Logix Micro Systems Ltd. v. ACIT

42 SOT 525Income Tax Appellate Tribunal#6676 most cited

What is Logix Micro Systems Ltd. v. ACIT authority for?

Interest on outstanding receivables should not be levied on an arbitrary basis, and a reasonable interest-free period should be allowed before calculating interest.

17

judgments rely on this decision, according to BharatTax’s citation analysis of 366,315 Indian tax judgments — from 2018 to 2024.

Also referred to as

Logix Micro Systems Ltd v ACIT · 42 SOT 525 · interest on outstanding receivables · interest free period · transfer pricing adjustment · associated enterprises · international transaction

Sections most often in play

Section 1962Section 234B (Income Tax Act)Section 270A (Income Tax Act)Section 92B (Income Tax Act)Section 92CA(3) (Income Tax Act)

Issues it is cited on

interest on outstanding receivablesworking capital adjustmentsection 92bcomparable companiesassociated enterprisestransfer pricing adjustmentsection 92casection 92cassociated enterprisesection 92international transactionfinal assessment order

Judgments citing Logix Micro Systems Ltd. v. ACIT

Mckinsey Knowledge Centre India Pvt. Ltd., Haryana vs. DCIT Circle 16(1), Delhi

In the result, assessee’s appeal is partly allowed for statistical purposes

ITA 475/DEL/2022[2017-18]Status: DisposedITAT Delhi04 Jun 2024AY 2017-18

Bench: Shri Shamim Yahya & Shri Sudhir Kumarmckinsey Knowledge Centre India Pvt. Ltd., Vs. Dcit, Circle 16 (1), 3Rd Floor, Block Iii, Delhi. Vatika Business Park, Sector 49, Sohna Road, Gurgaon – 122 018 (Haryana). (Pan : Aaccm2356G) (Appellant) (Respondent) Assessee By : Shri Porus Kaka, Sr. Advocate Shri Divesh Chawla, Advocate Revenue By : Shri Rajesh Kumar, Cit Dr Date Of Hearing : 24.04.2024 Date Of Order : 04.06.2024 Order Per Shamim Yahya: This Appeal By The Assessee Is Directed Against The Order Of The Assessing Officer Dated 21.01.2022 Pursuant To The Directions Issued By The Drp For The Assessment Year 2017-18. 2. Grounds Of Appeal Taken By The Assessee Read As Under :-

For Appellant: Shri Porus Kaka, Sr. AdvocateFor Respondent: Shri Rajesh Kumar, CIT DR

…IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘I’ : NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER and SHRI SUDHIR KUMAR, JUDICIAL MEMBER McKinsey Knowledge Centre India Pvt. Ltd., vs. DCIT, Circle 16 (1), 3rd Floor, Block III, Delhi. Vatika Business Park, Sector 49, Sohna Road, Gurgaon – 122 018 (Haryana). (PAN : AACCM2356G) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Porus Kaka, Sr. Advocate Shri Divesh Chawla, Advocate REVENUE BY : Shri Rajesh Kumar, CIT DR Date of Hearing : 24.04.2024 Date of Order : 04.06.2024 ORDER PER SHAMIM YAHYA, ACCOUNTANT MEMBER : This appeal by the assessee is directed again…

Epam Systems India Private Limited (Previously Known As M/S Alliances Global Service It India Private Limited ), Hyderabad vs. DCIT., Circle-1(1), Hyderabad

In the result, appeal of the assessee is partly allowed

ITA 148/HYD/2015[2010-11]Status: DisposedITAT Hyderabad07 Sept 2022AY 2010-11

Bench: Shri Rama Kanta Panda & Shri K.Narasimha Chary

For Appellant: Shri UtpalsenFor Respondent: 29/07/2022
Section 143(3)Section 144CSection 92Section 92B

