M/S. VESTAS TECHNOLOGY R&D CHENNAI PVT. LTD.,CHENNAI vs. ACIT, CHENNAI

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ITA 3081/CHNY/2016Status: DisposedITAT Chennai31 March 2022AY 2012-1311 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that notional interest costs are already taken care of under the TNMM method. Therefore, no separate upward adjustment on receivables for delayed payment is required. The addition made on this ground was directed to be deleted.

What were the facts?

The assessee's income was enhanced by the tax authorities by imputing interest on receivables from its Associated Enterprise (AE). The authorities treated overdue receivables as a separate international transaction and applied the CUP method to charge interest at 21%. The assessee argued that the intercompany agreement did not provide for interest on delayed receivables and that the TNMM method already accounted for such costs.

What were the issues?

Whether notional interest on delayed realization of receivables from AEs is a separate international transaction requiring separate benchmarking, and if it can be added when TNMM is applied as the most appropriate method.

Which sections of the Income-tax Act were involved?

Section 92B,Section 92CA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, CHENNAI

Before: SHRI C.M. GARG, JM & SHRI ARUN KHODPIA, AM

Hearing: 15/02/2022Pronounced: 31/03/2022

आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ� / The Appellant- 1.

��थ� / The Respondent- 2.

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