Teejay India Private Limited, Visakhapatnam V. Assistant Commissioner of Income Tax, DC/AC 4(1), Visakhapatnam

ITA 152/VIZ/2021

AI Insights

Teejay India Private Limited appealed against the final assessment order concerning the assessment year 2016-17, which included adjustments related to transfer pricing and disallowances on various grounds. The primary issues revolved around the adjustments made by the TPO under section 92CA of the Income Tax Act, which included adjustments for purchase and sale transactions, payment for technical support services, and interest on ECBs. The Tribunal examined the comparables used by the TPO, the justification for the technical support services fees, and the interest rates applied on ECBs. The Tribunal found merit in the assessee's arguments regarding the selection of comparables and directed a re-computation of the ALP for certain transactions. However, it upheld the TPO's approach on other issues, including the interest rate on ECBs and the addition of interest income as reported in Form 26AS.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128520 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 16-11-2022
• Assessment Year: 2016-2017
• Appeal Filed On: 14-09-2021
• Other Referred Cases: Societe General Global Solutions Private Limited vs. DCIT, Pr.CIT vs. AVERY DENNISON (INDIA) PVT LTD, Cummins India Ltd vs. Addl. CIT, M/s. Devi Sea Foods Limited vs. DCIT, M/s. Tuppadahalli Energy India Pvt Ltd vs Deputy Commissioner of Income Tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; Notional interest; FORM 26AS
• Section: 143(3); 92D; 92B; 10AA; 144C; 143(2); 92CA

Judgement Text

आयकर अपीलȣयअͬधकरण, ͪवशाखापटणम पीठ, ͪवशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM Įी दुåवूǽ आर एल रेɬडी, ÛयाǓयक सदèय एवं Įी एस बालाकृçणन, लेखा सदèय के सम¢ BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकर अपील सं./ I.T.A. No.152/Viz/2021 (Ǔनधा[रण वष[ / Assessment Year: 2016-17) Teejay India Private Limited, Plot No. 15, Brandix, APSEZ, Pudimadaka Road, Atchutapuram Mandal, Visakhapatnam-530011. PAN: AAACO9452H Vs. Assistant Commissioner of Income Tax, DC/AC 4(1), Visakhapatnam. (अपीलाथȸ/ Appellant) (Ĥ×यथȸ/ Respondent) अपीलाथȸ कȧ ओर से/ Appellant by : Sri Darpan Kirpalani CA Ĥ×याथȸ कȧ ओर से / Respondent by : Sri MN Murthy Naik, CIT-DR सुनवाई कȧ तारȣख / Date of Hearing : 17/11/2022 घोषणा कȧ तारȣख/Date of Pronouncement : 23/01/2023 O R D E R PER S. BALAKRISHNAN, Accountant Member : This appeal is filed by the assessee against the order final assessment order of the Additional/Joint/Deputy/Assistant Commissioner of Income Tax, Income Tax Officer, National e- Assessment Centre, Delhi in DIN No. ITBA/AST/S/143(3)/2020- 2 21/1031954419(1), dated 30/03/2021 passed U/s. 143(3) r.w.s 144C(13) & 144C(13) r.w.s 143(3A) & 143(3B) of the Income Tax Act, 1961 [the Act] for the AY 2016-17. 2. Brief facts of the case are that the assessee-company, M/s. Teejay India Private Limited (formerly known as M/s. Ocean India Pvt Ltd) is engaged in the business of manufacturing and exporting of knitted fabrics/apparels at Brandix APSEZ, Atchutapuram, Visakhapatnam. The assessee filed its return of income for the AY 2016-17 on 30/11/2016 offering gross total income of Rs. 7,79,09,388/-. Out of the gross total income, the assessee claimed deduction u/s. 10AA of the Act and hence the total income declared by the assessee was offered at NIL. Subsequently, the case was selected for scrutiny under CASS and notices U/s. 143(2) of the Act was issued on 23/08/2018 and served on the assessee on 1/9/2018. Subsequently notice U/s. 142(1) was issued on 17/10/2018, 07/11/2019, 08/11/2019 & 23/11/2019. In the course of assessment proceedings, the Ld. AO noticed that Form 3CEB report of the assessee company had international transactions with its Associated Enterprises (AEs) for Rs. 381.29 Crs. Hence, a reference was made to the Additional Commissioner of Income Tax (Transfer Pricing), 3 Hyderabad on 10/12/2018 after obtaining due approval of the Ld. Pr. CIT-2, Visakhapatnam. Accordingly, the TP matters were examined by the DCIT (TPO) and an order u/s. 92CA(3) of the Act was passed on 28/10/2019 determining the proposed adjustment as follows: Transaction Amount of adjustment proposed (Rs.) Purchase and sale transaction 5,42,39,942 Payment for technical support services 88,44,539 Interest on ECB 9,76,754 Interest on trade receivables 2,25,798 