi ('Ld. TPO') for computation of arm's length price ('ALP'). 3. That on facts and circumstances of the case and in law, the Ld. AO/ Ld. TPO / Hon'ble Dispute Resolution Panel ('Hon'ble DRP') has erred, in making an adjustment of INR 12,23,72,160 in relation to notional interest on overdue receivables from AEs. 3.1 Tha....
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....ble DRP which directed the Ld. TPO to verify the fact if invoices were being raised in foreign currency and apply 6-month LIBOR + appropriate basis points. 3.7 That on the facts and circumstances of the case and in law, the Ld. TPO/ the Ld. AO/ Hon'ble DRP have erred in arbitrarily adding 300 basis point to the SBI PLR for computing interest on outstanding receivables, without giving any cogent reason 3.8 That on the on the facts and circumstances of the case and in law, the Ld. TPO and Ld. AO have erred by not restricting the amount of adjustment to net outstanding receivables which is also in line with directions issued by the Hon'ble DRP in Assessee's own cases for AY 2010-11 to AY 2012-13. Corporate Tax Grounds 4. That on the facts and circumstances of the case and in law, the Ld. AO erred in not granting the complete credit of tax deducted at source. 5. That on the facts and circumstances of the case and in law, the Ld. AO has erred in charging interest under section 234A of the Act without appreciating that return of income was filed within the time limit specified under section 139(1) of the Act. 6. That on the facts and circumstances of the cas....
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....der u/s 143(3) r.w.s. 144C of the Act, 1961" but it was final assessment order. Assessee objected that final assessment order was passed without giving the opportunity to file objections before DRP. Based on the arguments of the assessee and facts brought on record by the Sr. Standing Counsel of the Department, Hon'ble High Court passed order dated 17.04.2021 and held that:- "(i) The assessment order dated 26.03.2021 shall be treated as a draft assessment order. (ii) The petitioner will have 30 days' time to file its objections with the DRP. The aforementioned timeframe will commence from the date of the receipt of a copy of this order. (iii) The notice of demand and the notice for initiation of penalty proceedings shall stand withdrawn." 6. After the order of Hon'ble High Court, Assessee filed objections before Dispute Resolution Panel (DRP) against the draft order dated 26.03.2021. DRP vide its order dated 29.11.2021 allowed part relief to the assessee. The TPO recommended following adjustments to the total income of the assessee based on the directions of DRP :- S.No. Nature of international transaction Adjustment u/s 92CA (Rs.) 1 Software Development ....
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....respectfully following the judgment of the Hon'ble Bombay High Court in Patni Computer Systems cited supra and the decisions of ITAT in Bechtel India, Ameriprise India (P) Ltd, Mckinsey Knowledge Centre (P) Ltd and KBACE Technologies (P) Ltd cited supra, the Panel upholds the action of the AO of treating delayed payment on receivables as a separate international transactions which cannot be said to be subsumed or factored in, in the working capital adjustments." 9. Against this addition, assessee is in appeal before us. We have heard both the parties and perused the records. 10. Ld. Counsel of the assessee submitted that ld. DRP has erred in distinguishing the decision of Hon'ble Delhi High Court in the case of Kusum Healthcare Pvt. Ltd. (supra). He submitted that the Tribunal has relied upon the decision in several cases to decide the issue in favour of assessee. He referred to following case laws :- (i) Principal Commissioner of Income-tax v. Kusum Healthcare Pvt. Ltd. (2018) 99 taxmann.com 431 (Delhi); (ii) ERM India (P.) Ltd. v. National e-assessment Centre, New Delhi - [2021] 132 taxmann.com 220 (Delhi-Trib.); (iii) Orange Business Services India Solutions )P.) ....
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....ise India (supra). 15. In the meanwhile, the Hon'ble Delhi High Court, vide order dated 25-4-2017 in the case of Kusum Healthcare (supra), dismissed the appeal of the revenue against the decision of Hon'ble Tribunal and that (i) The inclusion in the Explanation to section 92B of the Act of the expression "receivables" does not mean that de hors the context every item of "receivables" appearing in the accounts of an entity, which may have dealings with foreign AEs would automatically be characterized as an international transaction and (ii) With the Assessee having already factored in the impact of the receivables on the working capital and thereby on its pricing/profitability vis-a-vis that of its comparables, any further adjustment only on the basis of the outstanding receivables would have distorted the picture and recharacterized the transaction. 16. In the appeal filed by the assessee in the case of Mckinsey Knowledge, the Hon'ble High Court vide order dated 7-2-2018, while admitting the appeal on the other issue, remitted the issue of interest charged on outstanding receivables to ITAT, following their decision in the case of Kusum Healthcare. 17. However, vid....