9911796707
TMI Blog2017 (11) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... est on receivables is required after allowing working capital adjustment, in the absence of material on record, we are unable to give any relief to the assessee on this ground. Therefore, we deem it fit and proper to direct the AO to examine if the final margins of the comparables and the assessee have been arrived at after WC adjustment to hold the international transactions of the assessee to be at “ALP” and if it is found to be so, then we direct that no further addition on account of interest on receivables shall be made. However, in the event, it is found that WCA has not been made to the final margins which are compared to the margin of the assessee, then the AO shall allow the reasonable period of credit i.e. three months from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in giving effect to the directions of the Hon'ble Dispute Resolution Panel ('DRP'), which had resulted in a TP adjustment of ₹ 2,43,05,081. The same has resulted in the AO raising a demand of ₹ 1,24,59,090. The Appellant had filed a rectification petition before the AO as well as the TPO seeking to rectify the Assessment Order. The Appellant had filed a petition for stay of demand before the Hon'ble ITAT, Hyderabad against the demand raised by the AO and stated that the demand would be significantly reduced if the rectification petition is given effect to. The Hon'ble ITAT in the Stay Order has directed the AO to give effect to the rectification at the earliest and granted stay for a period of six ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34B, 234 C and 234D of the Act The grounds mentioned herein are without prejudice to one another. The Appellant craves leave to add to and/or to alter, amend, rescind, modify the grounds herein above or produce further documents before or at the time of hearing of this Appeal . 2. After going through the order of the AO passed consequent to the directions of the DRP, we find that the revised grounds filed now, are relevant for adjudication and accordingly we are consider the same. 3. Brief facts of the case are that the assessee company engaged in the business of rendering software development services to its AEs, filed its return of income for the A.Y 2012-13 on 28.11.2012 declaring an income of ₹ 9,69,55,820. Dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowing the grace period of one month. The assessee submitted the relevant data and after examining the same, the AO observed that there is a delay of nearly 7 to 9 months in respect of receipts. He therefore, held that the interest on receivables is to be adjusted u/s 92CA of the Act. In accordance with the order of the TPO, the AO proposed the draft assessment order against which the assessee preferred its objections before the DRP. The DRP granted partial relief to the assessee by directing the AO to adopt the interest rates of the SBI prevailing for the financial year 2011-12 on short term fixed deposits instead of 14.75% applied by the TPO. Further, the DRP also directed that the interest is to be calculated till the end of the relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siderable delay in receipt of the consideration by the assessee from its AEs and therefore, the notional interest on the outstanding balance is to be brought to tax at its ALP. 8. Having regard to the rival contentions and the material on record, we find that the only transaction, which has been treated as an international transaction by the assessee in its TP study is the provision of software development and consulting services. The assessee has adopted TNMM as the most appropriate method and has adopted 14 companies as comparables whose mean margin was 13.08% as against the assessee s margin of 12.14%. Since the assessee s margin was within + or _ 5% of the margin of the comparables, the assessee treated it to be at Arm s length. In A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comparables are arrived at after such adjustment. The decisions relied upon by the learned Counsel for the assessee support this contention. Though, we agree with the assessee s contention that no separate addition of interest on receivables is required after allowing working capital adjustment, in the absence of material on record, we are unable to give any relief to the assessee on this ground. Therefore, we deem it fit and proper to direct the AO to examine if the final margins of the comparables and the assessee have been arrived at after WC adjustment to hold the international transactions of the assessee to be at ALP and if it is found to be so, then we direct that no further addition on account of interest on receivables shall be m ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
