PCIT Vs Boeing India Pvt. Ltd. (Delhi High Court)
The Delhi High Court dismissed the Revenue’s appeal against the order of the Income Tax Appellate Tribunal (ITAT) dated 17 August 2020 for Assessment Year 2015-16.
The Revenue proposed three substantial questions of law. The first concerned the validity of the assessment proceedings where the draft assessment order under Section 144C(1) of the Income-tax Act, 1961 was issued in the name of a non-existent company, while the initial notice under Section 143(2) and the final assessment order were issued in the name of the correct entity. The second challenged the ITAT’s deletion of a transfer pricing adjustment of ₹22,16,059 on account of receivables. The third questioned the deletion of a disallowance of ₹56,58,19,799 under Section 40(a)(ia) read with Section 195 relating to payments made in connection with seconded employees.
Regarding the adjustment on receivables, the High Court noted the ITAT’s findings that the assessee was a debt-free company, had not paid interest to creditors or suppliers, had not earned interest from unrelated parties, and operated as a 100% captive service provider deriving all its revenue from associated enterprises. The ITAT had therefore concluded that no interest adjustment on receivables was warranted and directed deletion of the transfer pricing adjustment.
