No TP adjustment if assessee was availing more credit period vis a vis credit period it granted to its AEs : ITAT

Case Details: Coim India (P.) Ltd. v. DCIT - [2021] 132 taxmann.com 207 (Delhi - Trib.)

Judiciary and Counsel Details

• • Anil Chaturvedi, Accountant Member and K. Narasimha Chary, Judicial Member
  • Nageshwar Rao and Chakarborty, Advs. for the Appellant. 
  • Surender Pal, CIT/DR and Bhagwati Charan, Sr. DR for the Respondent.

Facts of the Case

Assessee filed the return of income declaring certain income. During the assessment, AO noticed that the assessee had undertaken certain transactions with its Associated Enterprise (AE). Thus, the international transactions entered into by the assessee with the AEs were referred to the Transfer Pricing Officer (TPO) for determining the Arm’s length price (ALP).

AO believed that any delay beyond the credit period should be benchmarked as an international transaction. By applying the same, he calculated the interest chargeable on receivables by taking the credit period as 30 days, and the TPO also suggested adjustment.

ITAT Held

The Delhi Tribunal held that the assessee did not charge any interest receivable by them from the AEs, and it was their policy not to charge so in respect of interest both payable and receivable. Further, the interest payable by the assessee was more than the interest receivable, and such interest on receivables was ingrained in sales itself.
The AO took into consideration only the interest chargeable but did not consider the interest payable. If both the interest chargeable and interest payable were taken into consideration and set-off was allowed, that would lead to no adjustment at all. Therefore, adjustment on account of interest receivable was to be deleted.

Case Review

• • Coim India (P.) Ltd. v. Asstt. CIT [2018] 96 taxmann.com 511 (Delhi – Trib.) (para 13) followed.

List of Cases Referred to

• • Coim India (P.) Ltd. v. Asstt. CIT [2018] 96 taxmann.com 511 (Delhi – Trib.) (para 13) followed.
  • Pr. CIT v. Kusum Health Care (P.) Ltd. [2018] 99 taxmann.com 431/[2017] 398 ITR 66 (Delhi) (para 16).