…we hold that Persistent Systems Ltd., is not a good comparable hence the same is directed to be excluded from the list of list of comparables. 20. Now coming to interest on receivables, Learned TPO placed reliance on the decision in Logix Micro Systems Ltd., 42 SOT 525, wherein it was held that a reasonable period should be provided as interest free period and no interest should be calculated for that period. Learned TPO charged interest at 12% p.a. 21. It was argued before the learned DRP that the receivables are result of international transaction and is not a separate transaction by themselves, apart from th…

Global E Business Operations Private Limited, Bangalore vs. DCIT, Bangalore

In the result, the revenue’s appeal is partly allowed for statistical purposes

ITA 418/BANG/2016[2011-12]Status: DisposedITAT Bangalore31 Jan 2022AY 2011-12

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri Sharath Rao, CAFor Respondent: Shri Sumer Singh Meena, CIT(DR)(ITAT), Bengaluru
Section 10ASection 143(3)

…. 1.7 Further, the Honorable DRP has erred in law and on facts, in arriving at the interest rate to be levied on overdue receivables to be 5 percent by relying on the decision of the Honorable Bangalore ITAT in the case of Logix Micro System Limited Vs ACIT (42 SOT 525) wherein the rate of interest has been decided on an arbitrary basis. 2. The learned AO and the DRP have erred in holding for exclusion of telecommunication charges amounting to Rs 43,689,951 from the 'export turnover' for the purpose of computing the relief under Section 10A of the Act. The Appellant craves leave to add, alter, vary, omit, substi…

Asst.C.I.T., Bangalore vs. M/S Global E- Business Operations Pvt. Ltd., Bangalore

In the result, the revenue’s appeal is partly allowed for statistical purposes

ITA 250/BANG/2016[2011-12]Status: DisposedITAT Bangalore31 Jan 2022AY 2011-12

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri Sharath Rao, CAFor Respondent: Shri Sumer Singh Meena, CIT(DR)(ITAT), Bengaluru
Section 10ASection 143(3)

…. 1.7 Further, the Honorable DRP has erred in law and on facts, in arriving at the interest rate to be levied on overdue receivables to be 5 percent by relying on the decision of the Honorable Bangalore ITAT in the case of Logix Micro System Limited Vs ACIT (42 SOT 525) wherein the rate of interest has been decided on an arbitrary basis. 2. The learned AO and the DRP have erred in holding for exclusion of telecommunication charges amounting to Rs 43,689,951 from the 'export turnover' for the purpose of computing the relief under Section 10A of the Act. The Appellant craves leave to add, alter, vary, omit, substi…

Commvault Systems (India) Private Limited, Hyderabad vs. Dy. Commissioner of Income Tax, Circle-1(2), Hyderabad

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

ITA 2280/HYD/2017[2013-14]Status: DisposedITAT Hyderabad26 Nov 2020AY 2013-14

Bench: Shri C.N.Prasad, Jm & Shri M.Balaganesh, Am M/S.Commvault Systems Vs. Deputy Commissioner Of (India) Pvt. Ltd., Income Tax, 5Th Floor, Plot No.39, Circle-1(2), B-Block, 7Th Floor, I.T. Towers Phase-Ii, Block-A Ananth Info Park A.C.Guards, Masab Tank Hitech City, Madhapur, Hyderabad – 500 004 Hyderabad Pan/Gir No.Aaccc3708L (Appellant) .. (Respondent)

Section 143(3)Section 144C(5)

…ing of funds with its AE by way of outstanding receivables, is concerned, the ld. DRP placed reliance on the Co-ordinate Bench decision of Bangalore Tribunal in the case of Logix Micro Systems Ltd., in ITA No.423 and 524/Bang/2009 dated 07/10/2010 reported in 42 SOT 525 and held that the potential loss arising to the assessee by way of parking of funds with the AE is definitely a factor to be considered while evaluating financial impact of the international transactions concluded by the assessee with its AE. Accordingly, the ld. DRP rejected the plea that the issue on deferred receivables cannot be looked into on…

