The Tax Publishers2017 TaxPub(DT) 1258 (Del-Trib)

 

Bechtel India (P) Ltd. v. ACIT

 

INCOME TAX ACT, 1961

--Transfer pricing--Determining ALPWorking capital adjustment----Interest receivable from associated enterprise for late realization of invoices beyond such stipulated period is a separate international transaction whose separate ALP was required to be determined.--Assessee company was providing engineering design and drawing services to its associated enterprise. It provided benefit to its associated enterprise by way of advancement of interest free loan in the garb of delayed receipt of receivables. AO was of the view that these funds could have been otherwise deployed for at least earning interest income. Hence, assessee had incurred cost in connection with a benefit and services provided to the associated enterprise by way of delayed receipt of receivable and accordingly separate ALP of interest on receivables from associated enterprise was required to be determined. Held: Interest for credit period allowed as per the agreement was given in the price charged for rendering of services. Whereas the non-realisation of invoice value beyond the stipulated period was a separate international transaction whose separate ALP was required to be determined.

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