The Tax Publishers2020 TaxPub(DT) 3699 (Del-Trib)

INCOME TAX ACT, 1961

Section 92B

Assessee during the year under consideration had not availed of any loan from its AEs or unrelated third party and was not incurring any interest cost. Further, there was similar delay in receipt of receivables from others and assessee was not charging any interest on delay in receipt of receivables against services rendered to unrelated third party. Accordingly, no adjustment was to be made on account of notional interest on receivables by relying upon Explanation (i), (a) and (c) of section 92B by treating continued debt balance as an international transaction.

Transfer pricing - International transaction - Outstanding receivables from AE - Assessee not availed of any loan from AEs or unrelated third party and not charged any interest on delay in receipt of receivables from unrelated third party

Assessee entered into transactions with its AE abroad. TPO held that overdue receivables from AE constituted separate international transaction and working capital adjustment did not subsume interest on overdue receivables. Accordingly, TPO suggested ALP adjustment on account of notional interest on outstanding receivables. Held: Assessee during the year under consideration had not availed of any loan from its AEs or unrelated third party and was not incurring any interest cost. Further, there was similar delay in receipt of receivables from others and assessee was not charging any interest on delay in receipt of receivables against services rendered to unrelated third party. Accordingly, no adjustment was to be made on account of notional interest on receivables by relying upon Explanation (i), (a) and (c) of section 92B by treating continued debt balance as an international transaction.

Relied:Pr. CIT-V v. Kusum Health Care Pvt. Ltd. in ITA No. 765/2016, Order, dated 25-4-2017 : 2017 TaxPub(DT) 4367 (Del-HC) Pr. CIT-1 v. M/s. Bechtel India Pvt. Ltd. in ITA 379/2016 Order, dated 21-7-2016 : 2016 TaxPub(DT) 5233 (Del-HC).

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FAVOUR :

A.Y. : 2013-14

IN THE ITAT, DELHI BENCH

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