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TMI Blog2018 (3) TMI 1613X X X X Extracts X X X X X X X X Extracts X X X X ..... Kalra, Advocate REVENUE BY : Shri H.K. Choudhary, CIT DR O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : The Appellant, M/s. Inductis (India) Pvt. Ltd. (hereinafter referred to as 'the taxpayer') by filing the present appeal sought to set aside the impugned order dated 17.02.2015, passed by the AO in consonance with the orders passed by the ld. DRP/TPO under section 143 (3) read with section 144C of the Income-tax Act, 1961 (for short 'the Act') qua the assessment year 2010-11 on the grounds inter alia that :- "1. That on the facts and in the circumstances of the case and in law, the assessment order passed by the Ld. Assessing Officer ("Ld. AO") is bad in law and void abinitio. 2. That the Ld. DRP erred in confirming the Ld. AO / Ld. TPO's order which provides that the alleged international transactions pertaining to outstanding receivables do not satisfy the arm's length principle envisaged under the Act. In doing so, the Ld. AO/Ld. DRP has grossly erred in: 2.1 re-characterizing the outstanding related party receivable from overseas AEs beyond 30 days period as short term loans advanced to the AEs and imputing interest thereon; 2.2 disregarding t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and in doing so have grossly erred in not appreciating that none of the conditions set out in section 92C(3) of the Act are satisfied in the present case. 6. That the Ld. AO has grossly erred on facts and in law by disregarding judicial pronouncements in India in undertaking the TP adjustment. 7. The Ld. AO / DRP erred in law and on the facts and circumstances of the case by making notional addition of ₹ 22,464 per provisions of section 14A of the Act read with rule 80 of the Income-tax Rules, 1962 ("Rules"). 7.1 The Ld. AO / DRP erred in law and on the facts and circumstances of the case by not taking cognizance of the detailed submission filed by the Appellant and erred in stating in the assessment order that the computation of disallowance of expenditure to be made under section 14A of the Act was submitted by the Appellant and was relied upon by the Assessing Officer. 7.2 The Ld. AO / DRP erred in law and on the facts and circumstances of the case by making an adhoc notional addition without providing reasonable basis of computation of disallowance of expenditure to be made under section 14A of the Act read with rule 80 of the Rules. 7.3 Without pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade an addition of ₹ 22,464/- while invoking the provisions contained u/s 14A of the Act read with Rule 8D of the Rules. 4. The taxpayer carried the matter before the ld. DRP by filing objections who has concurred with the findings returned by the ld. TPO and thereby dismissed the objections. Feeling aggrieved, the taxpayer has come up before the Tribunal by way of filing the present appeal. 5. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. GROUND NO.1 6. Ground No.1 is general in nature, hence does not require any specific adjudication. GROUNDS NO.2, 2.1, 2.2, 2.3, 2.4, 2.5, 3, 4 & 5 7. Undisputedly, the taxpayer entered into the transaction and made exports to the following AE as under :- S.No. Name of the company Amount 1 Inductis LLC 371,429,814 2 Inductis Singapore Pte. Ltd. 18,733,824 3 exl Holdings Inc. 12,611,954 Total 402,775,592 8. TPO noticed that the payment on account of sales to AE has been realized by the taxpayer after a long gap and in some cases, after a gap o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan to the AE for the purpose of charging interest thereon so as to bring it to tax. The coordinate Bench of the Tribunal while deciding the identical issue in Kadimi Tool Manufacturing Co. (P.) Ltd. (supra) returned the findings in favour of the taxpayer, the operative part of which is reproduced as under :- "10. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the DRP and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. The only issue to be decided in the above ground is regarding as to whether the receivables beyond the period mentioned in the service agreement is international transaction and as to whether any adjustment u/s. 92CA(3) of the I.T. Act is required on account of delay in recovering outstanding receivables from the AE. We find the Assessing Officer, after the direction of the DRP, made an adjustment of ₹ 6,36,894/- on account of the interest that should have been charged by the assessee on the outstanding amount from the AE. It is the submission of the ld. counsel for the assessee that in view of the decision of the Hon'ble Delhi H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receivables would have distorted the picture and re-characterised the transaction. This was clearly impermissible in law as explained by this Court in CIT v. EKL Appliances Ltd. (2012) 345 ITR 241 (Delhi). 12. Consequently, the Court is unable to find any error in the impugned order of the ITAT giving rise to any substantial question of law for determination. The appeal is, accordingly, dismissed. " 11. Similar view has been taken by the Co-ordinate Bench of the Tribunal in the case of Teradata India (P.) Ltd. (supra) wherein the Tribunal following the decision of Hon'ble Delhi High Court in the case of Kusum Health Care (P.) Ltd. (supra) has held that no adjustment can be made on account of interest on receivables on credit granted by the Indian Subsidiary to its foreign AE. Respectfully following the decisions cited above, we hold that the TPO is not justified in making adjustment of interest amounting to ₹ 6,36,894/- on account of alleged delay in recovering the outstanding toward receivables from the AE as per the provisions of section 92CA(3) of the LT. Act. The first issue raised by the assessee in the grounds of appeal is accordingly allowed." 12. In vie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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