Patni Computer Systems Ltd Vs. DCIT (ITAT Pune) – A continuing debit balance per se, in the account of the associated enterprises, does not amount to an international transaction u/s 92B in respect of which ALP adjustments can be made. U/s 92B(1), the apportionment of cost is permissible only where there exists a “mutual agreement or arrangement” between two or more Associated Enterprises for apportionment of cost incurred in connection with a benefit, service or facility provided to any one or more of such Enterprises. The bare allegation that the AE’s had received “specific and identifiable benefits” is not sufficient to justify apportionment.
Extension of credit to associated enterprises beyond the stipulated credit period cannot be construed as an “international transaction” for the purposes of s 92B(1), requiring an adjustment for ascertaining the ALP.
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH “B”, PUNE
ITA No. 426 & 1131/PN/06
(Asst. Year: 2002-03 & 2003-04)
Patni Computer Systems Ltd. Vs. Dy. Commissioner of I.T.
AND
ITA No. 687 & 42/PN/07
(Asst. Year: 2002-03 & 2003-04)
Jt. Commissioner of I.T (OSP), Vs. Patni Computer Systems P Ltd.
ORDER
PER G.S. PANNU, AM
The captioned four cross-appeals, two by the assessee and two by the Revenue pertaining to same assessee, were heard together and are being disposed off by a consolidated order for the sake of convenience and brevity.
2. In ITA No 426/PN/06 pertaining to the assessment year 2002-03, the assessee has raised the following Grounds of appeal:
“On the facts and in the circumstances of the case and in law:
1. The ld CIT(A) erred in confirming the dis allowance and adding back of following losses of 10A units while computing income as per normal computation:
