Overdue receivables from AEs treated as separate lending transaction.

Outstanding receivables from AEs exceeding agreed credit period constitutes separate international transaction of providing capital financing/lending receivables, not subsumed under sales/services transaction. Such overdue receivables amount to providing funds to AE without charge, requiring separate benchmarking. TPO rightly benchmarked this transaction, but erred in applying SBI PLR of 13.27% instead of LIBOR rate for foreign currency receivables. ITAT directed TPO to apply LIBOR rate and determine appropriate mark-up over LIBOR based on risk factors involved in overdue receivables from AEs. Assessee's appeal allowed for statistical purposes. .....

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