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TMI Blog2023 (10) TMI 972X X X X Extracts X X X X X X X X Extracts X X X X ..... h Shah, CIT (DR) ORDER PER YOGESH KUMAR U.S., JM The present appeal and the Stay Application have been preferred by the assessee for assessment year 2017-18 against the final Assessment Order dated 25/03/2022 passed by the A.O u/s 143(3) read with Section 144C (13) read with Section 144B of the Act. 2. The assessee has raised the following grounds of appeal:- General Grounds of Appeal 1. That, the final assessment order framed by National Faceless Assessment Centre, Delhi (hereinafter referred to as the Ld. AO ) pursuant to the directions of the Hon ble Dispute, [ Resolution Panel - I (hereinafter referred to as the Hon ble DRP ) under section 143(3) read with section 144C(13) and read with sections 144B of the Income-tax Act, 1961 ( the Act ), is a vitiated order having been passed in violation of principles of natural justice and is otherwise arbitrary and is thus bad in law and is void ab-initio. TP adjustment in relation to availing of technical services segment ( TSS ) [INR 11.86.43.290] 2.1 That on the facts of the case and in law, the Ld. AO/Ld. TPO have erred, in recharacterizing the functional profile of the Appellant as techni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely, Artefact Projects Ltd, Tera Software Ltd, Axis cades Technologies Ltd, Tata Consulting Engineers Ltd, Consulting Engineers Group Ltd, Tech Mahindra Business Services Ltd, Exl Service.com India Pvt. Ltd and Mahindra Consulting Engineers Ltd as comparable companies by erroneously contending these companies are functionally comparable to the Company. That on the facts of the case and in law, the Ld. TPO, in particular, erred in rejecting certain companies namely, Dimension Data India Pvt. Ltd, Informatics Technologies Private Limited, PS IT Infrastructure Services Ltd, Rashi Peripherals Private Limited and Savex Technologies Private Limited as non-comparable companies by erroneously contending that the data for these companies is not available. TP adjustment in relation to provision of marketing support services [INR 2.93.34.270] 3.1 That on the fact of the case and in law, the Ld. AO/TPO/Hon ble DRP has erred by not/accepting the economic analysis undertaken by the Appellant in accordance with the provisions of the Act read with the Income Tax Rules, 1962 ( the Rules ), and conducting a fresh economic analysis for the determination of the ALP of the Appellant s internatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TA No. 9131/Del/2019) and AY 2016-17 (ITA No. 466/Del/2021). 4.3 That on the facts of the case and in law, the Ld. TPO/Hon ble DRP have erred in recharacterizing the inter-company receivables as a separate international transaction of an unsecured loan and imputing interest on such transaction. 4.4 That on the facts of the case and in law, the Ld. TPO/Hon ble DRP have erred in not appreciating that inter-company receivables arising out of provision of services by the Appellant to its AE is closely linked to such transaction and no separate TP adjustment is warranted. 4.5 That on the facts of the case and in law, the Ld. TPO/ Hon ble DRP have erred in not appreciating the fact that the Appellant has provided services to non-AEs wherein no interest is charged on overdue receivable by the Appellant. 4.6 That on the facts of the case and in law, the Ld. TPO/Hon'ble DRP have erred in determining the arm s length interest rate for inter-company receivables at LIBOR plus 400 basis points on an arbitrary basis without any cogent reasons. 4.7 That on the facts of the case and in law, the Ld. TPO/Hon ble DRP have erred in granting the credit of period of 60 days ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... djustment of Rs 43,01,79,268 attributable to difference in Arm s length price has been made. Accordingly a draft order u/s 143(3) dated 22/09/2021 was passed making TP adjustment of Rs. 43,01,79,268, determining the taxable income at Rs 139,49,95,600/-. The assessee filed objections against the draft assessment order before the DRP. The DRP passed order u/s 144 C(5) of the Act on 14/02/2022 in accordance with the directions of the Hon ble DRP. Further the TPO vide letter dated 22/03/2022 has given effect to the order of the DRP issued u/s 144 C (5) of the Act. 4. The DRP vide order 08/02/2022 has considered the objection filed by the assessee and directed the Assessing Officer to incorporate the findings of the panel suitably in the final order. In compliance of the direction with the DRP, the Ld. A.O vide order dated 25/03/2022 passed the final assessment order u/s 143 (3) of the Act read with Section 144C (13) of the Act read with Section 144B of the Act by making TP Adjustment of Rs. 16,54,20,675/- by computing the taxable income of the assessee at Rs. 113,02,37,005/-as against the income admitted by the assessee at Rs. 96,48,16,330/-. 5. Aggrieved by the final assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the delayed payment are being treated as unsecured loan advance to the AE and charged the interest at 12.51% i.e. 6 months labor + 400 basic point for commuting notional interest for the delayed period. The Ld. DRP has also confirmed the order of the TPO by relying on the judgment of the jurisdictional High Court in the case of CIT Vs. Cotton Naturals India Pvt. Ltd. Reported in 55 Taxmann 401 and the order of the Tribunal in the case of the Bechtel India Pvt. Ltd. Vs. ACOT reported in 84 Taxman 421 for the AY 2012-13. 11. The similar issue has been considered by the Co-ordinate Bench of this Tribunal in assessee s own case in ITA No. 466/Del/2021 for AY 2016-17, vide order dated 09/07/2021 it is held as under:- 7. The other dispute with regard to the Transfer Pricing Adjustment relates to notional interest on receivables. 8. The TPO after examination of the balance sheet found that the assessee has not received the payments for the invoices raised by the assessee within the stipulated time as provided in the service agreement with the AE's. The TPO held that the delayed payments are being treated as unsecured loans advanced to the AE and charged interest @ 12.51% ..... X X X X Extracts X X X X X X X X Extracts X X X X
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