Total Adjustment U/s. 92CA 6,42,87,033 3. Further, an addition of Rs. 1,94,081/- was made as per the Form 26AS by the Ld. AO. It was also proposed to disallow an amount of Rs. 21,75,577/- on account of delayed payment of PF & ESI as per the provisions of section 36(1)(va) of the Act. The Ld. AO accordingly passed draft assessment order on 29/11/2019. Aggrieved by the draft assessment order of the Ld. AO, the assessee preferred an appeal before the Ld. Dispute Resolution Panel, Bangalore (Ld. DRP). The Ld. Authorized Representative made various submissions before the Ld. DRP 4 with respect to the comparables selected by the Ld. Transfer Pricing Officer (Ld. TPO). The Ld. AR further submitted various documents with respect to the Arm’s Length Price (ALP) of the interest rate on External commission Borrowings (ECBs). Further, the Ld. AR also submitted before the Ld. DRP regarding justification of payment of Technical Support Service Fee before the Ld. DRP. The Ld. AR contended the treatment of notional interest receivable as international transaction. Considering the above submissions made by the Ld. AR, the Ld. DRP directed the Ld. TPO to re-compute the ALP of the international transactions in accordance with the direction of the Ld. DRP. The Ld. TPO re- computed the adjustments U/s. 92CA of the Act as follows: Sl No Description Amount as per order U/s. 92CA Amount after DRP order 1. Purchase and sale transactions 5,42,39,942 2,06,07,627 2. Payment for technical support services 88,44,539 88,44,539 3. Interest on ECB 9,76,754 9,76,754 4. Interest on trade receivables 2,25,798 5,05,113 5. Total Adjustments u/s. 92CA 6,42,87,033 3,09,34,033 5 4. Based on the Ld. TPO’s order in accordance with the directions issued by the Ld. DRP, the Ld. AO passed the final assessment order on 30/03/2021. Aggrieved by the final assessment order of the Ld. AO, the assessee filed the present appeal before the Tribunal. 5. The assessee raised 8 grounds of appeal in its appeal as follows: “The grounds mentioned herein by the appell ant are wi thout prejudice to one another. 1. Th at the order of the Assistant Commissioner of Income Tax, DC/AC 4(1), Visakhap atn am to the e xtent prejudici al to the appel l ant is bad in l aw, contrary to the facts and ci rcums tances of the case and is l iabl e to be quashed. 2. Th at the Ld. Dispute Resol ution Panel erred in not appreci ating th at the orde r of the Ld. JCIT (Transfer Pricing), Hyderab ad passed under section 92CA of the Act is contrary to l aw an d thus l iabl e to be quashed. 3. Th at on the f acts an d in the circumstances of the case, the Ld. AO/Ld. TPO and the Ld. DRP erred in making an up ward adjustment to the transfer price of the appel l ant’s intern ation al trans actions INR 20,607,627 in respect of manufacture and s al e of fabric, INR 8,844,539/- in respect of payment of technical support services, INR 976,754 in respect of payment of interest on ECB and INR 505,133 on account o f imputation of notional interest on outstanding receiv abl es. A. Grounds of Appeal on Transfer Pricing Issues Grounds for manufacturing and sale of fabric 4. On the facts and in the circumstances fo the case and in l aw, wi th respect to adjustment to the transfer price of manuf acturing an d s al e of fabric, the Ld. DRP/AO/TPO erred in 4.1. Rejecting the transfer pricing documentation maintained b y the Compan y, in good faith, as required under section 92D of the Act re ad wi th Rul e 10D of the income tax Rul es, 1962 on the basis th at the search process appl ied by the comp any which is not in conformity wi th the Indi an TP Re gul ations and in stating th at the comp any di d not appl y appropri ate fil ters. 4.2. Not considering the current ye ar data fil ter (ie financi al ye ar 2015-16) which woul d l ead to rejection of comparabl e companies 6 sel ected by the comp an y b ase d on data av ail abl e for the FY preceding the current ye ar (FY 2014-15) 4.3. Computing the mark up on operating cost of the company whil e doing so, the Ld. TPO has considered finance cost as operating expense whil e considering the provision for doubtful adv ances as non-operating expense as ag ainst the tre atment adopte d in the transfer pricing documentation. 4.4. The Ld. AO/TPO erred in rejection of comp arabil ity an al ysis carried out by the assessee in the TP documentation and in conducting a fresh comparabil ity an al ysis for the manufacture an d s al e of fabric. 