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| The Tax Publishers2020 TaxPub(DT) 1649 (Mum-Trib) INCOME TAX ACT, 1961
Section 92C
Addition on account of interest was to be computed only till the end of financial year and not till the date of passing of transfer pricing order. As TPO made addition of notional interest till the date of passing of order, the same was incorrect and against the basic principle of taxation. Hence, interest adjustment on delayed accounts receivables, if any, should be computed only upto the end of financial year. Also, TPO had to consider price fixed by assessee with respect to transaction entered with non-AE vis-Ã -vis AE and if he found that price so charged had already taken care of delayed period of payment, the same had to be considered while re-computing interest chargeable.
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Transfer pricing - Determination of ALP - Notional interest pertaining to outstanding balance of receivables from AEs -
TPO suggested adjustment on account of notional interest pertaining to outstanding balance of receivables from AEs, applying LIBOR rate. Assessee contended that while fixing the sale price assessee had already considered the delay, if any, in recovery of price. Held: Addition on account of interest was to be computed only till the end of financial year and not till the date of passing of transfer pricing order. As TPO made addition of notional interest till the date of passing of order, the same was incorrect and against the basic principle of taxation. Hence, interest adjustment on delayed accounts receivables, if any, should be computed only upto the end of financial year. Also, TPO had to consider price fixed by assessee with respect to transaction entered with non-AE vis-Ã -vis AE and if he found that price so charged had already taken care of delayed period of payment, the same had to be considered while re-computing interest chargeable.
REFERRED :
FAVOUR : Partly in assessee's favour (by way of remand).
A.Y. :
INCOME TAX ACT, 1961
Section 115JB
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