M/S. TRACTORS AND FARM EQUIPMENT LTD.,CHENNAI vs. DCIT, CORPORATE CIRCLE-3(1), CHENNAI

आदेश / O R D E R

PER PADMAVATHY.S, A.M: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals), Chennai – 16 (in short "CIT(A)") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") dated 07.07.2015 for Assessment Year (AY) 2021-22. The grounds of appeal raised by the assessee are as under: “1. Order of the CIT(A) is contrary to law of facts and circumstances of the case.

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2.1. CIT(A) erred in not allowing the claim of Rs 14,06,904/- under Section 80JJAA, pertaining to the 3rd year's claim of AY 19-20, for which Form 10DA was filed during AY 19-20.

2.2. CIT(A) erred in not considering the details of additional number of employees during the first year i.e AY 19-20 and the amount of emoluments paid to the additional employees entitled for deduction u/s 80JJAA which was clearly mentioned in the Form 10DA and there is no mismatch between the amount of claim allowable as deduction as stated by CIT(A).

2.3. Form 10DA was properly filed in AY 2019-20 towards claim of deduction u/s 80JJAA was filed within the due dates and allowed by AO in the respective FY, is required to be filed only once and not year on year.

2.4. CIT(A) erred in not considering the submission of Form 10DA which was submitted online during the course of Assessment and Appellate proceedings.

2.5. CIT(A)ought to have appreciated that the base deduction of 80JJAA of 30% of additional employee cost pertains to AY 2019-20, where it was allowed and u/s 80JJAA and provides that this amount will be allowed for three Assessment Year (including the first year). CIT(A) ought to have appreciated the claim under sec.80JJAA is for the third AY in respect of the deduction granted in AY 2019-20.

2.6. CIT(A) ought to have appreciated that the sarne amount of deduction u/s80JJAA granted for AY 2019-20 is required to be granted for the third year viz., the year under appeal, without any further proof to be furnished in this regard.

2.5. Without prejudice to the above grounds, the appellant supports the order of the NeFAC CIT(A) in case of "TAFE Motors and Tractors Limited (TMTL)" for AY 21-22 where it is held that disallowance due to non-filing of Form 10DA is not justified in the subsequent year of claim as the deduction has already been established in the initial year.

3.1 CIT(A) erred in adding notional interest of Rs. 1,05,01,802 on the outstanding trade receivable from AE as working capital adjustment. CIT(A) ought to have appreciated the fact that the trade receivable is a result of normal sale transactions in regular course of business.

3.2 CIT(A) ought to have appreciated that the credit offered for payment for the specified AEs were based on trade practise and in consideration of the time taken for the products to be sold by the AE

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3.3 CIT(A) ought to have considered the different conditions regarding time taken for delivery of goods and the time taken for the AE to sell the products in the region. Period for working capital adjustment, if any, should be considered only from the date of sale by the AE, in as much as the AE is a subsidiary of the Appellant and the AE does not have the benefit of the funds from sale of product till they actually sell the product.

3.4 CIT(A) ought to have appreciated that the shipping duration, port clearance, assemble/set up time in Turkey and collection period of overseas subsidiary, local market conditions in Turkey were all built in as part of the credit period.

3.5 CIT(A) erred in not considering the working capital adjusted margins of comparable companies which benchmarks and subsumes the difference in working capital between the Appellant and the comparable companies.

3.6 CIT(A) erred in confirming the workings by the TPO considering the 30 days credit period across all transactions without analysing the underlying commercial requirements without providing any benchmark or rationale or justification for the same.

3.7 CIT(A) erred in disregarding the consistent credit policy of 150 days being adopted by the Appellant for transactions with related party and third-party customers and non-collection of interest from third-party customers.

3.8 CIT(A) erred in disregarding our submissions with respect to erroneous computation of notional interest by the TPO where the weighted average receivable days is considered instead of actual collection period furnished by the Appellant with respect to each invoice and also the actual collection dates beyond 31 March 2021 were considered for purpose of computing interest.

3.9 CIT(A) erred in considering LIBOR +350 bps as interest rate for the purpose of computing interest without any benchmarking or rationale or basis for the same.

3.10 CIT(A) ought to have appreciated the fact that Appellant company being debt free company (substantiated with relevant extract from financials) the question of receiving any interest on receivables did not arise. [PCIT Vs Inductis India Pvt Ltd (Delhi High Court)]

4.1 The NeFAC draft/ final assessment order passed u/s 143(3) is time barred as it is passed after the due date for completion of assessment for AY 21-22 which is 9 months from end of AY plus additional 12 months since reference was made to TPO. The due date of completion of