4.5. Sel ecting comparabl e comp anies rejecte d by the Ld. TPO in the previous AYs on account of functional dissimil ari ty. 4.6. Using data which was not contemporan eous and which was not av ail abl e in the publ ic domain at the time of prep aring the TP documentation. 4.7. Not considering the mul tipl e year/prior ye ar data of comp arable companies whil e determining the arm’s l ength price in rel ation to the appell ant’s intern atio nal trans actions wi th its AEs. 4.8. Incl uding companies th at are functional ly different from the operation al profil e of the appell ant. 4.9. Excl uding companies sel ected by the appel l ant in its TP documentation wi thout giving due cognizance to the appell ant’s contentions. 4.10. Computing the operating mark up on the cost for the comp arabl e companies sel ected whil e performing the comp arabil ity an al ysis by considering foreign exchange fluctuations and provision for bad debts as operating and non- operating in nature respectivel y. 4.11. Proposing transfer pricing adjustment in rel ation to the trans actions entered wi th third p arties on sal e of fabric whe rein principl e of transfer pricing is not appl ied. In doing so, the Ld. AO / TPO erre d in computing transfer pricing adjustments not on proportionate b asis which was consistentl y foll owe d in earl ier assessment ye ars. 4.12. Not providing appropri ate economic adjustments to wards materi al differences between the operation al profil e of comp arabl e companies and the appell ant with respect to working capital adjustments. Grounds for disallowance of technical support services fees paid. 5. On the facts an d in the circums tance s of the case, the Ld. DRP/AO/TPO erred in 5.1. Making adjustment of INR 8,844,539 to the income of the appel l ant by dis al l owing the fee p aid to its AE in rel ation to the technical assistance provided b y the AE during the year. 7 5.2. Rejecting the technical support services ag reement furnished by the appell ant and de termined the ALP of the said intern ation al trans action to be NIL whereas the agreement is not the onl y document which shoul d be considered to dete rmine ALP an d benefits derived shoul d al so be considered whil e arriving at ALP. 5.3. Chal l enging the commerci al expediency of any expenditure incurred by the appell ant, even when s uch expenses have been incurred whol l y and exclusivel y for the purpose of business operations. 5.4. Disregarding the evidence fil ed by the appell an t substanti ating the benefits received to it by payment of technical support services fee to its AE. 5.5. Ignoring the fact th at the technical support received by the appel l ant from i ts AE are essenti al for carrying out its business activi ties and improving its manuf acturi ng process. Grounds for disallowance of use of Reserve Bank of India master circular as a valid CUP with regards to payment oif interest on ECB 6. On the facts and in the circumstances of the case the Ld. DRP/AO/TPO erred in 6.1. Considering London Interb ank Offered Rate (L IBOR) pl us 200 basis points as the arm’s l ength rate for benchmarking the payment of i8nterest on ECB inste ad o f LIBOR pl us 350 basis points used by the appell ant. 6.2. Disregarding the use of RBI maste r circul ar as a v al id CUP wi thout providing any cogent re asons for the same. 6.3. Ignoring the judicial precedents rel ied upon by the appell ant in determining the arm’s l ength interest rate pai d on the external commerci al borro wings av ail ed. Grounds for imputation of notional interest on outstanding receivables. 7. On the facts an d in the circums tance s of the case, the Ld. DRP/AO/TPO erred in : 7.1. Considering overdue receivabl es from AEs as on intern ation al trans action under the provisions of section 92B of the Act. 7.2. Without prejudice to Ground No.7.1 above, 7.2.1 ignoring the fact th at the appell ant does not pay interest in rel ation to outstan ding payab l e to AEs 7.3.Without prejudice to the ground No. 7.1 and 7.2 above, the Ld. DRP erred in providing notional credit period of 30 days as provided by the Ld. TPO in its order. 7.4.Without prejudice to ground Nos. 7.1 and 7.2 above, imputing interest using SBI te rm deposit rate inste ad of London Interb ank Offered Rate (L IBOR). 