9911796707
TMI Blog2019 (10) TMI 917X X X X Extracts X X X X X X X X Extracts X X X X ..... s Ananya Kapoor, Advocate For the Revenue : Shri Subha Kant Sahu, Sr. DR ORDER PER R.K. PANDA, AM: The appeal filed by the assessee is directed against the order passed u/s 144C r.w.s. 144(3)/92CA of the IT Act, 1961 relating to assessment year 2012-13. 2. Facts of the case, in brief, are that the assessee is a company engaged in manufacturing and export of gold jewellery. The unit is making 100% exports and there is no local sale. It filed its return of income on 27.09.2012 declaring total income of ₹ 82,43,327/-. Since the assessee has entered into international transactions with associated enterprise M/s Siddhartha Jewellery (UK) Ltd., the Assessing Officer made reference to the TPO for determining the ALP of the international transactions. The Transfer Pricing Officer, during TP assessment proceedings, observed that the assessee has entered into the following international transactions:- S.No. Name of the associated enterprise Nature of Transaction Amount Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and without jurisdiction. 2. That the additions/ disallowances made are illegal, unjust, highly excessive and are not based on any material on record. The total income of the Appellant has been wrongly and illegally computed by the Assessing Officer at ₹ 1,21,35,540/- as against income declared at ₹ 82,43,327/- thereby making total addition/ disallowance of ₹ 38,92,217/-. 3. That the reference made by the AO to TPO suffers from jurisdictional error as the AO has not recorded any reasons in the draft assessment order based on which he reached the conclusion that it was 'necessary or expedient' to refer the matter to the Transfer Pricing Officer ('TPO') for computation of the arm's length price ('ALP'), as is required under section 92CA(1) of the Income Tax Act, 1961('Act'). 4. Regarding the addition/ disallowance of ₹ 7,93,809/- on account of interest on grant of loan to AE 4.1 That the TPO/AO/DRP erred in view of facts and circumstances of case and in law in treating the loan to Associated Enterprise ('AEs) AE as a separate international transaction no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 was given to AE in foreign currency from EEFC a/c (which is having surplus fund in shape of USD) amounting to ₹ 1,66,77,107/- The loan given is in foreign currency returned by AE in june 2012 in foreign exchange. Only due to the AE, that the assessee has been able to source regular orders for export and is able to survive at a time when other units are becoming sick. 5. Regarding the addition/ disallowance of ₹ 30,98,408 /- on account of interest on unrealized export proceeds (There is no such case of Non Realization, all Export Invoices are realized, The TPO is not correct) 5.1 That TPO/ AO grossly erred in law and on facts, in attributing notional interest on unrealized export proceeds 5.2 That the TPO/AO erred in disregarding the fact that export proceeds are realized with the statutorily permitted time limits as prescribed by RBI. 5.3 As per Exchange Control Declaration Form (GR) as prescribed by Reserve Bank Of India and declaration under FEMA on every export shipment, The firm is declaring that full Invoice value shall be received for the Invoice within six months. The RBI c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the contract with the A.E. minimum credit period allowed is 60-120 days (Avg. 90 days). Practically, the export realizations take much higher time period than 60 days and in some cases it may go beyond 6 months. The market conditions have not been kept in mind while developing and applying parameters. 5.9 The TPO/AO/DRP failed to consider the payments received before 60 days and also advance payments received from AE. 5.10 TPO considered 60 days for Export invoices, Then the principle of average 60 days must be considered, giving benefit of advance payments and payments received before 60 days. On such principle the benefit of Notional Interest on account of advance payments invoices where payment received before 60 days comes to ₹ 16,95,138/- and notional interest on receipts beyond 60 days comes to ₹ 19,24,477/-. Hence Net Interest of ₹ 2,29,339/- may be charged upon. Interest has been calculated by applying 3% Libor rate. 5.11 That the interest on outstanding receivables added/ adjusted by TPO/ AO is exorbitant and totally misleading. Avg. sundry debtors for 60 days during F.Y. 2011-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wful and based on mere surmises and conjunctures. The additions made cannot be justified by any material on record and also excessive. 10. The explanation given in the evidence produced, material placed that has been made available on record has not been properly considered and judicially interpreted and the same do not justify the additions/ allowances made. 11. That interest U/s 234A, 234B and 234C of the Income Tax Act, 1961 has been wrongly and illegally charged and has been wrongly worked out. 12. The AO has erred in initiation of proceedings u/s 271(l)(c ) of the Act. The above grounds are without prejudice to each other. 5. The ld. counsel for the assessee, at the outset, did not press ground of appeal No.4 for which the ld. DR has no objection. Accordingly ground of appeal No.4 is dismissed as not pressed. 6. So far as ground of appeal No.5 is concerned, the ld. counsel submitted that identical issued had come up before the Tribunal in assessee s own case for assessment year 2011-12 and the Tribunal, vide ITA No.873/Del/2016 by the Revenue and ITA No.804/Del/2016 by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e paper book. We find from the Annexure-1 to the order of the TPO that receivables beyond 90 days have been considered for transfer pricing adjustment. In view of the rule of consistency, the period of 90 days credit is found to be reasonable in the trade of the assessee and accordingly we direct the Ld.AO/TPO to compute the transfer pricing adjustment for receivables having delay in receipt of payment more than 90 days. Accordingly the ground of the appeal raised by the assessee in respect of transfer pricing adjustment for interest on receivables are partly allowed for statistical purposes. 9. Respectfully following the decision of the coordinate Bench of the Tribunal in assessee s own case, we restore the issue to the file of A.O./TPO to compute the TP adjustment for receivables having delay in receipt of payment of more than 90 days. The ground raised by the assessee is accordingly partly allowed for statistical purposes. 10. The other grounds were not argued by the ld. counsel for the assessee for which they are dismissed. 11. In the result, the appeal filed by the assessee is partly allowed for statistical purposes. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
