9911796707
TMI Blog2023 (2) TMI 1052X X X X Extracts X X X X X X X X Extracts X X X X ..... e transfer price proposed by the learned Transfer Pricing Officer ("TPO"). 2. Transfer Pricing:- 2.1 Under the facts and circumstances of the case and in law, the Ld AO/ TPO erred in proposing and the Hon'ble DRP further erred in upholding an adjustment of Rs. 39,07,760 pertaining to notional interest on outstanding receivables as on 31 March 2015, alleging that the same to be not at arm's length in terms of the provisions of Sections 92C(1) and 92C(2) of the Act 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/ DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4D The learned AO erred in levying interest under section 234D of the Act. 6. Interest under section 244A The learned AO erred in not correctly granting the interest under section 244A of the Act. 7. Levy of penalty under section 271(l)(c) That on facts and circumstances of the case and in law the learned AO erred in proposing the initiation of the penalty proceedings under section 271(1) (c) of the Act. 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 pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout raising bills on the basis of work completed on the projects undertaken, since corresponding expenditure in relation to the same had also been booked; the bills in relation to these unbilled revenues were subsequently raised. The ld.counsel for the assessee contended that this system of accounting had been followed by the assessee consistently from year to year and no adjustment on account of notional 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dited to the profit and loss account as income; however, invoice in relation to the same is not raised on the customers. We fail to understand how the amount which is admittedly accrued to the assessee and credited to the profit and loss account could not be considered as "outstanding'" when the assessee is following mercantile system of accounting. The contention of the assessee that 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the assessee for the year under reference is Rs. 27.76 crores whereas. Non-AE transaction for the same period is Rs. 4.17 crores only. Hence, there is no complete uniformity in terms of the volume of transactions between the AK and Non-AK. Furthermore, during the course of hearing on 26.06.2019. it was brought to the notice of the ARs that the credit period for the AK- and 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned TDS related in the impugned year itself, the assessee was entitled to credit of TDS deducted on the same even though deducted in the subsequent year. 18. In this regard, he drew our attention first to original return filed by the assessee on 30.11.2015 claiming TDS of Rs.4,04,56,666/- (placed before in paper book page no.82 and 83), and then to revised return 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
