TMI Blog2023 (11) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... on receivables is required to be made - HELD THAT:- Tribunal has noted the assertions made on behalf of the respondent/assessee that it permitted a ninety (90) days credit period. On behalf of the appellant/assessee, it had been emphasized that once the credit period exceeded ninety (90) days, interest had to be charged. It is on this account that adjustment was ordered with regard to the receivables. Tribunal has relied upon its decision [ 2021 (11) TMI 1148 - ITAT DELHI] and concluded that the said issue needed to be restored to the Assessing Officer (AO) for verifying the respondent/assessee s claim, keeping in view its aforementioned decision, albeit, after providing reasonable opportunity of hearing to the respondent/assessee. 20. In our view, on this score as well, no interference is called for with the order of the Tribunal. Also in support of her submission that once working capital adjustment is made, no further adjustment is required to be made on account of interest received on receivables has correctly relied upon the judgment of Kusum Health Care Pvt. Ltd. [ 2017 (4) TMI 1254 - DELHI HIGH COURT] as held with the Assessee having already factored in the impac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal, in our view, has returned findings of fact as to why they are not comparable. 10. As regards Infobeans, the Tribunal notes that it is into diversified activities which includes sale of products. In this context, the Tribunal has adverted to the profit and loss account of Infobeans which shows that it has received revenue from operations amounting to Rs. 32,96,59,883/-. 10.1. The Tribunal also records that the notes to account (i.e., Note no. 20) indicates that it is in the business of sale of software, which is sold both abroad and domestically. 10.2. The other finding, which has been recorded by the Tribunal is that Infobeans also pays sales tax and MODVAT. 10.3. Thus, based on the functional dissimilarity between the assessee and Infobeans, the said comparable was rejected. 11. As regards Cybercom, the findings of fact recorded by the Tribunal are that it is into diversified activities which includes provision of software services. It is indicated that segmental details concerning various segments are not available in public domain. 11.1. Importantly, the Tribunal highlighted that, unlike the respondent/assessee, Cybercom is the business of providing tech ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st will be low if the company can pay its liabilities after a larger period of gap then pay it in a shorter period. Holding of inventory as also interest costs. 2.5.3 As working capital requirements affect the margins or prices, costs or profits because this is a implicit cost which is recovered/ recoverable from the customers: therefore, this DRP is of the opinion that in view of the Rule 10B(3) and to improve the comparability, in the facts of the present case, while comparing the margins of tested party with that of the comparables, adjustment be made for working capital for which the reliable data is to be provided by the taxpayer. 2.5.4 The TPO has stated that the taxpayer has not demonstrated that there is a difference in the levels of working capital employed by it vis.-avis. the comparables, the nature of assets employed and the difference in asset intensity, which affect prices and consequently profits. With regard to this objection, as discussed above, the holding of inventories, trade debtor/creditors, trade receivable/payable has always an interest cost. Therefore there is definitely a connection in the level of working capital and price at which one is will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Assessee had undertaken working capital adjustment for the comparable companies selected in its transfer pricing report. It was further noted that the differential impact of working capital of the Assessee vis- -vis its comparables had already been factored in the pricing/profitability which was more than the working capital adjusted margin of the comparables and, therefore, any further adjustment to the margins of the Assessee on the pretext of outstanding receivables is unwarranted and wholly unjustified. xxx xxx xxx 10. The Court is unable to agree with the above submissions. 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 characterised as an international transaction. There may be a delay in collection of monies for supplies made, even beyond the agreed limit, due to a variety of factors which will have to be investigated on a case to case basis. Importantly, the impact this would have on the working capital of the Assessee will have to be studi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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