9911796707
TMI Blog2023 (7) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... Non AE debtors and the delay in realization of the export proceeds - Thus relying on M/s. Indo American Jewellery Ltd. [ 2013 (1) TMI 804 - BOMBAY HIGH COURT ] as neither interest has been charged nor paid, we hereby allow the appeal of the assessee on this ground. - ITA No. 1638/Del/2022 - - - Dated:- 12-7-2023 - Shri Shamim Yahya, Accountant Member And Shri Challa Nagendra Prasad, Judicial Member For the Assessee : Shri Ajit Jain, Advocate For the Revenue : Shri Bhaskar Goswami, CIT(DR) ORDER PER SHAMIM YAHYA, A.M. ITA No.- 1638/Del/2022 This appeal by the assessee is directed against the order of the Assessing Officer pursuant to the direction by the Dispute Resolution Panel-2, New Delhi dated 29.04.2022. The Grounds of appeal are as under:- Pertaining to Transfer Pricing matters Adjustment of INR 179,613,230 relating to manufacturing /assembly segment 1. On facts and in law, the Ld. AO/Ld. TPO erred in disregarding the provisions of Rule 10C of the Income Tax Rules, 1962 ( the Rules ) by aggregating the results of Distribution Segment (i.e., Class II transactions) with Assembly/ Manufacturing Segment (i.e., Class I trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m s length price of the impugned international transaction without applying any method prescribed as per Section 92C of the Act. 8.3 not appreciating that the Appellant did not charge any interest from third-party customers either on outstanding receivables, which represents an arm s length scenario. In doing so, the Ld. AO/ Ld. TPO erred in not taking cognizance of the order of the Tribunal in Appellant s own case for AY 2014-15. 8.4 Not appreciating that the working capital adjustment subsumes the impact of any additional return on account receivables. 8.5 Arbitrarily applying a markup of 400 basis points on LIBOR for the purpose of computing national interest on outstanding receivables. Pertaining to corporate tax matters 9. On the facts and in law, pursuant to the directions of the Hon ble DRP the Ld. AO has grossly erred in making the impugned disallowance amounting to INR 1,53,359 with regard to the Loans Advances writing off by the Appellant in its Profit Loss account and in doing so it has erred in completely disregarding the explanation and information filed by the Appellant in respect of retention money written off and that the said amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference was made to the Transfer Pricing Officer to determine the Arm s Length Price u/s 92CA(3) of the Act in respect of International Transaction entered into by the assessee company. Order u/s 92CA(3) of the Act was passed by the Dy. Commissioner of Income Tax. TPO- 3(2)(1), New Delhi, on 29.01.2021. The TPO has made an upward adjustments regarding Arm s length price in Class -I and II transactions of Rs. 18,42,15,262/-, Engineering design services of Rs. 2,80,32,618/-, Customer support services of Rs. 27,54,300/-, Business support service of Rs. 39,32,078/- and Interest on outstanding receivables of Rs. 3,60,38,910/- i.e. total adjustment of Rs. 25,49,73,168/-. Accordingly, the NaFAC, Delhi passed a draft order u/s 144C of the Income Tax Act, 1961 on 29.09.2021. Aggrieved with the draft order, the assessee filed objections before DRP-2, Delhi against draft order. DRP-2, Delhi after detailed hearing pronounced its judgement on 29.04.2022 and had issued certain direction in the case of the assessee company. Complying the same, the Ld. TPO -3(2)(2), Delhi vide DSN Order No. ITBA/COM/F/17/2022- 23/1043662323(1) dated 29.06.2022 has given appeal effect to order dated 29.04.2022 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... risks assumed (FAR) by the parties to the transactions. At various instances during the TP assessment proceedings, it has been brought to Ld. TPO's attention that the FAR of the appellant under assembly and distribution segment are absolutely distinct. For assembly, the appellant has setup a full-scale assembly facility, imports components for further value addition and assembly, deploys plant machinery, land, building and other tangible assets as well as assumes complete ownership and risk in respect of these products. Whereas, in case of import of finished products, products are sold to third party customers without making any value-addition, and the appellant primarily engages in activities of storage and distribution. Such distinction between two segments is always reflected in the segment profit loss account maintained by the appellant since inception of these activities and has never been challenged in the past. The Ld. DRP has also acknowledged this fact in their directions that the approach upheld by DRP in preceding A Ys shall apply in this A Y as well (Refer page 45 of merit appeal). It is the incorrect approach, rather a mistake committed by the TPO in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this regard, the Appellant would like to submit that the Hon ble Income Tax Appellate Tribunal ( ITAT ) in Appellant's own case for AY 2014-15 [ITA No. 6806/De1/2018] on the same issue has deleted the adjustment and held as under :- (Refer page no. 700 of merit application) In view of the aforesaid sequence of' events, it would he noted that the decision of Hon'ble Delhi High Court in the case of Kusum Healthcare is still the binding precedent on the issue of interest on outstanding receivables. Needless to mention that the law laid down by the Hon'ble High Court in the case of Kusum Healthcare was followed by the Co-ordinate Benches of the ITAT. There is complete uniformity in the act of the assessee in not charging interest from both the AE and Non AE debtors and the delay in realization of the export proceeds in both the cases is same. Reliance is being placed on the decision of Hon'ble Bombay High Court in the case of CIT-9 vs. M/s. Indo American Jewellery Ltd. in ITA (L) No.1053 of 2012 order dated 08.01.2013. Keeping in view the various judicial pronouncements and the facts of the case that neither interest has been charged nor paid, we hereby allo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
