9911796707
TMI Blog2021 (2) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... turing of projectors and parts and trading in visual display systems, projects and software and design operations. Assessee filed its return of income for A.Y. 2011-12 on 29.11.2011 declaring total income of Rs. 31,67,00,693/-. The case was selected for scrutiny and thereafter notice u/s 143(2) of the Act was issued on 19.09.2012 and served on the assessee. During the course of assessment proceedings AO noticed that during the year under consideration, assessee has entered into International Transactions with 'Associated Enterprises' (AE) within the meaning of Section 92B of the Act. He accordingly referred the matter to TPO for determining the Arm's Length Price' (ALP) u/s 92CA(1) of the Act. The TPO vide order dated 15.01.2015 passed u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd parties, therefore notional interest on outstanding receivables with AE is neither factually and nor legally sustainable, particularly when appellant is a debt free company and is not paying interest on funds utilized in business activities or on credit from suppliers. 1.3 That the Ld CIT(A) has also failed to appreciate that while determining the margin appellant had not made any adjustment for working capital and since appellant had earned higher margin of 9.47% as compare to the margin of 5.78% of comparable companies, no further adjustment was warranted. 2. That in any case and without prejudice the Ld CIT(A) has also erred both in law and on facts in not applying the LIBOR rate for computation of interest in view of the judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction u/s 92B(1) read with clause (v) of Section 92F. He thereafter bench marked the interest from receivables on the basis of SBI Base Rate of 11.69% and accordingly proposed an adjustment of Rs. 39,55,013/-. When the matter was carried before the CIT(A), CIT(A) granted partial relief by directing that the average PLR of SBI be considered @ 8.69% plus 150 basis at arm's length level of interest to be charged on the receivables. He also noted that while computing the interest on receivable, the AO had not reduced the interest on payables. He accordingly directed the AO to restrict the calculation of interest for the period of outstanding dues falling within the current year with respect to interest receivables and payables. He thus d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account for the impact of delay in receivables and no adjustment on account of outstanding receivable is called for, he relied on the decision of Hon'ble Delhi High Court in the case of CIT vs. EKL Appliances Ltd reported in 345 ITR 241 and in the case of Pr. CIT vs. Kusum Healthcare (P) Ltd. (ITA No 765/2016) for the proposition that when the assessee is debt free company and no funds utilized in business therefore no adjustment of outstanding receivable is called for. He also relied on the decision of Hon'ble Delhi High Court in the case of Pr. CIT vs. Bechtel India (P) Ltd. (ITA No 379/2016). He further submitted that identical issue arose in assessee's own case in AY 2010-11 wherein the Co-ordinate Bench of Tribunal in ITA No.1530/Del/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tical issue arose in assessee's own case in A.Y. 2010-11, wherein the Co-ordinate Bench of Tribunal has decided the issue in favour of the assessee by observing as under: "5. We have heard the rival submission and perused the relevant material on record. We have noted that the assessee is not charging interest on overdue debts from the third parties and also the assessee is a debt free company and not paying any interest on funds utilized is business. We have also noted that the assessee company has a margin of 23.3% on Software Development segment as compared to the margin of 11.42% of the comparable companies. The working capital adjusted margin of the assessee have already factored into account the delay in the receivables and therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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