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TMI Blog2025 (1) TMI 967X X X X Extracts X X X X X X X X Extracts X X X X ..... TE LIMITED [ 2021 (3) TMI 138 - SUPREME COURT] held in assessee s case that the assessee is not liable to deduct tax at source on payments made to non-resident towards software support charges and consequently, expenses could not be disallowed u/s. 40(a)(i) of the Act Application of Arm s Length interest rate - assessee had outstanding trade receivables from its AE - TPO proposed to benchmark the same. The assessee stated that the said transaction would not be an international transaction - CIT(A), substantially confirming the stand of TPO, held that average LIBOR rate would be the most appropriate rate of interest in the international market - HELD THAT:- We find that the adjudication of Ld. CIT(A) is in accordance with cited decision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee s own case, and upon the decision of Hon ble Supreme Court in the case of M/s. Engineering Analysis Centre of Excellence Pvt Ltd vs CIT against which Review petition is pending in Hon ble Supreme Court. 1.2. The Id. CIT (A) is erred in deleting the disallowance of deduction u/s 40(a)(i) without appreciating the decision of the ITAT in ITA No.1210/Chny/2019 dated 23/12/2019, allowing the issue in favour of the revenue in assessee s own case. 1.3. The ld. CIT (A) is erred in deleting the disallowance of deduction u/s 40(a)(i) without appreciating without considering the decision of the Jurisdiction High Court in the case of the M/s Zylog Systems Ltd Vs ITO in TCA No. 2184 and 2185 of 2006 dated 23.04.2019, squarely applicable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be required considering the decision of Hon ble Apex Court in the case of Engineering Analysis Centre of Excellence (432 ITR 471). However rejecting the same, Ld. AO held that the same would be royalty and accordingly, made disallowance u/s 40(a)(i). 3.2 During appellate proceedings, the assessee stated that the issue stood squarely covered in its favor by the decision of Tribunal in various other years. Concurring with the same, Ld. CIT(A) observed that identical issue stood covered in assessee s favor by the decision of this Tribunal for AYs 2009-10 to 2015-16 in ITA Nos.1862 to 1868/Mds/2017 dated 23-10-2017. The appeals of the department against the same stood dismissed by Hon ble High Court of Madras on 20-12-2021 in TCA Nos. 549, 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for AY 2018-19. The adjudication of Ld. CIT(A) is on similar lines. Therefore, taking the same view, the appeal for AY 2018-19 stands dismissed. 4. ALP adjustment of Outstanding receivables 4.1 The assessee had outstanding trade receivables from its AE for Rs. 41.67 Crores. The Ld. TPO proposed to benchmark the same. The assessee stated that the said transaction would not be an international transaction. However, rejecting the same, Ld. TPO allowed credit period of 30 days and benchmarked the transaction by applying SBI PLR of 14%. The same resulted in to upward adjustment of Rs. 71.98 Lacs. The Ld. CIT(A), substantially confirming the stand of Ld. TPO, held that average LIBOR rate would be the most appropriate rate of interest in the inte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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