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Income Tax Appellate Tribunal, DELHI BENCH ‘I’, NEW DELHI
Before: C.M. GARG & SH. N.K. BILLAIYA
Appellant Mrinal Kumar Das, Sr. DR Respondent Sh. VIshal Kalra, Advocate Ms. Reema Jain, CA Date of hearing: 11/10/2022 Date of Pronouncement: 14/10/2022 ORDER
PER N.K. BILLAIYA, AM:
This appeal by the revenue is preferred against the order of the CIT(A)-44, New Delhi dated 22.04.2019 pertaining to A.Y. 2014-15.
The grievance of the assessee read as under :- 1. In the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the Transfer Pricing adjustment
amounting to Rs.2,66,13,334/- u/s. 92CA(3) on account of interest chargeable on delayed receivables. 2. Whether in the fat of the circumstances of the case, Ld. CIT(A) was justified in relying upon the judgment of Hon’ble Delhi High Court in assesse’s own case for A.Y.2010-11, ignoring the fact that the above decision of Hon’ble High Court was not accepted by Revenue and SLP is pending for adjudication before Hon’ble Supreme Court of India.
Total tax effect Rs.86,34,696/-
At the very outset the Counsel for the assessee stated that the impugned quarrel has been settled by the Hon’ble Jurisdictional High Court of Delhi in assessee’s own case in A.Y.2010-11 which decision was subsequently followed by this Tribunal in A.Y.2012-13 and 2013-14.
Per contra the DR though agreed that in earlier assessment years there are decisions in favour of the assessee by the Hon’ble High Court and by the Tribunal, but strongly stated that the working capital adjustment does not take into account the impact of outstanding receivables on the profitability. It is the say of the DR, therefore, the facts of the appeal under consideration are different from the facts of earlier assessment years.
We have carefully considered the orders of the authorities below and have perused the decisions relied upon.
Facts on record show that the assessee is engaged in export of Pharmaceuticals Products to its overseas associates Enterprises as well as non group companies, the assessee had under taken the international transaction pertaining to export of pharmaceuticals products and the said international transaction has been accepted by the TPO to be at arms length.
However, the TPO re-charaterised receivables outstanding from AE as unsecured loans advanced by the assessee to its AE and imputed a notional interest based on LIBOR + 400 basis points and by taking interest rate 4.683 percent an adjustment of Rs.2,66,13,334/- was made by the TPO.
The adjustment was agitated before the CIT(A) who deleted the TP adjustment following the decision by the Hon’ble Delhi High Court in assesee’s own case in 398 ITR 66 for A.Y.2010-11.
The contention of the DR that facts of the year under consideration are different from the facts of earlier assessment years is without any basis as we find that the working capital adjustment is based on the same lines as was done in earlier assessment years, therefore, the decision of the Hon’ble Delhi High Court (supra) and the decision of this Tribunal in A.Y.2012- 13 and 2013-14 squarely apply on the facts of the case. The relevant findings of the Hon’ble High Court in dated 25.04.2017 read as under :-
The same view was taken by this Tribunal in for A.Y. 2013-14 and in ITA No.84/Del/2017 for A.Y. 2012-13.
Respectfully following the decision of the Hon’ble High Court (supra) we do not find any reason to interfere with the findings of the CIT(A). The appeal filed by the revenue is dismissed.
Order pronounced in the open court on 14.10.2022.