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TMI Blog2022 (4) TMI 716X X X X Extracts X X X X X X X X Extracts X X X X ..... ad in law and is liable to be quashed. 2. Ground No.2 2.1. On the facts and in the circumstances of the case and in law, the Ld. AO, the Ld. TPO and the Ld. DRP, erred on the following: 1. Treating the receivables due from the AE, as a separate international transaction. 2. Failing to appreciate that cost considered for pricing the international transactions subsumed the credit period extended to the AE. 3. Erred in re-characterising the overdue amount on receivables due from the AE as an unsecured interest-free loan. 4. Failing to appreciate that the parties never agreed for an interest compensation on delayed realisation of receivables, which can be evidenced from the intercompany agreement. 5. Failing to take cognisance of the CUP provided by the appellant based on the arm's length practice prevalent within the appellant group regarding overdue receivables from third parties. 2.2. In this regard, the order of the Ld. AO to the extent prejudicial to the Appellant is. bad in law and is liable to be quashed. 3. Ground No.3 3.1. Without prejudice to the earlier grounds, the Ld. AO/TPO under the directions of the Ld DRP, erred in arbitrarily applying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion with AE were at arm's length. Thereafter the TPO going through all the details and discussing the issue at length, rejected the arguments of the assessee against charging interest on receivables and after working out the interest which ought to have been charged, has come to the conclusion that an upward adjustment of Rs. 7,85,18,835/- to the ALP of the international transaction entered into by the assessee during the year under consideration is required. 3. Thereafter a draft assessment order u/s.143(3)/147 of the Act was passed on 04.03.2016, whereby making addition of Rs. 7,85,18,835/- on account of the value of international transactions entered into by the assessee with its AEs. Further the TPO disallowed Rs. 7,46,297/- on account of interest on income tax and TDS u/s.37 of the Act. 4. Dissatisfied with the order passed by the TPO, the assessee carried the matter before the Dispute Resolution Panel (in short the 'DRP') and the DRP after discussing the detail available on record and following the case laws, rejected the objections of the assessee and upheld the decision of the AO. Subsequently, the AO giving effect of the order passed by the DRP, dated 19.08.2016, made a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the law laid down by Hon'ble Delhi High Court in the case of DIT vs New Skies Satellite BV (supra), the amendment is required to be read as prospective, the Tribunal cannot do so as it is a creature of the Income Tax Act itself. In our considered view, and for the detailed reasons set out above, the amendment in Section 92B, at least to the extent it dealt with the question of issuance of corporate guarantees, is effective from 1 st April 2012. The assessment year before us being an assessment year prior to that date, the amended provisions of Section 92 B have no application in the matter. ii) Albany Molecular Research Hyderabad Research Center Private Limited, ITA No.425/Hyd/2015 along with other connected appeals, dated 26.11.2020, wherein the Tribunal in para 16 has held as under :- 16. The ground No.2 raised by the revenue is challenging the action of the ld. DRP to apply LIBOR rates as the applicable ALP rate for imputation of interest on deferred receivables. We have already held that deferred receivables cannot be construed as a separate international transaction for A.Yrs.2010-11, 2011-12 and 2012-13 in assessee‟s appeal supra by placing reliance on the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also not disputed that out of the total transactions of the assessee almost 57% were with its Non Associated Enterprises. Once there is complete uniformity followed by assessee in not charging any interest from any party, whether Associated Enterprise or Non Associated Enterprises, in our opinion there could not be any selective imputing of notional interest. Submission of the assessee that out of total sales of about of Rs. 261 Crores to its Associated Enterprise, Rs. 100 Crores was received well within the due date and small delays were only in the balance of Rs. 161 Crores has not been disputed by the ld. Departmental Representative. Assessee had not offered any discount to any party for payment of bills before the expiry of the credit period. Hence, it is only a natural corollary that it did not charge any interest for delays also. Where a good part of the dues were collected earlier to the due date, in our opinion the instances where there were delays could not be selectively elected for a levy of charge of notional interest. Such an approach if accepted will completely overlook commercial realties. That apart, once TNMM method is considered as the most appropriate method, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the TPO relating to the rate of interest of 21% which has been adopted based on the service agreement and as evident from the copies of the several invoices furnished as part of the submission of the assessee that mention very clearly that "Interest @21% per annum will be charged on delayed payments". With regard to the ground No.2, ld. CIT-DR submitted that the Tribunal in the case of Techbooks International Private Limited, ITA No.240/Del/2015, dated 06.07.2015 and in the case of Logix Micro Systems Ltd., ITA No.524/Bang/2009, ITAT Bangalore and in the case of Ameriprise India Pvt. Ltd., ITA Nos.2010/2575/Del/2014, dated 14.08.2015, has not accepted the objections of the assessee. With regard to ground No.3, the ld. CIT-DR submitted that the DRP vide para 3.6 at pages 8 & 9 has already considered the objections raised by the assessee and while rejecting the same has held that the rate of interest of 21% has been levied based on the service agreement and invoices raised. In this regard, ld. CIT-DR relied on the decision of Hyderabad Bench of the Tribunal in the case of DCIT Vs. Verizon Data Services Pvt. Ltd. [2020] 122 taxmann.com 259, 22.10.2019, wherein the Tribunal has held t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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