Case Law Details
Strides Pharma Science Limited Vs DCIT (ITAT Mumbai)
ITAT Mumbai held that as there is complete uniformity in not charging interest from AEs and Non-AEs for delay in realization of export proceeds, addition of notional interest in respect of transactions with AEs in the course of transfer pricing proceedings unwarranted.
Facts- Assessee has contended the action of charging interest on delayed realization of export proceeds from Associated Enterprises. It is mainly contended by the assessee that they are not charging interest on delayed realization either from the Associated Enterprises (AEs) or Non-AEs. In case of some of the AEs, average realization period is 311 days, on which no interest was charged. Similarly, in case of some of the Non-AEs there has been delay of over 300 days on which no interest has been charged.
Further, assessee also contended disallowance u/s. 14A of the Income Tax Act. Assessee submitted that they have not received any exempt income, nevertheless the assessee has made suo- motu disallowance of Rs.24,25,840/-. However, rejecting the submissions, AO made further disallowance of Rs.4,08,27,039/- u/s. 14A of the Act r.w. Rule 8D.
Conclusion- Hon’ble Jurisdictional High Court in the case of Indo American Jewellery has held that where there is complete uniformity in not charging interest from AEs and Non-AEs for delay in realization of export proceeds, the Assessing Officer was not justified in making addition of notional interest in respect of transactions with AEs in the course of transfer pricing proceedings.
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