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TMI Blog2013 (12) TMI 1535X X X X Extracts X X X X X X X X Extracts X X X X ..... s have been raised by the assessee:- "Re: Adjustment on account of interest on delayed payment from the Associated Enterprises (AEs) Rs.I0,12,676/-: On the facts and circumstances of the case and in law, the Hon'ble Members of the Dispute Resolution Panel (DRP) ought to have held that no adjustment on account of notional interest on delayed payment from the Associated Enterprises (AEs) is required to be made U / s.92CA(3) of the Income Tax Act, 1961 (the Act) and consequently, ought to have directed the AO not to make adjustment u/s 92CA(3) of the Act on account of delayed payment from AEs. Without prejudice to above and in the alternate On the facts and circumstances of the case and in law, if at all adjustment by way of interest o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n independent unrelated transactions involving extended credit facility, the third party expects some compensation in the form of interest. Accordingly, he proposed to charge arm's length interest rate by considering the rates prevailing in independent transaction i.e., short term unsecured debit. After detail reasons to justify such a transfer pricing adjustment, he calculated the rate of interest on the delayed payment @ 15.68% and, accordingly, made the adjustment of Rs. 2,26,98,395. The reasoning given by the TPO to justify such adjustment has been dealt with from Page-6 to 10 of the TPO's order. The DRP had reduced the rate of interest @ 7% per annum and held it to be reasonable and accordingly, the Assessing Officer was direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of A.E., the period of realization as gone beyond 700 days and in some cases even more than 1,200 days. In case of non-A.E., the maximum period of delay is only 203 days. Thus, there cannot be any comparability analysis in the transactions between the A.E. / non-A.E. Had it been a regular feature in the case of the non-A.E. then assessee's contention could have been said to have some force. Moreover, he submitted that the sale transactions with the A.Es were around 215 transactions whereas in the case of non-A.E. there was only 11 transactions and it is only in one instance in the case of non-A.E. that the terms of credit was 145 days and the overdue delay was 203 days. Whereas, in assessee's case, delay in most of the cases had fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction. Under these circumstances, it cannot be held that there can be direct comparison between the controlled transactions with the A.E. and uncontrolled transactions with the third party. Therefore, some kind of adjustment is required to be made on such transaction with the A.E. Looking to the fact that in the case of non-A.E., there has been maximum delay of 200 days, we are of the opinion that for bench marking the same, upto the delay of 200 days in the case of A.E. also, no interest should be chargeable. In case of delay beyond the period of 200 days, the transfer pricing adjustment is required to be made on account of charging of some interest. The learned Counsel for the assessee was required to furnish the working of period o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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