9911796707
TMI Blog2023 (6) TMI 1349X X X X Extracts X X X X X X X X Extracts X X X X ..... ssociated enterprises without charging any interest on delayed payment, therefore, after following the decision of Hon ble Jurisdictional High court as referred in M/s Indo American Jewellery Ltd. [ 2013 (1) TMI 804 - BOMBAY HIGH COURT] and Mr Livingstone Ltd. [ 2016 (11) TMI 1647 - BOMBAY HIGH COURT] this ground of appeal of the assessee is allowed that in such circumstances the AO/TPO is not required to make the adjustment on notional basis. Claim of deduction u/s 10A - assessee submitted that for the purpose of computing the export turnover u/s 10A and AO has incorrectly reduced the expenditure incurred in foreign currency on telecommunication charges and expenses incurred in foreign currency in providing technical services outside of India - HELD THAT:- As perused the decision of Jurisdictional High Court of Bombay in the case of assessee/Tech Mahindra Ltd. [ 2014 (8) TMI 71 - BOMBAY HIGH COURT ] wherein held that expenses incurred in foreign currency on telecommunication charges and providing technical services outside India should be excluded from total turnover for the purpose of computation of deduction u/s 10A. During the course of assessment proceedings, assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not considered by the ITAT while adjudicating the aforesaid grounds of appeal filed by the assessee. 3. The ITAT vide order MA No. 277/Mum/2022 and 327/Mum/2022 dated 30.04.2023 has recalled the order dated 23.03.2022 to adjudicate the aforesaid issues by allowing the miscellaneous application filed by the assessee. 4. Both the issues are adjudicated as followed. 5. Ground of appeal as per the revenue s appeal as under. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in allowing relief to the assessee to the extent impugned in the grounds enumerated below: 1. The order of the CIT(A) is opposed to law and facts of the case. 2. On the facts and in the circumstances of the case and in law, the CIT(A) erred in holding that the adjustment to arm's length price should be only to the extent of Rs.89,04,156 as against Rs.1.35.68,237/- made by the assessing officer in conformity with Section 92CA(3)/92CA(4) of the I.T.Act, 1961. 3. On the facts and in the circumstances of the case and in law, the CIT(A) erred in holding that consideration relating to expenditure incurred in foreign currency on telecommuni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the amount of Rs 1,35,68,237/- on account of arms length price in respect of credit period extended by the assessee to its associates Enterprises in USA. The TPO had taken the stand that for extending credit period to its associated enterprises the assessee was required to charge the interest. The TPO has taken the LIBOR rate of 3.40% and the amount loaded on it was plus 300 points (6.40%). 8. The assessee has filed appeal before the CIT(A) . The CIT(A) has partly allowed the grounds of appeal of the assessee, holding that USD LABOR rate at that point of time being 3.40% with a mark up of 80 basis point would be adequate for determining ALP interest for trade credit which can reasonable to charged to the Associates Enterprises. 9. During the course of appellate proceedings before us the Ld. Counsel referred Para No. 3.1 of the order of CIT(A) and submitted that assessee has also extended credit period to its non-associate enterprises without charging any interest for delayed payment and on the same issue on similar facts, the TPO has not made any adjustment for assessment year 2002-03 and assessment year 2003-04. The Ld. Counsel has referred the decision of ITAT Mumbai i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest, then adding of notional interest to delayed payments made by the Associated Enterprises is not called for. 6. In the present case also the Tribunal has rendered a finding of fact that the interest is not being charged in case of sales made to Non- Associated Enterprises for delayed payment just as in the case of Associated Enterprises. These finding of fact rendered by the Tribunal is not shown to be perverse in any manner... 11 Considering the undisputed fact that assessee has also extended credit period to its non-associated enterprises without charging any interest on delayed payment, therefore, after following the decision of Hon ble Jurisdictional High court as referred (supra) this ground of appeal of the assessee is allowed that in such circumstances the AO/TPO is not required to make the adjustment on notional basis. 12. Claim of deduction u/s 10A (Grounds of appeal No. 3 of the Assessee and Revenue. 12.1 The assessee submitted that for the purpose of computing the export turnover u/s 10A of the Act, the assessing officer has incorrectly reduced the expenditure incurred in foreign currency on telecommunication charges amounting to Rs 3,63,59,691/- and exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the total turnover. During the course of assessment proceedings, assessee has also placed on record written submission that it has not separately recovered any freight telecommunication charges or insurance attributable to the delivery of the article or computer software outside of India or expenses, if any incurred in foreign exchange in providing the technical services outside India from its customer. The assessee has also furnished the annexure 1 along with written submission showing working of deduction u/s 10A of without including the above referred expenses. After considering the above facts and submissions of the assessee that it has never recovered foreign currency expenses from the customers and it was not part of its total turnover, therefore, following the decision of Hon ble Jurisdictional High Court as referred supra, we allow the appeal of the assessee that expenditure incurred on foreign currency on telecommunication charges and provision of technical services outside of India should not be excluded from export turnover for the purpose of computing u/s 10A, since this expenditure were not included in the export turnover of the assessee. In the result the appeal of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
