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TMI Blog2020 (10) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... es on the recipient on the first day of every subsequent month for the services fee, and the recipient shall pay the services for within 15 days of receipt of the invoice by the company. Service costs shall constitute full consideration for the company for the providing of services to the recipient. This agreement clause clearly shows that if the payment is beyond 15 days, it does not include the cost of service for withholding the payment beyond 15 days by the associated enterprises. This shows that in the service cost, the cost of outstanding which remains overdue is not factored. Hence, We do not find any infirmity in the order of the ld CIT A. Working capital adjustment was denied to the assessee in absence of any reliable data pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notional interest on outstanding balance of receivables from Associated Enterprises ( AE ). 2. That the learned CIT(A) and the learned AO/TPO has erred in not appreciating that outstanding balance of receivables from the AE is not an international transaction as it does not impact the profits, incomes, losses or assets of the appellant. 3. That the learned CIT(A) further erred in law in concluding that characterizing of outstanding account receivables as loan is permitted under section 92B. 3.1 That the learned CIT(A) erred in law in treating the account receivables at par with unsecured loan by making reference to clause (c) of section 92B(1). 3.2 That the learned CIT(A) and the learned AO/TPO erred on facts and in law in recha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the case show that Assessee Company is engaged in the business of selling of hardware for Internet and satellite business and also in the field of providing training. During the year the assessee has reported three international transactions. The transaction of manpower recruitment related services and manpower related services provided to its associated enterprise was benchmarked adopting cost plus method and stated that transactions are at arm s-length. With respect to the employee -related transactions no specified method was adopted. However that is not the dispute between the TPO and the assessee. 4. The learned transfer pricing officer examined the balance sheet which revealed that the receivables have not been received withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed on 29/11/2011. 5. Assessee aggrieved with the order of the learned assessing officer preferred an appeal before the learned CIT A wherein the outstanding overdue receivable from associated enterprise Leon 15 days agreed was held to be a international transaction. However the learned CIT A agreed that for benchmarking such loan only LIBOR should be applied as the outstanding receivable is in US dollars. He directed the TPO/AO to apply LIBOR Rate + 300 base points on outstanding loan instead of SBI base rate +300 base points applied by the learned TPO. 6. Thus assessee aggrieved with the order of the learned CIT A has preferred this appeal raising seven different grounds of appeal. The learned authorised representative submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period. He submitted that therefore it is irrelevant here wither the assessee pays interest or is a debt free company. He submitted that the facts of the case are quite different then the decision cited by the learned that AR. 8. We have carefully considered the rival contention and perused the orders of the lower authorities. In the present case the service agreement clearly says that the amount of payment is to be made by the associated enterprises to the assessee within 15 days. Such payment was not made within that period but beyond that. The learned assessing officer held that the amount of outstanding bills beyond a specified period of 15 days is a separate international transaction giving certain benefit of extended credit to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... funds to its associated enterprise for which the assessee must have been compensated in the form of interest at LIBOR + 300 BPS as held by CIT (A) . 9. Coming to the various decisions relied upon by the learned authorised representative we find that they are on different facts. The decision of the honourable Delhi High Court in ITA number 765/2016 dated 24th appeal 2017 in case of Kusum healthcare private limited (supra), para number eight clearly shows that assessee has undertaken working capital adjustment for the comparable companies selected in its transfer pricing report which has not been disputed by the learned transfer pricing officer and therefore the differential impact of working capital of the assessee vis- -vis is comparabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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