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TMI Blog2019 (1) TMI 1598X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, with the prior approval of the Pr.CIT-2, Hyderabad for determination of arm's length price in respect of international transaction reported by the assessee for the FY relevant to AY 2013-14. 3. Profile of the taxpayer: M/s NetCracker Technology Solutions (India) Pvt. Ltd. is engaged in the software development and support services to its AE. 3.1 International transactions: As per 3CEB report/TP document, the international transactions reflected are as under: AE Nature of transaction Amount (Rs.) NetCracker Technology Solutions Inc, USA (Formerly Convergys Information Management Group Inc, USA) Provision of software development and support services Communication Cost Training Fees Professional charges paid 1,54,61,396 54,65,396 40,544 1,130,407 Convergys Customer Management Group Inc, USA Software development and support services 3,54,78,335 Convergys Intervoice Inc. Software development and support services 2,14,73,994 Convergys Indonesia PT Travel and per diem reimbursable expenses 1,62,17,645 Total 1,62,61,40,014 The TPO noted that the assessee has not reported the outstanding recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature of any advance/loans. Further, it was submitted that sine these are closely linked with the sale of services they have been aggregated with the principle transaction of sales for the purpose of economic analysis and it is fully funded entity and the sales and receivables are running accounts and the WCA duly considered the impact of outstanding receivables. 3.5. After considering the submissions of the assessee, the TPO referring to the retrospective introduction of explanation to section 92B, interest charged @ 14.45% on the receivables received beyond the due date, which comes to Rs. 1,07,27,259/- as per the table at page 5 of his order. Thus, the arm's length price of interest on receivables is Rs. 1,07,27,259/- and the shortfall of Rs. 1,07,27,259/- is treated towards adjustment. 4. When the assessee carried the objections before the DRP, the DRP directed the AO to apply the applicable interest as per domestic term deposit rates of SBI prevailing for the FY 2012-13. 5. As per the directions of DRP, the AO computed the interest on receivables at Rs. 48,84,781/- as against 1,07,27,259/- computed by the TPO. 6. Aggrieved by the order of DRP, the assessee is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t charges any interest in case of delay in payment. 6. On the facts and in the circumstances of the case and in law, the addition of Rs. 48,84,781/- made by the Ld. AO be held to be untenable and be deleted since the addition has been made by computing interest on an invoice to invoice basis as against on a weighted average basis for all invoices raised during the year under consideration which is 87 days in the present case. The approach is contrary to the principal and terms allowed under Advance Pricing Agreement (' AP A') signed on 29th August 2016 which is applicable for the subsequent years, wherein inter alia the weighted average period of realization of invoices from its Associated Enterprises (' AE') allowed is within 94 days. Computation of interest liability under section 234B and 234C of the Act 7. On the facts and in the circumstances of the case and in law, the Ld. AO erred in levying interest liability under section 234B and 234C of the Act. The Appellant craves leave to add to/alter/amend/ substitute any of the above grounds of appeal, at the time, before or at the time of hearing of the appeal, so as to enable the Appellate authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r otherwise would be revealed only through TP analysis. 8. With regard to Ground No: 6, it is submitted that when the transaction wise data is available there is no need to aggregate the data and find out a mean period to be applied across the board. When the analysis is based on CUP method, it is the transactional approach which prevails and not the aggregate method. The DRP determined the interest under the CUP being the "domestic TDR rate of SBI" and the same has to be applied to each transaction. With regard to the fact that the approach of the TPO/DRP is contrary to the approach of APA dated 29/08/2016 which is applicable to subsequent years, it is submitted that as clarified by CBDT in Circular No: 10/2015, rollback is not available in cases where revised return is not filed. Also, the appellant does not have the option to selectively choose rollback for one year. The roll back in such case would apply to all four years. As per the explanation, the international transaction in receivables existed for all earlier four years also. Also, as per Rule 10MA of IT Rules, the appellant has to make an application for rollback in the specified form and cannot seek selective rollback ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... average period of collection for the period and in case any deviation noticed that the period allowed beyond reasonable period should alone be considered for making adjustment. 9.1 In the given case, ld. AR also disputed the fact that no such period was agreed between the parties that the credit period was fixed at 90 days. Therefore, in our view, TPO should calculate the average of collection for the year under consideration of all the transactions carried on by the assessee. In case, it is found that such collection period is beyond 90 days, he can do the adjustment only to the extent it crossed 90 days. TPO cannot calculate the collection period selectively for those which are beyond 90 days. Therefore, we remit this issue back to the TPO to calculate the average collection period for this AY and determine the adjustment as per the above directions. Accordingly, the grounds raised by the assessee on this issue are treated as allowed for statistical purposes. 10. As regards ground No. 7 with regard to computation of interest liability u/s 234B and 234C of the Act, charging interest under these sections are mandatory in nature, therefore, the AO is directed accordingly. ..... 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