Income Tax Appellate Tribunal - Chennai
Plintron Global Technology Solutions ... vs Dcit, Chennai on 22 March, 2018
आयकर अपील
य अ धकरण, 'डी' यायपीठ, चे नई
IN THE INCOME TAX APPELLATE TRIBUNAL , 'D' BENCH, CHENNAI
ी एन.आर
एन आर.एस
आर एस. न याियक सद य एवं ए. मोहन अलंकामणी, लेखा सद य के सम!
एस गणेशन, याियक
BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND
SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER
आयकर अपील सं./I.T. A. No.532/Chny/2017
( नधा रण वष / Assessment Year: 2012-13)
M/s. Plintron Global Technology V The Deputy Commissioner of
Solutions, s Income Tax,
Private Block No.6, GKS Tech Corporate Circle 5(2),
Park, Level 3, DLF IT SEZ, 1/124, Chennai -34.
Sivaji Gardens, Ramapuram,
Chennai - 600 089.
PAN: AABCL4077E
(अपीलाथ /Appellant) ( यथ /Respondent)
अपीलाथ क ओर से /Appellant by : Shri R. Vishwanathan,FCA
यथ की ओर से /Respondent by : Ms. S. Vijayaprabha, JCIT
सन
ु वाई क तार ख/D at e of he ar i ng : 24.01.2018
घोषणा क तार ख /D at e of Pr on o unc em en t : 22.03.2018
आदे श / O R D E R
Per A. Mohan Alankamony, AM:-
This appeal by the assessee is directed against the order passed by the learned members of the Dispute Resolution Panel
- 2, Bengaluru, dated 21.12.2016 for the assessment year 2012- 13 passed U/s.144C(4) of the Act.
2 ITA No. 532/Chny/2017
2. The assessee has raised several grounds in its appeal however the crux of the issue is that the Ld.DRP has erred in applying Prime Lending Rates with respect to outstanding receivables from Associated Enterprises (AEs) rather than applying LIBOR rate of interest.
3. The brief facts of the case are that the assessee is a private limited company engaged in providing services relating to development and maintenance of telecom software solutions primarily to its group companies, filed its return of income for the assessment year 2012-13 on 30.11.2012 declaring total income of Rs.Nil after claiming deduction of Rs.6,87,40,161/- U/s.10AA and declaring book profit of Rs.5,65,74,765/- under MAT provisions of the Act. Subsequently the assessee filed revised return of income on 29.01.2014 declaring income of Rs.Nil after claiming deduction of Rs.7,80,04,473/- U/s.10AA of the Act and declaring book profit of Rs.6,46,50,312/-. The case was selected for scrutiny under CASS and notice U/s.143(2) of the Act was issued on 20.08.2013. Finally the assessment was completed U/s.143(3) r.w.s 92CA of the Act on 30.01.2017 wherein the Ld.TPO made upward adjustment on the income of the 3 ITA No. 532/Chny/2017 assessee to the tune of Rs.3,50,23,483/- towards interest on overdue receivables based on prime lending rates. On appeal, the Ld. Members of the DRP confirmed the order of the Ld.TPO.
4. At the outset, the Ld.AR submitted before us that interest may be charged at LIBOR rate instead of the Prime Lending Rate adopted by the Revenue on the outstanding receivables from the assessee's AE's abroad. The Ld.AR further relied in the decision of the Mumbai Bench of the Tribunal in the case Tecnimont ICB House Vs. DCIT in ITA No.487/Mum/2014 vide order dated 08.07.2015, wherein it was held that while worked out deemed notional interest on the delay in repatriation from foreign AEs, LIBOR rate will be most appropriate. It was therefore pleaded that relief may be granted accordingly. The Ld.DR on the other hand relied in the orders of the Ld.Revenue Authorities.
5. We have heard the rival submission and carefully perused the materials on record. We find merit in the submissions of the Ld.AR. Mumbai Bench of the Tribunal cited supra has held that were deemed notional interest has to be worked out in the case 4 ITA No. 532/Chny/2017 of funds receivable from AEs LIBOR rate would be most appropriate. The relevant portion of the order is reproduced herein below for reference:
"14. From the record, we found that so called delay repatriation from foreign AE's, TPO/Assessing Officer, while working out deemed notional interest has considered interest rate of 12.25% p.a. (SBI PLR). AS per our considered view the notional interest has to be worked out for so called amount receivable from AE, by applying LlBOR interest rate for the purpose of computation of transfer pricing adjustment, if any. In this regard, reliance is placed on the following decisions, wherein the Hon'ble Tribunals has upheld use of LlBOR for the purpose of benchmarking loan/advance given to foreign AE's:
(i) Everest Kanto Cylinder Ltd Vs ACIT (L TU) (ITA No 7073/Mum/2012) (Mumbai Tribunal)
(ii) M/s PMP Auto Components P. Ltd, (ITA NO. 1484/Mum/2014) dated 22 August 2014 Hinduja Global Solutions Ltd Vs ACIT (145 ITD 361) (2013) (Mumbai Tribunal)
(iii)Tata Autocomp Systems Ltd Vs ACIT (52 SOT 48) (2012) (Mumbai Tribunal)
(iv) Tata Autocomp Systems Ltd Vs ACIT (ITA No 1320 of 2012) (Approved by Bombay High Court)
(v) Four Soft Ltd Vs DCIT (142 TT J 358) (2011) (Hyderabad Tribunal)
(vi) Everest Kanto Cylinder Ltd Vs ACIT (L TU) (ITA No 5501Mum12014) (Mumbai Tribunal)
15. In view of above discussion, computation of interest is restored back to the file of AO for recomputing the interest on delayed payment of receivables, keeping in view our above observation .
16. In respect of the expenditure incurred on behalf of the AEs and which was reimbursed by the AE, the AO also levied interest thereon. We found that the recovery of expenses was beyond the normal period of 60 days.
Recovery of expenses beyond the normal period was in the nature of deemed loan in the hands of AEs and require transfer pricing adjustment. Accordingly, we do not find any infirmity in the transfer pricing adjustment made. However, we direct the AO to charge interest by applying LIBOR rate."
5 ITA No. 532/Chny/2017
In view of the decision of the Tribunal cited supra and the other decisions cited by the Tribunal in the case of Tecnimont ICB House supra, we hereby hold that in the case of the assessee also LIBOR rate may be adopted instead of Prime Lending Rate. It is ordered accordingly.
6. In the result the appeal of the assessee is allowed. Order pronounced on the 22nd March, 2018 at Chennai.
Sd/- Sd/-
(एन.आर.एस. गणेशन) (ए. मोहन अलंकामणी)
(N.R.S. Ganesan) (A. Mohan Alankamony)
याियक सद य/Judicial Member लेखा सद य/Accountant Member
चे#नई/Chennai,
$दनांक/Dated 22nd March, 2018
RSR
आदे श क त'ल(प अ)े(षत/Copy to:
1. अपीलाथ /Appellant 2. यथ /Respondent 3. आयकर आय,
ु त (अपील)/CIT(A)
4. आयकर आय,
ु त/CIT 5. (वभागीय त न/ध/DR 6. गाड फाईल/GF