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TMI Blog2020 (3) TMI 676X X X X Extracts X X X X X X X X Extracts X X X X ..... estore the matter back to the file of the TPO/AO and direct to reverify the carry forward and MAT credit. We direct accordingly. Non grant of full TDS/TCS credit and non consideration of TDS and advance tax payable by erstwhile subsidiary - HELD THAT:- It appears that the TDS credit and advance tax payable by erstwhile subsidiary of the assessee amount go ₹ 1,72,79,041/- was not given which was merged with the assessee w.e.f. 01/04/2011. It was also pointed out by the ld AR that the A.O. has not given credit of advance tax paid by the erstwhile subsidiary of the assessee which was merged with the assessee w.e.f. 01/04/2011. We direct the A.O. to verify the factual position of TDS and advance tax and to give proper credit as per law. We direct accordingly. Incorrect computation of interest U/s 234B/234C due to noncredits/ short credits granted to the assessee - HELD THAT:- We direct the A.O. to verify the computation of interest U/s 234B of the Act. With regard to interest U/s 234C, we direct the A.O. to charge the same on returned income and not on the assessed income. Computation of interest U/s 244A - HELD THAT:- As per the provisions of Section 244A of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding balance of receivables of the assessee from its AEs. From the record we found that the TPO has computed adjustment on the interest that should have been charged to the AE on receivables that remained unpaid even the period of 90 days. The TPO has applied LIBOR of 4.8% in making the adjustment which was confirmed by the DRP. Grounds No. 1 to 10 in the A.Y. 2012-13 pertains to the said addition. 4. It was argued by the ld AR of the assessee that the issue under consideration is covered by the order of the Tribunal in assessee s own case for the A.Y. 2009-10. He has further contended that no adjustment was made on account of notional interest on AE receivable for AY 2010-11 and AY 2011-12. Copy of the TPO order are enclosed at pages 237 to 244 and page 245 of the paper book respectively. As per the ld AR, the interest is already factored in while pricing the contracts undertaken with AEs. Further, since the assessee s margin from its AE transactions is higher vis a vis non-AEs as well as single year working capital adjustment margin of independent comparables, interest element for delayed payment is subsumed in higher mark up charged. 5. On the other hand, the ld DR has rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing from any international transaction which is to be computed with regard to the arms length price for the year under consideration. Accordingly, we restore the matter back to the file of AO to recompute the interest in terms of the above direction. 9. It was also brought to our notice that while fixing the sale price the assessee has already considered the delay, if any, in recovery of the price. Accordingly, while recomputing the interest, the AO should also take into account the price fixed by the assessee with respect to the transaction entered with non-AE vis- -vis AE and if he finds that price so charged has already taken care of the delayed period of payment, the same should be taken into account while computing the interest chargeable. 10. We also found that operating margin earned by the assessee on provision of EPC services (17.03% OP/ OC) from its AEs transactions is higher than the margin earned on its non-AE transactions. Since the transactions are intrinsically linked and the assessee under the TNMM fits within the arm's length, the assessee should be given due credit for the same while computing chargeable interest for delayed payment. 11. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s laid down by Income Tax Act. Hence, interest adjustment on delayed accounts receivables, if any, should be computed only upto 31 March 2009. 13. We also found that during the year under consideration, the assessee has received advances from AE's for the purpose of export, therefore computation of interest, if any, on delayed recovery of export receivables should be after reducing the advances received from AE's for the purpose of export. Reliance is placed on the Mumbai Tribunal ruling in the case of Boston Scientific International BV India (40 SOT 11) (2010) wherein it has been held that interest income on accounts receivables of an assessee from its AE should be examined after considering the outstanding payables from that AE. 14. From the record, we found that so called delay repatriation from foreign AE's, TPO/ AO, while working out deemed notional interest has considered interest rate of 12.25% p.a. (SBI PLR). As per our considered view the notional interest has to be worked out for so called amount receivable from AE, by applying LIBOR interest rate for the purpose of computation of transfer pricing adjustment, if any. In this regard, reliance is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verify the carry forward and MAT credit. We direct accordingly. 11. Ground No. 12 of the appeal is with regard to non grant of full TDS/TCS credit and non consideration of TDS and advance tax payable by erstwhile subsidiary. It is just a matter of verification, therefore, in all fairness, we restore the matter back to the file of the TPO/AO and direct to verify actual amount of TCS credit which is alleged to be ₹ 15,94,56,254/- in place of credit give by the A.O. of ₹ 15,74,61,198/-. It appears that the TDS credit and advance tax payable by erstwhile subsidiary of the assessee amount go ₹ 1,72,79,041/- was not given which was merged with the assessee w.e.f. 01/04/2011. It was also pointed out by the ld AR that the A.O. has not given credit of advance tax paid by the erstwhile subsidiary of the assessee which was merged with the assessee w.e.f. 01/04/2011. We direct the A.O. to verify the factual position of TDS and advance tax and to give proper credit as per law. We direct accordingly. 12. Ground No. 15 of the appeal for the A.Y. 2012-13 is with regard to incorrect computation of interest U/s 234B/234C due to noncredits/ short credits granted to the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, the profit/loss in the profit and loss account is increased by amount of depreciation as per the books and shall be reduced by amount of depreciation debited to the books (excluding depreciation on account of revaluation of assets). Accordingly, depreciation as computed under the Income Tax Act, 1961 is not relevant for book profit computation. 21. In this regard we observe that the Hon ble Supreme Court in the case of Apollo Tyres Ltd. Vs CIT (2002) 255 ITR 273 (SC) have observed that while computing income U/s 115J, the A.O. has only power of examining whether books of account are certified by authorities under Companies Act as having been properly maintained in accordance with Companies Act and thereafter, he has limited power of making additions and reductions as provided for in Explanation to said Section. It was further held that the A.O. does not have jurisdiction to go behind net profit shown in the P L account except to extent provided in Explanation to Section 115J of the Act. Respectfully following the decision of the Hon ble Supreme Court, we do not find any justification in the order of the TPO/A.O. for making addition of the depreciation while computing b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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