Mckinsey Knowledge Centre India Pvt. Ltd., Gurgaon vs. DCIT, New Delhi

ITA 5817/DEL/2016[2010-11]Status: DisposedITAT Delhi21 Oct 2019AY 2010-11

Bench: Shri R.K. Panda & Shri Kuldip Singh

For Appellant: Shri Divesh Chowla, AdvocateFor Respondent: Shri Subha Kant Sahu, Senior DR
Section 143(3)Section 250Section 92C

…nsel, the outstanding receivables on account of services cannot be equated with capital financing as provided for in the Explanation by the amendment by Finance Act, 2012 retrospectively. Even otherwise, as rightly held by the Logix Micro Systems Ltd v. ACIT [42 SOT 525] (supra), TPO should have allowed some interest free period for receiving the outstanding service charges. While acknowledging the order of the ITAT, TPO did not even bother to exclude the reasonable period and levied interest not only from the date of invoice to the date of realization during the year but also for the period beyond 31-03-2010 in…

Mckinsey Knowledge Centre India Pvt. Ltd., Gurgaon vs. DCIT, Circle- 16(2), New Delhi

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

ITA 7349/DEL/2018[2014-15]Status: DisposedITAT Delhi16 Sept 2019AY 2014-15

Bench: Shri Amit Shukla & Shri O.P. Kantassessment Year: 2014-15 M/S. Mckinsey Knowledge Vs. Dcit, Centre India Pvt. Ltd., Circle-16(2), New Delhi 3Rd Floor, Block Iii, Vatika Business Park, Sector-49, Sohna Road, Gurgaon Pan :Aaccm2356G (Appellant) (Respondent) Appellant By Shri Porus Kaka, Adv. Shri Divesh Chawla, Adv. Respondent By Shri Sanjay I. Bara, Cit(Dr)

Section 92C(2)

…nsel, the outstanding receivables on account of services cannot be equated with capital financing as provided for in the Explanation by the amendment by Finance Act, 2012 retrospectively. Even otherwise, as rightly held by the Logix Micro Systems Ltd v. ACIT [42 SOT 525] (supra), TPO should have allowed some interest free period for receiving the outstanding service charges. While acknowledging the order of the ITAT, TPO did not even bother to exclude the reasonable period and levied interest not only from the date of invoice to the date of realization during the year but also for the period beyond 31-03- 2010 in…

Assistant Commissioner of Income, Circle-1(1), Guntur vs. M/S Ccl Products(India) Limited, Guntur

In the result, appeal of the revenue is dismissed

ITA 348/VIZ/2018[2014-15]Status: DisposedITAT Visakhapatnam03 Apr 2019AY 2014-15

Bench: Shri V. Durga Rao& Shri D.S. Sunder Singhआयकर अपील सं./I.T.A.No.348/Viz/2018 (ननधधारण वर्ा/ Assessment Year:2014-15) Dcit, Circle-1(1) Vs. M/S Ccl Products (India) Guntur Pvt. Ltd. Duggirala Post & Mandal Guntur [Pan : Aaacc9552G] (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) अपीलधथी की ओर से/ Appellant By : Shri D.K.Sonowal, Dr प्रत्यधथी की ओर से/ Respondent By : Shri Ramesh Babu, Ar सुनवधई की तधरीख / Date Of Hearing : 20.03.2019 घोर्णध की तधरीख/Date Of Pronouncement : 03 .04.2019

For Appellant: Shri D.K.Sonowal, DRFor Respondent: Shri Ramesh Babu, AR
Section 92BSection 92C

…4.2002, receivables are treated as international transaction. Since the taxpayer failed to submit the details, the TPO proposed to charge interest @6% on delayed payments beyond 60 days credit period. The AO relied on the case of M/s Logix Micro Systems Ltd., 42 SOT 525 and M/s Chiel India Pvt. Ltd. [TS-145-ITAT-2014(DEL)-TP] and considered the SBI term deposit rates as appropriate to charge interest on receivables. Accordingly determined the 3 I.T.A. No.348/Viz/2018 M/s CCL Products (India) Ltd., Guntur arm’s length price on receivables at Rs.66,41,816/- u/s 92CA of the Act. The AO made the addition of Rs.66,41…

