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TMI Blog2023 (2) TMI 1052X X X X Extracts X X X X X X X X Extracts X X X X ..... be termed as outstanding debtors and there is no question of charging any interest for the delayed recovery of the same. The unbilled revenue is therefore, we hold not to be treated as accounts receivable for the purposes of making any adjustment on account of notional interest earned thereon. No adjustment on account of notional interest was warranted since it had been demonstrated that even vis- -vis non-AE the assessee was not charging any interest - As far as outstanding receivables are concerned, in the case of the amount outstanding with respect to AE it is only an amount which is to be considered, being the amount actually billed to the AE and outstanding as at the end of the year. It is a fact on record that with respect to non-AE also the assessee has not charged any interest on the outstanding balance, and again it is a fact that on record that the amount invoiced to non-AE is to the tune of Rs.4.12 crores. Therefore, even going by volume, the billed revenue with non-AE is much more than the AE and the outstanding receivable from AE and non-AE can be reasonably compared, even as per the reasoning of the ld.DRP. In the present case, no interest having been charged by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t read with Rule 10D of the Income-tax Rules,1962 ( Rules ). 2.2 Under the facts and circumstances of the case and in law, the Ld TPO/ DRP/ AO erred in disregarding the detailed arguments/ submissions put forth by the Appellant during the course of the DRP/ assessment proceedings while passing its direction under section 144C of the Act. 2.3 Under the facts and circumstances of the case and in law, the Ld TPO/ DRP/ AO erred in imputing interest on the outstanding receivables from the AEs ignoring the fact that the Appellant followed the same policy of not charging any interest on trade receivables from both AEs as well as Non-AEs. Under the facts and circumstances of the case and in law, the Ld TPO/ DRP/ AO erred in ignoring the fact that the Appellant has done a business transaction (rendering of technical advisory services) with its AE. To benchmark the said transaction, the Appellant has applied Transactional Net Margin Method ( TNMM ) as Most Appropriate Method ( MAM ). Accordingly, once the Ld TPO/ DRP/ AO has accepted the TNMM as MAM, the consequential outstanding receivable is covered in the arm's length pricing. Therefore, no separate adjustment for no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. Each of the above grounds is independent and without prejudice to the other grounds of appeal preferred by the Appellant. 9. The Appellant prays for leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing, of the appeal. 3. Ground Nos.1, 8 and 9 are general in nature; and ground no.7 raised by the assessee against initiation of penalty proceedings is premature. The same are therefore not being dealt with by us. 4. Ground No.2, it was stated by the ld.counsel for the assessee, related to the issue of transfer pricing adjustment to the outstanding receivables of the assessee by charging interest thereon. The assessee, i.e. Toshiba Technical Services International Corporation is the project office of Toshiba Corporation, Japan and is engaged in various services having specialization interalia in supervision of erection and commissioning of Toshiba hardware in power generating facilities, plants of various manufacturing industries and electronic communication facilities. During the impugned year, the assessee had reported international transaction of account receivable with respect to its Associat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al interest of unbilled amount ever made in the past or future in the case of the assessee. He contended that same policy was followed by the assessee in the case of unrelated parties also. The ld.counsel for the assessee, therefore, contended that amounts outstanding for which the assessee had not even raised the bills, and thus, was not entitled to be recovered from the debtors could not be termed as outstanding receivables so as to charge notional interest on the same. In this regard he drew our attention to the contentions made before the ld.DRP which were summarized at page no.5.2.3 as under: 5.2.3 In this relation, the assessee stated that the outstanding receivables refer to the amounts which have accrued to the assessee and invoice has been raised by assessee, but not received at the end of the year. Whereas, unbilled revenue is the amount which is accrued to the assessee and credited to the profit and loss account as income: however, invoice in relation to the same is not raised on the customers. Further, the assessee submitted follows mercantile system of accounting. As per this, revenue is recognized when it is accrued. Accordingly, the assessee recognized the incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same should be considered as outstanding only when the invoice is raised to the customers is ex facie contrary to the principles of mercantile system of accounting. Moreover, since we are looking into transactions with AE, it is immaterial when the invoice is raised as the same could easily be arranged and managed between the AEs. The contention of the assessee in this regard is not acceptable. Ground No(iii) is, accordingly, rejected. 10. We have heard both the parties. The issue before us is, whether amount receivables admittedly outstanding on account of unbilled revenues can be considered as outstanding debts for the purpose of making adjustment of notional interest thereon under the TP provision of the Act. It is an admitted fact that Rs.11,71,68,167/- of the outstanding receivables relate to unbilled amounts; that the bills in relation to these amounts were raised by the assessee on its AE in the subsequent year. The Revenue does not dispute this position. Having said so, until bill is raised the assessee has no right to recover any amount from the other party, because it is the bill which notifies the other party of fixing liability on it to pay certain amounts. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Non-AE has not been furnished in the submissions of the assessee. The hearing was adjourned at their request and they were provided further period of lime for filing of the same as requested. However, it is found that vide the letter filed subsequently on 28.06.2019 the assessee has provided the credit period of the AE only. The requisite details of credit period for Non-AE, has not been provided. Hence, since the assessee failed to provide the credit period for the non-AF., the same is rendered incapable of comparison with the credit period of the AE. As such the assessee failed to demonstrate complete uniformity in terms of credit period for AE and Non-AE. 14. The ld.counsel for the assessee countered by saying that in truth the transaction with AE amounted to only Rs.57,17,385/- while that with the non-AE was Rs.4,12,51,237/-, and therefore, considering the volume of transaction also internal comparison was comparable. 15. We have heard both the parties. We have already held above that as far as outstanding receivables are concerned, in the case of the amount outstanding with respect to AE it is only an amount of Rs.57,17,385/- which is to be considered, being the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn filed by the assessee for the impugned year on 31.3.2017 and claiming TDS at Rs.5,63,89,321/-. He pointed out therefrom that the assessee had claimed the impugned TDS in the revised return filed for the year. He thereafter drew our attention to the TDS certificate furnished by the party, which had deducted the impugned TDS i.e. Toshiba JSW Power Systems P.Ltd. (placed before in PB page nos.86 to 97) along with copy of invoices to which TDS related, demonstrating the fact that the they related to bills raised by the assessee on the said party during the impugned year itself. The ld.counsel for the assessee, therefore, stated that the AO be directed to give credit of TDS to the assessee. 19. We have considered the contentions of the assessee, and since the assessee has raised this issue for the first time before us after noting the fact of short credit of TDS given in the demand notice issued to the assessee after passing of the assessment order, We consider it fit to restore the issue back to the AO to consider the contentions of the assessee, verify all the documents placed by the assessee in support of its contention and thereafter allow the credit of TDS to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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