Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, HYDERABAD ‘B’ BENCH, HYDERABAD.
Before: SHRI S.S. GODARA & SHRI L. P. SAHU
O R D E R Per Shri S.S. Godara, J.M. : This assessee's appeal for Assessment Year 2016-17 arises against the order of National e-Assessment Centre, Delhi dated 30.03.2021 in DIN No.ITBA/AST/S/143(3)/2020-21/1031957895(1) framed in Dispute Resolution Panel-1, Bangalore (DRP)’s directions dt.22.02.2021 in F. No. ITBA / AST / S / 143(3) /2020-21 / 1031957895(1) involving proceedings u/s.143(3) r.w.s 144C(13) read with sections 143(3A) & 143(3B) of the Income Tax Act, 1961 ('the Act').
Heard both the parties. Case file perused.
The assessee's first and foremost substantive grievance challenges correctness of both the lower authorities action making Arm’s Length Price (ALP) adjustment regarding interest on receivables amounting to Rs.79,85,631. We note from a perusal of the case file; more particularly, in light of the TPO’s order dt.29.10.2019 in page 41 para 12 onwards that he quoted section 92B Expln.1(c) which was inserted in the Finance Act, 2012 w.e.f. 1.4.2012; to hold that such interest as trading receivables in case of overseas Associated Enterprises (AEs) indeed forms an international transaction. He accordingly went by SBI short- term deposit interest rates ranging between 5% to 8.5% to arrive at the impugned adjustment. Suffice to say, the Assessing Officer passed his draft assessment order dt.29.11.2019 to this effect; which in turn, has been affirmed in all subsequent proceedings. This leaves the assessee aggrieved.
We have given our thoughtful consideration to Revenue’s stand supporting the impugned adjustment and find no merit therein. This is for the reason that neither the Transfer Pricing Officer (TPO) nor any other lower authority has quoted even a single comparable in the very segment so as to arrive at the impugned ALP. It is rather noted that the TPO sought for the assessee’s credit period in light of its inter-company agreement with its AEs only which is not permissible in light of Technimont ICV Pvt. Ltd. Vs.Addl. CIT 138 ITD 23 (Mum) (TM) and Sabic Innovative Plastics Vs. DCIT (2013) 59 SOT 138 (Ahm.) that an AE is nowhere contemplated as a comparable in transfer pricing regime since lacking uncontrolled transaction. This is also coupled with the fact that the learned lower authority(ies) have adopted SBI short-term deposit interest rate for benchmarking than the “LIBOR” in international transactions. We thus delete the impugned ALP adjustment of Rs.27,63,667 going by the very reason. The assessee succeeds in its first and foremost substantive ground.
The assessee's second substantive ground pleads that the learned lower authorities have erred in disallowing 80G claim of Rs.8,51,240 in the final assessment which stand duly accepted in draft assessment
order. Learned CIT-DR is fair enough in stating before us that the same requires verification at the Assessing Officer’s end. We thus restore the instant second substantive issue for his fresh adjudication / verification in above terms.
The assessee's third substantive ground of section 234B interest of Rs.3 lakhs is treated as consequential in nature.
This assessee's appeal is partly allowed in above terms.