Nuance Transcription Services India Private Limited, Bangalore vs. DCIT, Bangalore

In the result, the appeal filed by the assessee stands partly allowed

ITA 307/BANG/2016[2011-12]Status: DisposedITAT Bangalore07 Nov 2018AY 2011-12

Bench: Shri Sunil Kumar Yadav & Shri Arun Kumar Garodia

For Appellant: Shri Vishal Kalra, AdvocateFor Respondent: Shri G. Guruswamy, CIT-DRP

…R of the assessee but the invoices raised in whole of the present year along with the opening balance as on 01.04.2010 should be considered for this purpose. He also placed reliance on a Tribunal order rendered in the case of Logix Micro Systems Ltd Vs. ACIT (42 SOT 525). 3. We have considered the rival submissions. First of all, we examine the applicability of Tribunal order rendered in the case of Bechtel India Pvt. Ltd. vs. DCIT (supra) on which reliance has been placed by ld. AR of assessee. In this case, the Tribunal order is on this basis that it is not justifiable to presume that borrowed funds have been u…

M/S. Mahati Software Pvt. Ltd., Visakhapatnam vs. The ACIT, Visakhapatnam

In the result, appeals of the assessee are partly allowed

ITA 68/VIZ/2017[2012-2013]Status: DisposedITAT Visakhapatnam07 Sept 2018AY 2012-2013

Bench: Shri V. Durga Rao& Shri D.S. Sunder Singhआयकर अपील सं./I.T.A.No.67/Viz/2016 & 68/Viz/2017 (निर्धारण वर्ा/Assessment Year:2011-12 & 2012-13) M/S Mahati Software Pvt. Ltd. Vs. Asst. Commissioner Of D.No.10-27-14A Income Tax Sivam, Kailashmetta Circle-3(1) Waltair Visakhapatnam Visakhapatnam [Pan : Aadcm9620J] (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent)

For Appellant: Shri G.V.N.Hari, ARFor Respondent: Shri Deba Kumar Sonowal, DR
Section 10ASection 143(3)Section 144Section 144C(1)Section 194JSection 40

…cifically including the deferred payments or receivables as international transactions, the objection raised by the assessee is not acceptable. The Ld.DRP has taken the support from the ITAT, Bengaluru decision in the case of Logix Micro System Ltd. Vs. ACIT (42 SOT 525) and observed that the assessee had incurred the financial charges of Rs.5,92,23,347/- during the financial year which includes the interest on working capital loans amounting to Rs.2,74,34,290/-. Had the assessee did not divert these funds there would have been reduction in the interest payments to the extent of the interest on receivables. Hence…

Mahati Software Pvt Ltd., Visakhapatnam vs. The ACIT, Visakhapatnam

In the result, appeals of the assessee are partly allowed

ITA 67/VIZ/2016[20011-12]Status: DisposedITAT Visakhapatnam07 Sept 2018

Bench: Shri V. Durga Rao& Shri D.S. Sunder Singhआयकर अपील सं./I.T.A.No.67/Viz/2016 & 68/Viz/2017 (निर्धारण वर्ा/Assessment Year:2011-12 & 2012-13) M/S Mahati Software Pvt. Ltd. Vs. Asst. Commissioner Of D.No.10-27-14A Income Tax Sivam, Kailashmetta Circle-3(1) Waltair Visakhapatnam Visakhapatnam [Pan : Aadcm9620J] (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent)

For Appellant: Shri G.V.N.Hari, ARFor Respondent: Shri Deba Kumar Sonowal, DR
Section 10ASection 143(3)Section 144Section 144C(1)Section 194JSection 40

