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TMI Blog2019 (11) TMI 1817X X X X Extracts X X X X X X X X Extracts X X X X ..... Pricing Officer - 1(3), New Delhi ("the learned TPO"), the draft assessment order and the final assessment order passed by the Assistant Commissioner of Income Tax, Circle-4(1), Gurugram ("Learned AO'') and the final order passed by the Assistant Commissioner of Income Tax, Circle-4(1), Gurugram pursuant to the directions of Dispute Resolution Panel -1, New Delhi ("Hon'ble DRP"), are bad in law and void- ab-initio. 2 The learned AO following the order of the learned TPO and the Hon'ble DRP has erred in law and on the facts of the case in making an upward adjustment of Rs. 1,66,10,1151- on account of interest on delayed receivables. Part I - Transfer Pricing Grounds 3 That on facts of the case and in law, the DRP/TPO/AO have erred i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udice to the above, once working capital adjustment is granted no separate adjustment on account of outstanding receivables is maintainable. Part II- Consequential grounds of appeal 6. That the learned AO has passed an order under section 143(3) r.w.s 144C(1) of the Act which suffers from computational errors, and consequently, erred in computing the amount of tax demand and interest payable as per the impugned order. 7. That on the facts and in the circumstances of the case and in law, the Ld. AO has erred in initiating penalty under section 271(1)(c) of the Act. 8. That on the facts and in the circumstances of the case and in law, the Ld. AO has erred in not giving credit of Foreign tax credit amounting to INR 1,24,35,314. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said services. For the relevant assessment year the Assessee filed its return of income on 30.11.2015 declaring a total income of Rs. 41,09,17,230. The return was processed u/s 143(1) of the Income Tax Act, 1961. The case was selected for scrutiny and a notice under section 143(2) of the Act dated 13 April 2016 was issued to the Assessee for initiation of assessment proceedings. Reference was made u/s 92CA of the Act to the Transfer Pricing Officer. The TPO vide order dated 22.10.2018 made total adjustment of Rs. 12,50,25,217/- . During the course of assessment, the information was furnished by the Assessee. The Assessing Officer issued a draft assessment order dated 28.12.2018. Thereafter the assessee filed objection before DRP. The DRP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing LIBOR + 400 bps. We also note that the Tribunal in ITA No. 87/Del/2017 for assessment year 2012-13 in case of assessee, following the decision of the Hon'ble Jurisdiction High Court in the case of Principal Commissioner of Income Tax vs. Kusum Health Care Pvt. Ltd. in I.T.A. No. 765/2016 vide judgment dated 25th April, 2017, held that "no separate adjustment on account of interest receivable is required when working capital adjustment has already been made to the margins of the comparables while comparing the margin of the assessee under the TNMM. The relevant finding of the Tribunal is reproduced as under: "9. We have heard both the parties and perused the relevant case laws along with order of the TPO, DRP & A.O. In respect of firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and thereby on its pricing/profitability vis-à-vis that of its comparables, any further adjustment only on the basis of the outstanding receivables would have distorted the picture and re-characterized the transaction. This was clearly impermissible in law as explained by this Court in CIT v. EKL Appliances Ltd. (2012) 345 ITR 241 (Delhi). The issue in the present appeal is also identical therefore, squarely covered by this judgment in favour of the assessee. Therefore, Ground No. 4 & 5 are allowed." 4.3 In assessment year 2013-14, in ITA No. 7885/del/2017, also the Tribunal following the decision, allowed the appeal of the assessee observing as under: "8. After considering the rival submissions, we are of the view that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et aside the finding of the learned DRP complied by the Assessing Officer in the impugned order and delete the adjustment on account of the interest receivables. In the result, the grounds No. 3 to 5 of the appeal of the assessee are allowed." From the perusal of the order passed in the Assessment Year 2014-15, it is seen that the issue involved in the present assessment is identical. Besides, the contentions of the Ld. DR does not sustain as there is no receivables in relation to ITES services as per the records. Thus, we set aside the finding of the DRP which was complied by the Assessing Officer and delete the adjustment on account of the interest receivables Therefore, Ground No. 4 is allowed. As regards to Ground No. 5, the same beco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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