Case Law Details
Blue Coat Network (India) Private Limited Vs DCIT (ITAT Bangalore)
The issue under consideration is whether TPO is correct in making an upward adjustment to the transfer price of the Appellant’s international transactions on account of imputation of notional interest on outstanding receivables?
ITAT states that this issue was considered by this Tribunal in the various cases which held that outstanding sum of invoices is akin to loan advanced by- assessee to foreign AE., hence it is an international transaction as .per explanation to section 92B of the Act. Alternatively, it has been argued that working capital adjustment subsumes sundry creditors. In such situation computing interest on outstanding receivables and loans an advances to international transaction would amount to double taxation. There may be a delay in collection of monies for supplies made, even beyond the agreed limit, due to a variety of factors which would have to be investigated on a case to case basis. Importantly, the impact this would have on the working capital of the assessee would have to be studied. It went on to hold that, there has to be a proper inquiry by the TPO by analysing the statistics over a period of time to discern a pattern which would indicate that vis-a-vis the receivables for the supplies made to an AE, the arrangement reflected an international transaction intended to benefit the AE in some way. There are several factors which need to be considered before holding that every receivable is an international transaction and it requires an. assessment on the working capital of the assessee. In view of the above, ITAT deem it appropriate to set aside the impugned order on this issue and remit the matter to the file of the Assessing Officer/TPO for deciding it in, conformity with the above referred judgment. Needless to say, the assessee will be allowed a reasonable opportunity of being heard in such fresh proceedings. Accordingly, this ground raised by assessee stands allowed for statistical purpose.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal by assessee is directed against order of the Deputy Commissioner of Income-tax Circle-1(1)(2) passed u/s 143(3) r.w.s. 144C(13) of the Income-tax Act,1961 [‘the Act’ for short] dated 30.10.2018. The assessee has raised following grounds of appeal:-
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