…cifically including the deferred payments or receivables as international transactions, the objection raised by the assessee is not acceptable. The Ld.DRP has taken the support from the ITAT, Bengaluru decision in the case of Logix Micro System Ltd. Vs. ACIT (42 SOT 525) and observed that the assessee had incurred the financial charges of Rs.5,92,23,347/- during the financial year which includes the interest on working capital loans amounting to Rs.2,74,34,290/-. Had the assessee did not divert these funds there would have been reduction in the interest payments to the extent of the interest on receivables. Hence…

Netenrich Technologies Private Limited, Hyderabad vs. Asst. Commissioner of Income Tax, Central Circle-16(1), Hyderabad

In the result, assessee’s appeal is partly allowed

ITA 2205/HYD/2017[2013-14]Status: DisposedITAT Hyderabad27 Jul 2018AY 2013-14

Bench: Smt. P. Madhavi Devi & Shri S.Rifaur Rahmanm/S. Netenrich Vs Asstt. Commissioner Of Technologies Private Ltd Income Tax, Circle 16(1) Hyderabad Hyderabad Pan: Aabcn8899A (Appellant) (Respondent)

For Appellant: Shri Sampath RaghunathanFor Respondent: Shri J. Siri Kumar, DR
Section 115JSection 143(3)Section 144CSection 92C

…ITA No 2205 of 2017. IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad Before Smt. P. Madhavi Devi, Judicial Member AND Shri S.Rifaur Rahman, Accountant Member M/s. Netenrich Vs Asstt. Commissioner of Technologies Private Ltd Income Tax, Circle 16(1) Hyderabad Hyderabad PAN: AABCN8899A (Appellant) (Respondent) For Assessee : Shri Sampath Raghunathan For Revenue : Shri J. Siri Kumar, DR Date of Hearing: 02.07.2018 Date of Pronouncement: 27.07.2018 O R D E R Per Smt. P. Madhavi Devi, J.M. This is assessee’s appeal for the A.Y 2013-14 against the assessment order passed by ACIT, Circle 16…

Hexagon Capability Center India Private Limited, Hyderabad vs. ACIT, Circle-2(2), Hyderabad

In the result Assessee appeals are allowed and Revenue appeal is dismissed

ITA 84/HYD/2017[2012-13]Status: DisposedITAT Hyderabad08 Jun 2018AY 2012-13

Bench: Smt. P. Madhavi Devi & Shri B. Ramakotaiah

For Appellant: Sri Saubhagya AgarwalFor Respondent: Shri J. Siri Kumar
Section 143(3)Section 92B

…nsel, the outstanding receivables on account of services cannot be equated with capital financing as provided for in the Explanation by the amendment by Finance Act, 2012 retrospectively. Even otherwise, as rightly held by the Logix Micro Systems Ltd v. ACIT [42 SOT 525] (supra), TPO should have allowed some interest free period for receiving the outstanding service charges. While acknowledging the order of the ITAT, TPO did not even bother to exclude the reasonable period and levied interest not only from the date of invoice to the date of realization during the year but also for the period beyond 31- 03-2010 in…

ACIT, Cirlce-2(2), Hyd, Hyderabad vs. Hexagon Capability Center India P.Ltd., (Formerly Known As Intergraph Consulting Pvt.Ltd) Hyd, Hyderabad

In the result Assessee appeals are allowed and Revenue appeal is dismissed

ITA 258/HYD/2016[2011-12]Status: DisposedITAT Hyderabad08 Jun 2018AY 2011-12

Bench: Smt. P. Madhavi Devi & Shri B. Ramakotaiah

For Appellant: Sri Saubhagya AgarwalFor Respondent: Shri J. Siri Kumar
Section 143(3)Section 92B

…nsel, the outstanding receivables on account of services cannot be equated with capital financing as provided for in the Explanation by the amendment by Finance Act, 2012 retrospectively. Even otherwise, as rightly held by the Logix Micro Systems Ltd v. ACIT [42 SOT 525] (supra), TPO should have allowed some interest free period for receiving the outstanding service charges. While acknowledging the order of the ITAT, TPO did not even bother to exclude the reasonable period and levied interest not only from the date of invoice to the date of realization during the year but also for the period beyond 31- 03-2010 in…