8 7.5.Without prejudice to ground nos. 7.1, 7.2 and 7.3 above, the Ld. DRP/AO/TPO erred in disreg arding the fact th at the appell ant is engaged in manufacturing operations wherein the overal l credit period of outstanding receiv abl es are higher. B. Grounds of Appeal on Corporate Tax issues Addition on account of interest income: 8. on the facts and in the circumstance s of the case, the Ld. DRP/AO/TPO erred in 8.1. Adding an amount of INR 1,94,081 on account of interest income as per Form 26AS. 8.2. Not appreci ating the f act th at the co mp any h as offered interest income amounting to INR 73,75,338 as ag ains t interest income of Rs. 72,70,980 reported in Form 26AS.” 6. With respect to Grounds of appeal for manufacturing and sale of fabric raised vide Ground No.4, the Ld. AR submitted that as per the profile of the company as mentioned in Sl. No. 3 of the Ld. TPO’s order the assessee is engaged in the manufacturing and sale of knitted fabrics/apparels for AEs and third party customers. The Ld. AR reiterated that the assessee company is engaged in only one activity ie., manufacturing and sale of fabrics. The Ld. AR further submitted the Ld. TPO has taken the following companies as comparables rejecting the TP documentation submitted by the assessee. (i) Maral Overseas Limited (FAB) (ii) Vardhaman Textiles Limtied (iii) Sarla Performance Fibers Limited (iv) Morarjee Textiles Ltd 9 (v) Arvind Ltd (Textiles Segment) (vi) Indocount Industries Ltd (vii) Prathishta Weaving & Knitting Co Ltd (viii) ORBIT Exports Ltd 7. The Ld. AR submitted that the same set of companies has been considered functionally dissimilar by the Ld. DRP in the AY 2017-18 and AY 2018-19. The Ld. AR invited our attention to the relevant paragraph in the Ld. DRP order for the AY 2017-18 and AY 2018-19 regarding the rejection of comparables which were otherwise considered in the AY 2016-17. The Ld. AR therefore pleaded that the functional dissimilar companies considered by the Ld. DRP in subsequent assessment years should not be considered in the impugned assessment year also. Per contra, the Ld. DR invited our attention to the relevant paragraphs in the Ld. DRP order of the impugned assessment year stating that the reasons why the comparables were considered functionally similar during the impugned assessment year. He therefore pleaded that the order of the Ld. DRP be upheld. 10 8. We have heard both the sides and perused the material available on record and the orders of the Ld. Revenue Authorities. The Ld. TPO in para 4.4 of his order passed U/s. 92CA(3) has rejected the comparables selected by the assessee and considered it inappropriate while stating the rejection for the selection of comparables. The Ld. TPO then further selected the comparables as proposed in the show cause notice: (i) Maral Overseas Limited (FAB) (ii) Vardhaman Textiles Limtied (iii) Sarla Performance Fibers Limited (iv) Morarjee Textiles Ltd (v) Arvind Ltd (Textiles Segment) (vi) Indocount Industries Ltd (vii) Prathishta Weaving & Knitting Co Ltd (viii) ORBIT Exports Ltd 9. However, we find that during the AY 2017-18 the following comparables were rejected by the Ld. DRP as it is considered functionally dissimilar: (i) Vardhaman Textiles Limtied (ii) Sarla Performance Fibers Limited 11 (iii) Indocount Industries Ltd (iv) Prathishta Weaving & Knitting Co Ltd 10. We find from the order of the Ld. DRP the above companies were held dissimilar during the AY 2017-18 and AY 2018-19. However, it was considered by the Ld. DRP for the AY 2016-17. We find from the reasons that there is no fundamental change in the activities of the company during the impugned assessment year and subsequent assessment years. We therefore, find merit in the argument of the Ld. AR that the fundamentally dissimilar companies rejected by Ld DRP during the AY 2017-18 and AY 2018-19 shall be removed from the comparables for the AY 2016- 17 and accordingly ALP of the assessee be computed after removing the above dissimilar companies. We therefore direct the Ld. TPO to re-compute the ALP as directed above. Accordingly, this ground raised by the assessee is allowed for statistical purposes. 