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TMI Blog2024 (5) TMI 1080X X X X Extracts X X X X X X X X Extracts X X X X ..... l transaction, and it certainly requires separate benchmarking. There is no dispute that the learned DRP in the directions dated 08/06/2022 directed AO to adopt the SBI short term deposit interest rate for the subject year as the ALP interest rate and re-compute the adjustment to be made to the total income by applying credit period of thirty days or as per the agreement or invoice. There is no appeal by the Revenue as to this direction in respect of application of credit period of thirty days or as per the agreement of invoices. AO is, therefore, under the obligation to verify the invoices and apply the credit period of either thirty days or as per agreement or invoices, whichever is longer. Rate of interest - We are of the considered opin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 781/-. 3. Aggrieved, assessee filed objections before the learned DRP. Learned DRP vide directions dated 08/06/2022 granted partial relief to the assessee reducing the adjustment on both the counts. Pursuant to the directions of the learned DRP, learned Assessing Officer passed final assessment order dated 30/07/2022, reflecting the adjustment of Rs. 5,73,28,728/- towards software development services and Rs. 1,89,57,412/- towards interest on trade receivables. Challenging both the adjustments in the final assessment order, pursuant to the directions of the learned DRP, assessee filed this appeal. 4. Subsequently, the assessee filed an application for rectification of certain mistakes and after such rectification, the Transfer Pricing adjus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on the decisions of PCIT vs. Technimont (P.) Ltd., [2018] 96 taxmann.com 223, CIT vs. Cotton Naturals (I) (P.) Ltd., [2015] 55 taxmann.com 523 and CIT vs. Tata Autocomp Systems Ltd., [2015] 56 taxmann.com 206. 6. Learned DR submitted that the question as to whether or not the interest on outstanding receivables is no longer res integra. She further submitted that in the absence of any proof that the assessee allowed 180 days period for not referring to any interest, such a period cannot be taken as globally applicable. In respect of the rate of interest, she supported the orders of the authorities, stating that since the assessee is incurring such expenditure in India, the SBI short term deposit interest rate is proper. 7. We have gone th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (P) Ltd., (supra) and CIT Vs. CottonNaturals (I) (P.) Ltd. [2015] 55 taxmann.com 523 (Delhi), assessee prayed that LIBOR+200 basis points may be adopted. This aspect is also no longer res integra and dealt with by the Mumbai Bench of the Tribunal in the case of Tecnimont ICB House (supra) and confirmed by the Hon'ble Bombay High Court. CottonNaturals (I) (P.) Ltd. (supra) is also on the same aspect. 10. In the case of Tecnimont ICB House (supra), the Co-ordinate Bench of the Tribunal considered the view taken in Everst Kanto Cylinder Ltd. v. Asstt. CIT (LTU) [2014] 52 taxmann.com 395 (Mum.); PMP Auto Components (P.) Ltd. v. [IT Appeal No. 1484 (Mum.) of 2014, dated 22-8-2014]; Hinduja Global Solutions Ltd. v. Addl. CIT [2013] 145 ITD 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be faulted. 11. In the case of CIT Vs. CottonNaturals (I) (P.) Ltd. [2015] 55 taxmann.com 523 (Delhi) the Hon'ble Delhi High Court considered the question as to whether the interest rate prevailing in India should be applied, for the lender was an Indian company/assessee, or the lending rate prevalent in the United States should be applied, for the borrower was a resident and an assessee of the said country, observed that such a question must be answered by adopting and applying a commonsensical and pragmatic reasoning and held that the interest rate should be the market determined interest rate applicable to the currency concerned in which the loan has to be repaid; that the interest rates should not be computed on the basis of i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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