INCOME TAX ACT, 1961

Section 92C

Transfer pricing - Computation of ALP - Adjustment towards interest on outstanding receivables of AEs -

Assessee was engaged in export of manufactured medicines and export of traded medicines. TPO made adjustment towards ALP on account of interest chargeable on delayed receivable. It was alleged that delayed realization of outstanding receivables beyond 180 days, for supplies made to AE, was not in accordance with normal trade practices and reflected an arrangement of international transactions which were intended to benefit the AE. Held: Assessee gave all details and TPO in his order and without discussing calculations and evidences produced by assessee, simplicitor, made adjustment. There was no contrary facts given by TPO in consonance with the evidence produced by assessee before him. Calculation given by revenue counsel in his submissions was not in-consonance with the actual figures and the calculations considered by the TPO as well as DRP at time of assessment proceedings. Facts of assessee's case were identical to that of assessment year 2010-11, which was already decided by Delhi High Court in assessee's favour, wherein it was held that assessee already factored in impact of receivables on working capital and thereby on its pricing/profitability vis-à-vis that of its comparables. No distinguishing facts were pointed out by revenue.

Followed:Pr. CIT-V v. Kusum Health Care (P) Ltd. [ITA No. 84/Del/2017) : 2017 TaxPub(DT) 4367 (Del-HC). Distinguished:Techbooks International (P) Ltd. v. Asstt.CIT [ITA No. 6102/Del/2016, Order, dated 6-7-2020].