INCOME TAX ACT, 1961

Section 92C

Transfer pricing - Computation of ALP - Adjustment on account of interest receivables - Assessee being a debt free company

TPO found that international transactions carried out by assessee-company with its AEs were at arm's length; however, he observed that payments for invoices raised by the assessee on its AEs were not received within the stipulated period as provided in the service agreement with theAEs. According to him, the assessee was required to charge interest on receivables due from the AEs; accordingly, he benchmarked the transactions of interest receivable from the AEs. Held: In view of High Court decision in the case of PCIT v. Bechtel India Private Limited in (IT Appeal No. 379 of 2016, dated 21-7-2016) : 2016 TaxPub(DT) 5233 (Del-HC), when the assessee is a debt free company the question of receiving any interest on receivable did not arise. In instant case, assessee was a debt free company and the same was not disputed by Revenue after verification of the financial statements of the assessee. Therefore, the TP adjustment made on account of the interest receivables in the case of the assessee would not be sustainable.

Followed:PCIT v. Bechtel India Private Limited in (IT Appeal No. 379 of 2016, dated 21-7-2016) : 2016 TaxPub(DT) 5233 (Del-HC)

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

INCOME TAX ACT, 1961

Section 37(1)

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