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TMI Blog2023 (11) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... such sample evidence would have been sufficient. But it is not so in this case. We, therefore, do not find any merits in the contention of the assessee. Suffice it to say that the interest shall be charged only at 6% p.a. in respect of the receivables outstanding for more than 30 days. Issues No. 3 to 8 area allowed in the above terms. Deduction u/s 10AA - Assessee filed rectification application and the CPC allowed the deduction u/s 10AA - Subsequently, in the draft assessment order AO did not make any disallowance on this account and, therefore, there is no occasion for the assessee to carry this to the learned DRP- HELD THAT:- AO missed this aspect while passing the final assessment order dated 18/01/2022 and added the sum by way of disallowance of deduction under section 10AA - These are all undisputed facts. It is not the case of the Revenue that for any reason, the order passed u/s 154 cannot be acted upon - we see no reason not to accept the action of AO while passing the draft assessment order and the order u/s 154 allowing the deduction u/s 10AA of the Act. We, therefore, direct the AO to delete the addition made on this account - Shri Rama Kanta Panda, Vice Pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of impugned order, learned DRP, placing reliance on the decisions of the Hon ble Delhi High Court in the cases of McKinsey knowledge Centre India (P) Ltd (2018) 96 Taxmann.com 237 (Delhi) and other decisions, rejected the contention of the assessee as to the nature of transaction and held that the deferred receivables constitute a separate international transaction and has to be benchmarked on account of delay, beyond the reasonable credit period as per Transfer Pricing regulations. Learned DRP rejected the other contention of the assessee that outstanding amount gets adjusted in working capital adjustment and that a separate adjustment is not required, while referring to the view taken by the Delhi Bench of the Tribunal in the case of BechtelIndia (P.) Ltd. vs. ACIT [2017] 85 taxmann.com 121 (Delhi - Trib.). On the plea of the assessee as to not charging interest from AEs, learned DRP directed the assessee to submit complete information relating to payables to AEs and non-AEs such as date of invoice, credit period, date of payment, period of delay with supporting invoices before the learned TPO within a week from the date of receipt of the order and simultaneously, the learned T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t outstanding receivables is an international transaction requiring separate benchmarking, extra credit in excess of 30 days would amount to profit shifting and, therefore, 6% of interest would be proper rate of interest to be levied in respect of such interest on outstanding receivables. In reply, the learned AR submitted that the matter may be reconsidered. 8. On a careful consideration of the matter in the light of the decisions relied upon by the Revenue, we find that in the case of McKinsey knowledge Centre India Pvt. Ltd (supra) the Hon ble High Court held that the outstanding receivables is an international transaction and requires benchmarking separately. In the case of M/s. AMD India private limited (supra) the Hon ble Karnataka High Court found that allowing extra credit in excess of agreed period of 30 days, amounts to profit shifting and requires determination of ALP. In this case the Hon ble Karnataka High Court found that application of 6% interest on such outstanding receivables would be just and proper. The Co-ordinate Benches of the Tribunal followed the above view, and in the cases of Zeta Interactive Systems (India) (P) Ltd., (supra), Satyam ventures (supra) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amounts payable to non-AEs were from the following three companies- 1. AT T Global Network Services India 2. Dell International Services India 3. First Advantage Private Limited On perusal of the invoices, that were raised by these parties on the taxpayer and as submitted on behalf of the taxpayer, it was noted that while M/s AT T Global Network Services India provided a credit period of only 30 days(or 45 days in some cases), Dell International invoices mentioned a credit period of 60 days but levied an interest of 24% per annum on delayed payments, the invoices mentioned by First advantage provide a credit period period of 30 days only. Further, it has been submitted by taxpayer that the overall payables are huge and only a few have been provided as samples. In this respect it is being pointed out that hon'ble DRP has directed the taxpayer to submit the complete information and the taxpayer can not cherry-pick the ones supporting its own stand thus there is no acceptable explanation for non-submission of the complete information. Even with respect to the ones that have been cherry-picked and submitted for verification of TPO the details like ledgers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not mean that no interest is provided for the initial 6 days. Further, a credit free period of 30 days has already been provided as interest free period thus in effect the interest is being calculated on funds that have been pending with AEs for a minimum period of 31 days. Thus, the calculation submitted on behalf of the taxpayer is rejected. Hence no change is needed in the draft order in pursuance to the order of the Hon ble DRP and accordingly a final order may be passed by the Assessing Officer. 11. From the directions given by the learned DRP and the findings of the learned TPO, it is argued on behalf of the assessee that since the direction is to adjust the interest payable against the interest receivable, the assessee understood that if the material is provided covering the adjustment to the tune of Rs. 18,46,834/- imputed by the learned TPO towards upward adjustment, any addition on that account would become zero. Here the question is whether such sample evidence provided by the assessee is sufficient to be acted upon by the learned TPO. Learned TPO in unequivocal terms noted that even in respect of such sample evidence, no ledgers of the parties, confirmation th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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