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2023 (4) TMI 672 - AT - Income TaxTP Adjustment - Interest on outstanding receivables - HELD THAT - On identical facts, the Tribunal in assessee s own case for assessment year 2017-2018 2022 (8) TMI 1364 - ITAT BANGALORE had restored the matter to the AO / TPO with specific directions to determine the ALP with regard to interest on delayed receivable by following the rules with a proper benchmarking study. Thus following the co-ordinate Bench order of the Tribunal in assessee s own case, we restore the grounds back to the files of the AO / TPO - Ground allowed for statistical purposes. Disallowance u/s 43B - Adjustment made in the intimation u/s 143(1) - HELD THAT - The present appeal of the assessee arises out of the final assessment order (final assessment order, which has considered the issues which are adjudicated by the TPO, the draft assessment order and the DRP s directions). Therefore, the issue of adjustment made in the intimation u/s 143(1) cannot be raised in the present appeal before the Tribunal. However, we notice that the assessee has filed rectification application as against the intimation u/s 143(1) of the I.T. Act. The assessee shall pursue rectification application u/s 154 .
Issues Involved:
1. Transfer Pricing Adjustment on Interest on Outstanding Receivables 2. Disallowance under Section 43B of the Income Tax Act Transfer Pricing Adjustment on Interest on Outstanding Receivables: The appeal concerns a private limited company providing contract software development services to its Associated Enterprises (AEs) outside India. The Central Processing Centre (CPC) initially adjusted the total income due to disallowance under Section 43B of the Income Tax Act and ESI/PF amounts. Subsequently, the Transfer Pricing Officer (TPO) made adjustments on the software development segment and interest on delayed receivables. The Dispute Resolution Panel (DRP) upheld the TPO's adjustment on interest on delayed receivables. The TPO imputed interest based on the SBI short-term deposit rate. The company argued against the adjustment, highlighting its debt-free status and lack of working capital risks. The Tribunal referred to a previous case involving the same company and directed the AO/TPO to determine the Arm's Length Price (ALP) following proper benchmarking, remanding the issue for further examination. Consequently, grounds 7 and 8 were allowed for statistical purposes. Disallowance under Section 43B of the Income Tax Act: The issue of disallowance under Section 43B of the Income Tax Act arose from adjustments made in the intimation under Section 143(1) of the IT Act. This matter was not addressed in the draft assessment order or before the DRP. The final assessment order considered issues adjudicated by the TPO and the DRP. As the adjustment in the intimation under Section 143(1) could not be raised in the current appeal, the Tribunal rejected ground 10. The Tribunal advised the assessee to pursue rectification under Section 154 of the IT Act and, if dissatisfied, to appeal against the intimation under Section 143(1)/154 order. Consequently, the appeal was allowed for statistical purposes. In conclusion, the Tribunal addressed the transfer pricing adjustment on interest on outstanding receivables by remanding the issue for further examination based on previous rulings. The Tribunal also clarified the limitations of raising issues related to adjustments made in the intimation under Section 143(1) in the current appeal.
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