INTERNATIONAL AEROSPACE MANUFACTURING PRIVATE LIMITED,VARTHUR HOBLI, BANGALORE vs. DCIT, CIRCLE 3(1)(1), BANGALORE, KORAMANGALA, BANGALORE

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ITTPA 1227/BANG/2024Status: DisposedITAT Bangalore16 August 2024AY 2020-214 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the sole dispute concerned the adjustment of Rs.30,33,560 towards interest on delayed trade receivables from the AE. It also observed that the assessee was given two opportunities for compliance during the appellate proceedings before the CIT(Appeals), but there was no compliance. Considering the facts and in the interest of justice, the Tribunal decided to remit the issue to the CIT(Appeals) for fresh consideration and decision. The assessee was directed to update its contact details and file necessary documents to substantiate its case. The CIT(Appeals) was directed to provide a reasonable opportunity of being heard. The assessee was cautioned that further default would not entitle it to any leniency. The appeal was allowed for statistical purposes.

What were the facts?

The assessee, International Aerospace Manufacturing Private Limited, filed an appeal against the order dated 25.4.2024 of the CIT(Appeals), NFAC, Delhi, for Assessment Year 2020-21. The assessee declared a total income of Rs.13.43 crores and book profit of Rs.5.12 crores. During scrutiny, the Assessing Officer (AO) noted a large international transaction of Rs.212.80 crores and referred it to the Transfer Pricing Officer (TPO). The TPO proposed an adjustment of Rs.30,33,562 under Section 92CA towards interest on delayed receivables. The AO passed a draft assessment order, which the assessee did not contest. Subsequently, the AO passed the final assessment order on 23.11.2023, making an adjustment of Rs.30,33,560. The assessee appealed to the CIT(Appeals), but failed to comply with two notices issued by the CIT(Appeals). Consequently, the CIT(Appeals) confirmed the assessment order and dismissed the appeal.

What were the issues?

1. Whether the adjustment made by the AO/TPO towards interest on delayed trade receivables from the Associated Enterprise (AE) is correct, considering the payment period is to be counted from the date of receipt of goods as per the agreement, not from the date of invoice? (Question of law and fact, concerning Section 92CA). Assessee's contention: The AO/TPO wrongly calculated interest on delayed trade receivables. The agreement with the AE stipulated that the payment period should be counted from the date of receipt of goods, whereas the AO/TPO calculated it from the date of invoice. The assessee also submitted that notices from the CIT(A) might have gone into the spam folder and requested an opportunity to respond and substantiate its case. Revenue's contention: The AO/TPO correctly made the adjustment. The due date of payment should be counted from the date of invoice, not from the date of receipt of goods. The CIT(A) provided opportunities, but the assessee did not pursue the matter. The order of the CIT(Appeals) should be upheld.

Which sections of the Income-tax Act were involved?

Section 92CA,Section 143(3),Section 144B,Section 144C(1),Section 144C(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH : BANGALORE

Before: SMT. BEENA PILLAI & SHRI LAXMI PRASAD SAHU

For Appellant: Shri Darshan Bhat, CA
For Respondent: Shri Shahnawaz Ul Rahman
Hearing: 05.08.2024Pronounced: 16.08.2024

Per Laxmi Prasad Sahu, Accountant Member This appeal is filed by the assessee against the order dated 25.4.2024 of the CIT(Appeals), National Faceless Appeal Centre, Delhi [NFAC], for the AY 2020-21.

2.

Briefly stated the facts of the case are that the assessee company filed return on 13.3.2021 declaring total income of Rs.13.43 crores and book profit under MAT of Rs.5.12 crores. The case was selected for

IT(TP)A No.1227/Bang/2024 Page 2 of 4

scrutiny and statutory notices issued to the assessee. The AO issued various notices and assessee submitted partial documents which were examined. The financial statements were examined and as per Form 3CEB it was noticed that the assessee had made large value of international transaction of Rs.212.80 cores. Accordingly it was referred to TPO for determining the ALP as per section 92CA and the ld. TPO passed order on 30.11.2022proposing the adjustment of Rs.30,33,562 u/s. 92CA towards interest on delayed receivables. After receipt of the TPO order, the AO passed draft assessment order u/s 144C(1) r.w.s 143(3) on 21.09.2023. The assessee filed a letter stating that it is not contesting to the Draft Assessment order, accordingly the AO passed order u/s. 143(3) r.w.s. 144C(3) r.w.s. 144B of the Act on 23.11.2023 making adjustment of Rs.30,33,560 towards interest on delayed trade receivables with its AE against which the assessee filed appeal before the CIT(Appeals).

3.

During the appellate proceedings, the ld. CIT(Appeals) issued two notices on 09.04.2024 and 16.04.2024, but there was no compliance from the assessee’s side. Accordingly the ld. CIT(Appeals) confirmed the assessment order and the appeal was dismissed. Aggrieved, the assessee is in appeal before the ITAT.

4.

The ld. AR reiterated the submissions made before the lower authorities and submitted that the notices issued by the CIT(A) might have gone into the spam folder. He submitted that the AO/TPO has wrongly made adjustment towards interest on delayed trade

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receivables, whereas as per the agreement with AE the payment period shall be counted from the date of receipt of goods, however the AO/TPO has calculated interest on delayed trade receivables from the date of issue of invoices. Accordingly he requested that that if a chance is given to the assessee, he undertook to respond to the notices and substantiate its case with evidence before the lower authorities.

5.

The ld. DR relied on the order of lower authorities and submitted that AO/TPO has correctly made adjustment towards interest on delayed trade receivables and the due date of payment should be counted from the date of issue of invoice, but not from the date of receipt of goods. He further submitted that the ld. CIT(A) provided opportunities to the assessee, but the assessee was not bothered after filing the appeal and did not pursue the notices. Therefore he requested that the order of the CIT(Appeals) should be upheld.

6.

Considering the rival submissions we note that there is only dispute regarding adjustment made by the AO/TPO towards interest on delayed trade receivables from AE of Rs.30,33,560 and during the appellate proceedings we note that the assessee was given two opportunities only for compliance as noted above. Considering the facts of the case and in the interest of justice, we remit the issue to the CIT(Appeals) for fresh consideration and decision as per law. The assessee is directed to update its email id, communication address and other details and file necessary documents that would be essential and required for substantiating his case and for proper adjudication by the

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revenue authorities. Needless to say that reasonable opportunity of being heard be given to the assessee. The assessee is directed to cooperate with the proceedings and in case of further default, the assessee shall not be entitled to any leniency.

7.

In the result, the appeal by the assessee is allowed for statistical purposes.

Pronounced in the open court on this 16th day of August, 2024.

Sd/- Sd/- ( BEENA PILLAI ) (LAXMI PRASAD SAHU ) JUDICIAL MEMBER ACCOUNTANT MEMBER

Bangalore, Dated, the 16th August, 2024.

/Desai S Murthy /

Copy to:

1.

Appellant 2. Respondent 3. Pr.CIT 4. CIT(A) 5. DR, ITAT, Bangalore.

By order

Assistant Registrar ITAT, Bangalore.

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