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assessment is 31.12.2023 and the final assessment order is passed post the due date on 15.01.2024. 4.2 There is no valid extension of limitation period under the relevant provisions of the Act for the said AY, and the assessment order is time barred.” 2. The assessee is a company engaged in manufacturing of tractors. The assessee filed a return of income for AY 2021-22 on 04.03.2022 declaring total income of Rs.9,59,54,92,643/-. The return was processed u/s. 143(1) of the Act determining income at Rs. 10,32,06,78,020/- in which the deduction claimed by the assessee u/s. 80JJAA of the Act is disallowed. The case was selected for scrutiny and the statutory notices were duly served on the assessee. Since the assessee had international transactions, the A.O made a reference to the Transfer Pricing Officer (TPO) to complete the Arm's Length Price (ALP) of the international transactions. The TPO made an adjustment of R.s 1,05,01,802/- towards interest on receivables. The A.O passed the draft assessment order incorporating the TP adjustment. Since the assessee preferred further appeal before the CIT(A), the A.O passed the final assessment order. Aggrieved, the assessee filed further appeal before the CIT(A), who gave partial relief to the assessee. The assessee is in appeal before the Tribunal against the order of the CIT(A).

Disallowance of deduction of u/s. 80JJAA of the Act: 3. The CIT(A) confirmed the disallowance made by CPC by holding that: “This ground pertains to the disallowance of deduction u/s 80JJAA. The appellant contended that the said sum was erroneously disallowed for non furnishing of Form 10DA. The appellant submitted that the amount of Rs. 14,06,904/- claimed u/s 80JJAA pertains to the 3rd years claim for which Form 10DA has been filed in AY 2019-20. A perusal of Form 10DA dated 26-11-2019 shows that in respect of AY 2019-20, a sum of Rs.3,23,97,209/- was determined to be the additional employee cost incurred by the appellant. Even as per Form 3DA for AY 2019-20, the additional number of employees during the first year or the amount of

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emoluments paid to additional employees entitled for deduction u/s 80JJAA have not been mentioned. There is also mismatch between the claim of allowable deduction for the concerned year and no such specific details have been submitted by the appellant. As per the provisions of Sec.80JJAA(1), the appellant is entitled to a deduction of 30% of additional employee cost incurred in the course of such business in the previous year for three assessment years including the assessment year relevant to the previous year in which the employment is provided. However, no form 3DA has been submitted for AY 2021-22. It is a mandatory requirement as per Sec.80JJAA(2) that the necessary certificate in Form 10DA shall be furnished before the specified date referred to in Sec.44AB. The appellant has not produced such certificate either before the AO or during the appeal proceedings. In the circumstances, I uphold the disallowance of deduction u/s 80JJAA. Hence, Ground No.5 is dismissed.

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third year of the deduction claimed under section 80JJAA in respect of the very same additional employee cost which had originated in the initial year and on the basis of which the deduction had been claimed in the preceding assessment years. This fact is substantiated by the fact that in the Form 10DA submitted by the assessee in year 1, the assessee has stated the amount to be claimed in year 2 & year 3 and that the Form 10DA now submitted as additional evidence reflects the same amount as in year 3. There is also no material on record to suggest that there has been any variation in the qualifying employee base or the computation of the additional employee cost from that accepted in the earlier years.

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the Assessing Officer for the limited purpose of verifying the particulars contained in Form No.10DA and satisfying himself that the deduction claimed pertains to the same eligible additional employee cost in respect of which the deduction had been allowed/claimed in the earlier two years and that no other statutory condition remains unfulfilled. Subject to such verification, the Assessing Officer is directed to allow the deduction under section 80JJAA in accordance with law. Needless to say that the assessee be given a reasonable opportunity of being heard.

Interest on receivables: 9. We have heard the parties, and perused the material available on record. There is no dispute that the outstanding receivables from the Associated Enterprise constitute a separate international transaction amenable to benchmarking under the transfer pricing provisions. However, the determination of the arm's length price of such transaction has to be based on the facts and circumstances of each case. From the perusal of the financial statements of the assessee we find that the assessee is a debt-free company having sufficient own funds and no interest-bearing borrowings [page 19 to 25 of paper book]. We further notice that the Revenue has not brought any material on record to establish that the delay in realization of receivables resulted in any financing cost or economic prejudice to the assessee. We also notice that, no comparable uncontrolled transaction has been placed on record to demonstrate that, in similar circumstances, an independent enterprise

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would have charged interest on the delayed realization of receivables. In these facts, where the assessee is a debt-free company, we are of the considered view that the adjustment towards notional interest on outstanding receivables is not sustainable. Therefore, we hold that the TPO is not correct in computing the notional interest on the receivables and we direct that the same be deleted.

Sd/- Sd/- (एबी टी. वक�) (पदमावती यस) (ABY. T. Varkey) (Padmavathy.S) लेखा लेखा सद�य लेखा लेखा सद�य सद�य /Accountant Member सद�य �याियक सद�य �याियक सद�य / Judicial Member �याियक �याियक सद�य सद�य चे�नई/Chennai, �दनांक/Dated: 02nd July, 2026. EDN, Sr. P.S आदेश क� �ितिल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकर आयु�/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय �ितिनिध/DR 5. गाड� फाईल/GF Digitally signed by EJTADA DURGA EJTADA DURGA NARESH NARESH Date: 2026.07.08 12:24:34 +05'30'