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TMI Blog2017 (10) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... any further adjustment only on the basis of the outstanding receivables would have distorted the picture and recharacterised the transaction - Decided in favour of assessee. Excess deprecation claim on fixed assets - Held that:- Similar issue was raised in AY 2008- 2009 which was remanded back to the Assessing Officer to verify the claim of depreciation. Thus on similar line in the present Assessment year also the Assessing Officer is directed to verify the claim of the assessee as per law. - I.T.A .No. 87/DEL/2017 - - - Dated:- 8-8-2017 - SHRI N. K. SAINI, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER For The Appellant : Sh. Nageshwar Rao, Adv For The Respondent : Sh. T. M. Shiv Kumar, CIT DR ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules to determine the arm s length price of the international transaction; iv. by applying an interest rate on outstanding receivable at a SBI Base Rate plus 300 basis points. v. By ignoring the fact that account receivables arising from an international transaction are closely linked to the main transaction and should be benchmarked, using a combined transaction approach, by making working capital adjustment. vi. By erroneously observing that Teradata India is remunerated in INR for provision of services i.e. contract R D services and Global Consulting Center Services to the foreign AEs. 5. That without prejudice to the above, once working capital adjustment is granted no separate adjustment on account of outstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20,53,64,035/- which was incorporated by the Assessing Officer in his draft assessment order dated 1/3/2016 and the total income was proposed at ₹ 50,46,72,990/-. The assessee filed various objections before the DRP. The DRP decided the said objection while order dated 18/10/2016 the main contesting issue which is agitated in the present appeal are that of interest on receivables as well as depreciation. 6. The Ld. AR submitted that interest on receivables on the working capital cannot be taken into account in light of the decision of Hon ble Delhi High Court in the case of Principal Commissioner of Income-tax Vs. Kusum Health Care Pvt. Ltd (ITA No. 765/2016 order dated 25/4/2017). 7. As relates to second issue relating to depre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period is a separate international transaction. Allowing working capital adjustment in the international transaction of rendering services has been held to have no impact on the determination of ALP of the international transaction of interest on receivables from AEs beyond the stipulated period allowed as per the Agreement. In our considered opinion, whereas, the international transaction of purchase/sale of goods from/to AE contemplates comparison of the price charged/paid for such goods by impliedly including the interest for the period allowed for realization of invoices as per the terms of the agreement, the international transaction of charging interest on late recovery of trade receivable covers the period which starts with the termi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en in the above orders of the Delhi Bench of the Tribunal. 9. We have heard both the parties and perused the relevant case laws along with order of TPO, DRP A.O. In respect of first issue the Ld. AR relied upon the order of jurisdictional High Court in case of Kusum Health Care Pvt. Ltd. wherein it is held as under:- 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was raised in AY 2008- 2009 which was remanded back to the Assessing Officer to verify the claim of depreciation by the Tribunal vide order dated 01.08.2016 in ITA No. 791/Del/2013. The extract of the said order is as follows:- 11.4 The Ld.AR submitted that the Ld.AO on one hand accepted the difference in the liability but he submitted that the differential amount between the purchase consideration and the value as per the valuation certificate did not accelerate the difference in the fixed assets. He submitted that the differential amount between the purchase consideration and the value of assets as per the valuation certificate has to be transferred to capital reserve as it represents the actual cost of assets to the assessee and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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