9911796707
Advanced Search 
TMI Blog2025 (1) TMI 1486X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, to verify the same, we remit this issue to back to the file of the AO, who will verify the computation of income, whether the provisions of gratuity has been added by the assessee and not claim any further deduction. Hence, we remit this issue back to the file of the AO.
Late payment towards employee's contribution to provident fund/ESI as prescribed - HELD THAT:- Assessee conceded this ground and stated that the issue is covered by decision of Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT] Since, payments are belated payments in terms of respective statutes of ESI and PF Act, and, hence, appeal of the assessee on this issue is dismissed.
Appeal filed by the assessee is partly allowed for statistical purposes. X X X X Extracts X X X X X X X X Extracts X X X X ..... rts Inc. LLC, USA as per form 3CEB. He noted that the assessee's turn over/sales from this party is Rs.129,46,20,676/- during the year, which comes to 33.85% equivalent to receivables. He noted that the trade receivables are as old as at an average of 123.6 days on account of credit to this party for sale of goods. He noted that no enterprise in an uncontrolled environment would provide such a long credit for sale of goods in international trade. Thus, according to him the Arm's Length Price (ALP) of interest on this long credit/trade receivable needs to be determined under CUP method. The TPO, thereafter discussing the facts of the case i.e., purchase of raw material, sale of raw materials, sale of goods, trade payable, trade receivables and reimbursement of expenses paid, IT Support charges, freight charges paid noted that the assessee has allowed credit period of trade receivables to the extent of Rs.123.6 days at an average. The TPO relying on the decision of the Delhi High Court in the case of Mckinsey Knowledge Centre India (P) Ltd. vs. PCT [(2018) 96 taxmann.com 237 (Delhi) computed the ALP on interest receivables at Rs.4,63,74,506/-. The TPO noted that the assessee was aske ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate and reliable comparison in view of the Rule 10B(3) of the IT Rules, 1962 and for which reliable data has to be provided by the assessee. The Panel has considered the AO's views recorded in the remand report on this issue. However, the TPO is directed to compute the working capital in accordance with OECD Guidelines as follows: i. Compute the average of opening and closing balances of inventories, trade debtors/receivables, trade creditors/payables of both the tested party and the comparables for the relevant year on revenue account only. ii. Compute the net working capital ratio (in percentage) after dividing the net working capital by operating cost/sales or such denominator (as is used in the PLI) both for the tested party and the comparables. iii. Determine the difference between the tested party's ratio with that of each comparable. iv. Multiply the above difference by the interest rate i.e. SBI Prime Lending Rate as on 30th June of the relevant financial year. v. The above adjustments shall be added to the profit margin of comparable companies as finally determined in accordance with the directions of this Panel. vi. Credits received from various group ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng/profitability", which was more than working capital adjustment margin of the comparables and, therefore, "any further adjustment to the margins of the assessee on the pretext of outstanding receivables is unwarranted and wholly unjustified. This has not been inserted by Hon'ble Delhi High Court that the assessee having factored impact of receivable on the working capital, the further adjustment on account of outstanding receivable would have distorted the picture and re-characterized the transaction. Accordingly, he requested that the TP adjustment is to be deleted. 6. On the other hand, CIT-DR heavily relied on the order of TPO and that of the DRP. He drew our attention to the accounts of the assessee and argued that the assessee is debt company and currently it is paying interest on borrowings to the extent of 42,53,458/-. He drew our attention to trade receivables of assessee at Rs.441,407,587/- as against Revenue from operations at 1,407,195,719/-. Hence, this debt written company and trade debtors without charging interest will under report the income and, accordingly, TPO has rightly made adjustment of this ALP. He also drew our attention to the relevant purchase order bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order or non-conforming Goods. arising out of any other transaction with Seller. Payment will not constitute acceptance of any defective or non-confirming Goods." In terms of the above, he stated that the trade receivables outstanding more than 95 days attract interest and, therefore, TPO rightly computed the ALP of the trade receivables and, accordingly, proposed adjustment and the same was confirmed by DRP. As regard another argument or alternative argument of assessee that the trade receivables subsumed capital adjustment, he cited the decision of Co-ordinate Bench of this Tribunal in the case of Bechtel India (P.) Ltd. vs. ACIT, Circle-4(2), New Delhi [2017] 85 taxmann.com 121 (Delhi-Trib) dated 16/05/2017. He also drew our attention to the decision of Hon'ble Delhi High Court in the case of CIT vs. Cotton Naturals (I) (P.) Ltd. [2015] 55 taxmann.com 523 (Delhi). 7. We have heard the rival contention and gone through the facts and circumstances of the case. We find that this issue is squarely covered by the decision of Hon'ble Delhi High Court in the case of PCIT vs. Kusum Health Care (P) Ltd (supra) wherein the Hon'ble High Court has laid down ratio that where the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