Hexagon Capability Center India P.Ltd., Hyd, Hyderabad vs. ACIT, Cirlce-2(2), Hyd, Hyderabad

In the result Assessee appeals are allowed and Revenue appeal is dismissed

ITA 251/HYD/2016[2011-12]Status: DisposedITAT Hyderabad08 Jun 2018AY 2011-12

Bench: Smt. P. Madhavi Devi & Shri B. Ramakotaiah

For Appellant: Sri Saubhagya AgarwalFor Respondent: Shri J. Siri Kumar
Section 143(3)Section 92B

…nsel, the outstanding receivables on account of services cannot be equated with capital financing as provided for in the Explanation by the amendment by Finance Act, 2012 retrospectively. Even otherwise, as rightly held by the Logix Micro Systems Ltd v. ACIT [42 SOT 525] (supra), TPO should have allowed some interest free period for receiving the outstanding service charges. While acknowledging the order of the ITAT, TPO did not even bother to exclude the reasonable period and levied interest not only from the date of invoice to the date of realization during the year but also for the period beyond 31- 03-2010 in…

United States Pharmacopeia India Private Limited, Hyderabad vs. Deputy Commissioner of Income Tax, Circle-17(2), Hyderabad

In the result, appeal of the assessee is allowed

ITA 1927/HYD/2017[2013-14]Status: DisposedITAT Hyderabad11 May 2018AY 2013-14

Bench: Smt P. Madhavi Devi & Shri S. Rifaur Rahmanassessment Year: 2013-14 United States Pharmacopeia Vs. Dy. Commissioner Of Income- India Pvt. Ltd., Hyderabad Tax, Circle – 17(2), Hyderabad. Pan – Aaacu7542C

For Appellant: Shri R. VijayaraghavanFor Respondent: Shri J. Sirikumar
Section 143(1)Section 143(2)Section 92B

…ational transactions, then, its ALP has to be determined. In such situation, any independent party would like to receive its funds within the credit period allowed and, if not, would normally charge interest. He relied on the case of Logix Micro Systems Ltd., 42 SOT 525, in which, Tribunal held that a reasonable period should be provided as ‘interest-free’ period and no interest should be calculated for such period. Accordingly, TPO has calculated ALP adjustment as per the below table after 30 days grace period and charged interest @ 14.45%.: Invoice Date of raising Amount Received date Delay in Delay after Inte…

Cordys Software India Pvt.Ltd., (Now Merged With Open Text Corpn. India P. Ltd), Hyderabad vs. DCIT, Cir-1(2), Hyd, Hyderabad

In the result, the appeal filed by the assessee is partly

ITA 232/HYD/2016[2011-12]Status: DisposedITAT Hyderabad28 Mar 2018AY 2011-12

Bench: Smt P. Madhavi Devi & Shri B. Ramakotaiahassessment Year: 2011-12 Open Text Corporation Vs. Dy. Cit, Circle-1(2), India Pvt Ltd., (Cordys Hyderabad. Software India Pvt Ltd Is Now Merged With Open Tex Corporation India Pvt Ltd.,) Hyderabad. Pan- Aaacb8264E

For Appellant: Shri Ravi BharadwajFor Respondent: Shri R. Laxman
Section 143(3)Section 234BSection 92BSection 92C

…eceive its funds within the credit period allowed and if not, would normally charge interest. After coming to this conclusion, the TPO relied upon the decision of the Tribunal at Bengaluru in the case of Logix Micro Systems Ltd., in ITA No. 524/Bang/2009 (42 SOT 525), for charging interest @ 12% p.a and proposed an adjustment under Sec. 92CA of the Act. 6. The A.O, consequently proposed the draft assessment order, against which, the assessee preferred its objections before the DRP. The DRP, vide its orders dated 02.11.2015, confirmed the order of the A.O, but restricted the interest to 5% as against 12%…

Logix Micro Systems Ltd. v. ACIT (42 SOT 525) — Cited in 17 Judgments | BharatTax