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TMI Blog2019 (12) TMI 902X X X X Extracts X X X X X X X X Extracts X X X X ..... sactions qua receivables at arm s length by deeming the receivables outstanding beyond the period stipulated in the service agreement/invoice as deemed loan advanced - HELD THAT:- Following the order passed by the Tribunal in taxpayer s own case for AY 2009-10 [ 2018 (4) TMI 926 - ITAT DELHI] we are of the considered view that in the instant case, the period of outstanding receivables is ranging between 25 days to 365 days and facts and circumstances are identical, so no interest can be charged on the receivables with AEs, hence ld. CIT (A) has rightly ordered to delete the addition. Consequently, ground no.2 is determined against the Revenue. - ITA No.74/Del./2017 - - - Dated:- 10-12-2019 - SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER For the Appellant : Shri Vishal Kalra, Advocate Ms. Reema Malik, CA For the Respondent : Shri Sanjay I. Bara, CIT DR ORDER PER KULDIP SINGH, JUDICIAL MEMBER The Appellant, Addl. Commissioner of Income-tax, Special Range 1, New Delhi (hereinafter referred to as the Revenue ) by filing the present appeal sought to set aside the impugned order dated 30.08.2015 passed by the Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by making computation as under:- Particulars Amount Income from consultancy services 401,960,248 Reimbursement received 48,642,007 Operating Income 450,602,255 Personal expenses 227,535,858 Operating and administrative expenses 80,923,087 Less Foreign exchange loss (net) (498,709) Bank charges (21,888) Depreciation and amortization 8,612,748 Reimbursement received 48,642,007 Total cost (TC) 365,193,103 Operating Profit (OP) 85,409,152 OP/TC 23.39% Add Other income 771 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nil 33,73,224 33,73,224 Total 2,58,05,595 The Assessing Officer will accordingly enhance the income of the taxpayer by ₹ 2,58,05,595/-. This shall be treated as the cumulative adjustment u/s 92CA. 7. The taxpayer carried the matter before the ld. CIT (A) by way of filing appeal, who has deleted the addition made by the TPO/AO on account of TP adjustment by partly allowing the same. Feeling aggrieved, the Revenue has come up before the Tribunal by way of filing the present appeal. 8. 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 9. Undisputedly, the TPO as well as ld. CIT (A) have accepted TNMM with OP/TC as PLI as MAM applied by the taxpayer to benchmark the international transactions qua provision of consultancy service. Now, the Revenue has challenged the order passed by the ld. CIT (A) only to the extent that the ld. CIT (A) has erred in law and facts dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... public domain and result of M/s. R. Systems International Ltd. has been recasted on the basis of audited quarterly result and audited financial results, we are of the considered view that no error has been committed by the ld. CIT (A). So, we find no ground to interfere into the findings returned by the ld. CIT (A) on this issue, hence ground no.1 is determined against the Revenue. GROUND NO.2 13. TPO, after rejecting the contentions raised by the taxpayer in its reply dated 13.11.2014 that benchmarking of receivables on the ground that receivables were not separate international transactions, recharacterisation was not permitted, non-application of SBI base rate for benchmarking etc. and has given invoice details of receivables along with their duration, proceeded to apply the interest @ 11.69% to bring the transactions qua receivables at arm s length by deeming the receivables outstanding beyond the period stipulated in the service agreement/invoice as deemed loan advanced. 14. Undisputedly, during the year under assessment, the taxpayer has entered into transactions with AE as well as non-AE. Ld. CIT (A) deleted the addition made on account of adjustment on the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rk for comparison with the price paid for availing of any services in an international transaction. If there are similar transactions of services with related parties as well as unrelated parties and the price charged or paid are comparable, then it is taken to be at arm s length price. Thus, if under both the scenarios, no interest has been charged on similar nature of receivables, then it has to be reckoned that the transaction with the related party meets the arm s length requirement vis- -vis, the transactions with the unrelated third parties. Accordingly, we hold that no interest can be imputed on receivables with the AE and accordingly, the addition made by the TPO is directed to be deleted. 16. Following the order passed by the Tribunal in taxpayer s own case for AY 2009-10 (supra), we are of the considered view that in the instant case, the period of outstanding receivables is ranging between 25 days to 365 days and facts and circumstances are identical, so no interest can be charged on the receivables with AEs, hence ld. CIT (A) has rightly ordered to delete the addition. Consequently, ground no.2 is determined against the Revenue. 17. Resultantly, the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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