11. With respect to Ground No.5, the assessee has agitated against the disallowance of technical support service fee paid. The Ld. AR argued that the assessee has submitted the technical support services agreement before the Ld. TPO. The Ld. AR 12 vehemently argued that the technical support services fee was incurred wholly and exclusively for the purpose of business operations. The Ld. AR also further submitted that technical services fee from its AE ie., Teejay Lanka PLC helped the assessee in achieving higher quality and efficiency standards in its manufacturing process and accordingly, the technical support service fee Rs. 88,44,539/- was paid to its AE. The Ld. TPO has erred in rejected the aggregation approach of the assessee and has held that the assessee has failed to justify the receipt of technical support services which are closely linked to the manufacturing activity. The Ld. AR therefore submitted that the Ld. TPO has therefore rejected the aggregation approach followed by the assessee. The Ld. AR relied on the decision of the Coordinate Bench of ITAT in Societe General Global Solutions Private Limited vs. DCIT in IT(TP)A No. 2580/Bang/2017. The Ld. AR also relied on the decision of the Hon’ble Delhi High Court in the case of Pr.CIT vs. AVERY DENNISON (INDIA) PVT LTD. Per contra, the Ld. DR submitted that no documentary evidence for the services rendered was provided by the assessee and no explanation was furnished as to how commercially it enhanced the productivity. 13 Contending the arguments of the Ld. DR, the Ld. AR submitted that the technical support services fee paid by the assessee during the impugned assessment year increased the sales by 33% when compared to the previous year. The Ld. AR submitted that the turnover of the assessee which stood at Rs. 218,83,46,604/- during the FY 2014-15 increased to Rs. 291,55,18,749/- during the FY 2015-16 solely on account of improvement in the productivity arising out of the technical support services fee payments made to AE. Further, the Ld. AR submitted that the technical support services fee was paid only in the impugned assessment year and not in the subsequent assessment years. 12. We have heard both the parties and perused the material available on record and the orders of the Ld. Revenue Authorities. Admittedly we find that there is an increase in the turnover of 33% as submitted by the Ld. AR. It is also found that the Ld. AR submitted that Technical Services Agreement before the Ld. TPO and therefore the contention of the Ld. DR that no documentary evidence was provided could not be accepted. The issue with respect to the aggregation approach followed by the assessee for the purpose of calculation of technical support service fee as submitted by the Ld. AR, it is found that the sale and purchase operations are closely linked transactions for the purpose of payment of 14 technical support service fee. The Hon’ble Delhi High Court in the case of Pr.CIT vs. AVERY DENNISON (INDIA) PVT LTD held as follows: “3. The Commissioner of Income Tax (Appeals) [CIT(A)] on appeal restricted the transfer pricing adjustment to Rs. 1,66,18,290/-. The contention of the assessee was that agreement between the assessee and its AE was a composite one and could not be split up for the purposes of holding that some services are at arm’s length and some are not. The ITAT appears to have agreed with the above contention of the assessee on viewing the agreement as a whole. It was not within the purview of the TPO to determine if some of the services resulted in any actual benefit to the assessee or not.” 13. Further, the Coordinate Bench of the ITAT in in Societe General Global Solutions Private Limited vs. DCIT (supra) has held relying on the decision of the Pune Bench of the Tribunal in the case of Cummins India Ltd vs. Addl. CIT, 53 taxmann.com 53 (Pune Trib.) that for closely linked transactions it is not necessary that the transactions need to be identical or even similar. 14. In the instant case, the Ld. AR submitted that it is a composite agreement and it need to be aggregated for the purpose of payment of technical support services fees which has resulted in increase in the productivity during the impugned assessment year. We find merit in the argument of the Ld. AR and judicially following the above precedents, we are inclined to allow this ground raised by the assessee. 15 15. With respect to Ground No.6 on payment of interest on ECB, the Ld. AR submitted that the ALP should be considered at LIBOR plus 350 points as per the RBI Master Circular. . The Ld. AR relied on the Coordinate Bench of the Tribunal at Bangalore in IT(TP)A No. 2207/Bang/2016 in the case of M/s. Tuppadahalli Energy India Pvt Ltd vs Deputy Commissioner of Income Tax, dated 13/10/2017. Per contra, the Ld. DR submitted that LIBOR plus 200 basis points is considered appropriate and it was also confirmed by the Ld. DRP. He therefore pleaded that the order of the Ld. DRP may be upheld. 