HARSCO INDIA PRIVATE LIMITED,HYDERABAD vs. DEPUTY COMMISSIONER OF INCOME TAX,CIRCLE-2(1), HYDERABAD

PDF · subscribers
ITA 480/HYD/2021Status: DisposedITAT Hyderabad06 April 2022AY 2017-185 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal followed its coordinate bench decisions and directed the AO/TPO to delete the adjustment on account of notional interest on outstanding receivables. Other grounds were remitted to the AO for examination or were considered consequential.

What were the facts?

The assessee, Harsco India Pvt. Ltd., engaged in metallurgical services, had international transactions with its AEs. The TPO proposed an adjustment for interest on trade receivables, which was added to the total income in the draft assessment order and later enhanced by the DRP.

What were the issues?

The primary issue was the charging of notional interest on outstanding trade receivables from associated enterprises. Other issues included discrepancies in income computation and TDS/TCS credit, and charging of interest.

Which sections of the Income-tax Act were involved?

Section 92CA,Section 143(3),Section 144C(13),Section 144B,Section 234B,Section 234C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCHES “A”: HYDERABAD

Before: SHRI SATBEER SINGH GODARA & SHRI LAXMI PRASAD SAHU

For Appellant: Shri Suvibha Nolkha
For Respondent: Shri Rajendra Kumar
Hearing: 05/04/2022Pronounced: 06/04/2022

Assessee by: Shri Suvibha Nolkha Revenue by: Shri Rajendra Kumar Date of hearing: 05/04/2022 Date of pronouncement: 06/04/2022 O R D E R PER L.P. SAHU, A.M.: This appeal of the assessee is directed against the order dated 21/09/2021 passed u/s 143(3) rws 144C(13) read with section 144B of the Income-tax Act, 1961 (in short ‘the Act’) for the AY 2017-18.

2.

Briefly the facts of the case are that the assessee M/s Harsco India Pvt. Ltd., incorporated in 2008 and is mainly engaged in providing full range of services to the metallurgical industries which involve metal recovery through various processes like slag processing, skull and :- 2 -: Harsco India Pvt. Ltd., Hyd.

tundish processing, drop balling, briquetting and micro palletization etc. The assessee e-filed the original return of income for AY 2017-18 on 30/11/2017 showing total income of Rs. 11,31,22,700/-. Later, it filed the revised return declaring total income of Rs. 11,08,83,260/-.

2.1 During the previous year relevant to AY 2017-18, the assessee company had entered into various international transactions with its AEs and, hence, a reference was made to the Transfer Pricing Officer TPO after obtaining prior approval of Pr. CIT for determining Arm’s Length Price u/s 92CA of IT Act. Vide his order dated 28/01/2021, the TPO proposed an adjustment of Rs. 12,54,421/- u/s 92CA of the Act, towards interest on trade receivables. In view of the above, an amount of Rs. 12,54,421/- being the quantum of adjustment made by the TPO, the same was added to the total income of the assessee in the draft assessment order passed on 07/04/2021 by FAO, National e-Assessment Centre, Delhi.

2.2 Against the addition made in the draft assessment order, the assessee raised objections before the Dispute Resolution Panel (DRP). As per the DRP-1, Bengaluru vide its order dated 19/08/2021, the TPO/AO revised the TP adjustment to Rs. 12,81,871/- in place of Rs. 12,54,421/-.

:- 3 -: Harsco India Pvt. Ltd., Hyd.

2.3 Accordingly, the addition of Rs. 12,54,421/- which was made in the draft assessment order was enhanced to Rs. 12,81,871/- pursuant upon the directions of the DRP, in the final assessment order.

3.

Aggrieved, the assessee is in appeal before the ITAT.

4.

In the grounds of appeal 1 to 6, the assessee has challenged notional interest on outstanding receivables from AE.

5.

Before us, the ld. AR of the assessee filed a paper book containing case law from pages 305 to 419 pages of the paper book, which are as under:

:- 4 -: Harsco India Pvt. Ltd., Hyd.

6.

On the other hand, the ld. DR relied on the orders of revenue authorities and submitted that the AO/TPO had rightly applied the SBI’s interest rate on outstanding receivables.

7.

We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. The issue is squarely covered by various decisions of the coordinate bench of this Tribunal, as quoted supra by the ld. AR. Following the same, we direct the AO/TPO to delete the impugned adjustment on account of interest on outstanding receivables.

8.

As regards ground Nos. 7 regarding considering the income of Rs. 12,39,28,948/- in the computation sheet as against Rs. 11,21,65,131/- as provided in the assessment order and ground no. 8 regarding short grant of TDS and TCS, we remit these two grounds to the file of the AO with a direction to take correct figure of income and grant correct grant of TDS and TCS on examination of the records. Thus, these two grounds are allowed for statistical purposes.

9.

As regards ground Nos. 9 to 11 regarding charging of interest u/s 234B and 234C, charging interest under these sections consequential in nature and, therefore, the AO is directed accordingly.

:- 5 -: Harsco India Pvt. Ltd., Hyd.

10.

Ground No. 10 is regarding initiating penalty proceedings. This ground is premature, in nature, hence, need no adjudication.

11.

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

Pronounced in the open court on 6th April, 2022

More judgments on Section 92CA

All 3,978 judgments and leading authorities on Section 92CA →

Latest GST High Court judgments

Search GST case law →