Case Law Details
Court: Mumbai Bench of the Income Tax Appellate Tribunal
Citation: Nimbus Communications Ltd Vs. ACIT [2010–TI1-21-ITAT-MUM-T9
Overview :- In a recent ruling in the case of Nimbus Communications Ltd v. ACIT [2010–TI1-21-ITAT-MUM-T9, the Mumbai Bench of the Income Tax Appellate Tribunal (“the Tribunal”), while deciding the case in favour of the assessee, ruled that for determination the of arms’ length price (“ALP”), any one of the methods as prescribed in section 92C(1) of the Income Tax Act, 1961 (“the Act”) must be followed. The Tribunal also ruled that levying interest on outstanding trade balances is different from interest charged on loans and cannot be compared.
Facts:- The assessee is engaged in the business of marketing airtime on television. During the course of transfer pricing (“TP”) assessment proceedings, the Transfer Pricing Officer (“TPO”) proposed an adjustment for an interest charge from associated enterprises (“AEs”) on long outstanding balances.
The Assessing Officer (“AO”) passed an order, incorporating the TP order, against which the assessee filed an appeal before the Commissioner of Income-Tax (Appeals) (“CIT(A)”). The CIT(A) only gave partial relief, aggrieved by which the assessee appealed before the Tribunal.
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