9911796707
TMI Blog2017 (3) TMI 479X X X X Extracts X X X X X X X X Extracts X X X X ..... .2016 for A.Y 2012-13. The assessee also filed Stay Petition for assessment year 2012-13 seeking extension of stay for outstanding disputed demand of Rs. 4,37,34,260/- till the disposal of the appeal. Since issues involved in this appeal and the Stay Petitions are inter linked, this appeal and Stay Petition are clubbed together, heard together, disposed off by this common order for the sake of convenience. 2. The first issue raised in its appeal relating to Ground Nos. 2 to 6 is with regard to Transfer Pricing (T.P) adjustments on account of notional interest on receivables from Associated Enterprises (A.E). 3. The facts of the issue re that Transfer Pricing Officer (TPO) noted that average credit period allowed by the assessee to the AE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate international transaction of interest-free advances to AEs and that the same cannot be treated as part of transaction of services for benchmarking purposes. Thus even while not finding any fault in the TP analysis and benchmarking of international transaction of services is carried out by assessee including making working capital adjustment, TPO adopted prime lending rate of 14.4% and proposed an adjustment of Rs. 11.10 crores to total income. Before the DRP Proceedings, detailed objections were filed by appellant contesting approach of treating outstanding receivables of the separate international transaction although closely and inextricably linked to the main 'transaction of provision of software development services which are found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a zero debt company and does not have any borrowings involving payment of interest. In this context, ld.A.R relied in decision of Hon'br Tribunal to decision of Hon'ble Delhi High Court in the case of Bechtel ITA No 379 of 2016 confirming the principle laid down by Hon'ble Tribunal, Delhi Bench in ITA no.1478/DEL/2015. It was submitted that by order dated 25 August 2016, DRP granted partial relief by reducing the rate to be applied from 14.4% to 12.75% in further directing TPO to delete interest beyond 31 March 2012. It was submission of assessee that all the relevant records including financial statements were submitted, considered and findings recorded by TPO & DRP during the course of assessment. This is further evidenced by annexure a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Taxation". As per clause (c) of Explanationto Sec.92B of the Act. In support of that he relied on the judgement of Bangalore Bench in the case of Logix Micro System Ltd., Vs. ACIT in 42 SOT 525. Ld.D.R surhter submitted that after insertion of Explanation to Sec.92B of the Act, the decision relied upon by the assessee in the case of Nimbus Communications Ltd. become irrelevant. He relied on the following decisions:- i) In the case of Techbooks International Pvt. Ltd., in ITA No.240/Del./2015 for A.Y 2010-11 dated 6th July, 2015 ii) In the case of Ameriprise India Pvt. Ltd. in ITA Nos. 2010 & 2575/Del./2014 A.Y 2009-10 dated 14.09.2015. 6. We have heard both the parties and perused the material on record. In this case, huge amount of rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can pay the assessee in time. If the assessee's contention is accepted, it would also mean that the AE has no working capital of its own to pay the assessee in time. In other words, the AE was doing its business using the capital of the assessee. The AE collects money from its clients even beyond the normal period, which shows that the assessee is financing its AE by accommodating the delayed remittance. In the present case, the assessee parked a huge amount of funds for a longer period with its AE. It was only because the pricing of international taxation has been accepted for ALP test, it is not possible to hold that the TPO should not go into this question of parking of huge funds with its AE. If the funds are repatriated to India, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordinate Bench in the case of Foxteq, Bechtel so as to hold that there can be no separate transfer pricing adjustments towards notional interest on outstanding receivables. In our opinion, the cases relied by the assessee's counsel in the decision of Delhi Bench in ITA No.1478/Del./2015 in the case of Bechtel India Pvt Ltd., confirmed by the Delhi High Court in ITA No.379 of 2016 dated 21.07.2016 wherein the assessee extended the credit period of 60 days to its AE and charging no interest on the same. We have also gone through the other judgements relied by ld.A.R. However, in the present case, the credit period extend by the assessee to its AE is very longer period, sometime it is more than one year. Hence, considering the facts of the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