16. We have heard both the sides and perused the material available on record and the orders of the Ld. Revenue Authorities. We find that the Ld. TPO has relied on Nestle India Ltd (337 ITR 103) (Delhi) and Sara Lee TTK Ltd (2016) 76 taxmann.com 74 (Mumbai-Trib) with respect to payment of royalty. The Ld. TPO ignored the RBI Master Circular dated 30/3/2012 on ECB and trading credits which provides interest for all in cost ceiling of 6 month LIBOR plus 350k basis points with a maturity period of 3 years and upto 5 years. We find from the Master Circular relied on by Ld AR, that RBI prescribed the 16 maximum cap interest on ECBs with different tenures. Therefore, the Ld. DRP has rightly determined the ALP as LIBOR + 200 basis points considering it rational based on several judicial decisions while directing the Ld TPO to adopt the interest rate @ LIBOR + 200 basis points. We are therefore not inclined to interfere with the order of the Ld. DRP and hence this ground raised by the assessee is dismissed. 17. With respect to Ground No.7 regarding notional interest on outstanding receivables, the Ld. AR submitted that the notional interest is subsumed in the working capital and no further adjustment is required as proposed by the Ld. DRP. The Ld. AR relied on the case of the jurisdictional Bench of the ITAT in the case of M/s. Devi Sea Foods Limited vs. DCIT in ITAT No.75/Viz/2022, dated 9/9/2022. Per contra, the Ld. DR submitted that there were various decisions where interest be charged as per the SBI deposit rates. The Ld. DR vehemently argued that the notional interest on outstanding receivables cannot be subsumed in the working capital adjustments and hence pleaded that the order of the Ld. DRP be upheld. 18. We have heard both the sides and perused the material available on record and the orders of the Ld. Revenue 17 Authorities. In Ground No.7.1 the assessee contested that the receivables is not an international transaction under the provisions of section 92B of the Act. While deciding on the identical issue the ITAT in the case of M/s. Devi Sea Foods Limited vs. DCIT in ITAT No.75/Viz/2022, dated 9/9/2022, held as follows: “7..........There is no dispute wi th regard to the fact th at receiv abl es is incl uded under the definition of internation al trans action consequent to the amendme nts made by the Fin ance Act, 2012 w.e.f 1/4/2002. Therefore we are of the considered vie w th at there is no me rit in the argument of Ld AR th at receiv abl es is not an intern ation al trans action ..........” Consistently following the above decision this ground No 7.1 raised by the assessee is dismissed. 19. The assessee also submitted that working capital adjustment which was rejected by the Ld. TPO. Further, we find that the dispute is with respect to selection of comparables and not with respect to selection of method adopted by the assessee. In the decision of M/s. Devi Sea Foods Limited (supra) the Tribunal has held that when TNM method is considered as the most appropriate method which was also not disputed by the Revenue the net margin there under would take care of such notional interest cost. Further, we also direct the Ld. TPO to consider the working capital adjustment and its impact on the 18 profits of the assessee vis-à-vis its comparables. We are therefore of a considered view that no upward adjustment on the outstanding receivables is required and therefore we direct the Ld. AO to delete the upward adjustment made towards overdue receivables from AE. The contention of the Ld. AR that the assessee does not pay interest in relation to outstanding payable to AEs is of no relevance. Further, the Ld. DRP has provided a notional credit period of 30 days which is reasonable in the instant case. Accordingly this ground raised by the assessee is partly allowed for statistical purposes. 20. With respect to Ground No.8 regarding the addition made on account of interest income as per 26AS amounting to Rs. 1,94,081/- the Ld. AR argued that the assessee has declared an income of Rs. 73,75,338/- as against the interest income of Rs. 72,70,980/- as reported in Form 26AS. The Ld. AR therefore pleaded that since the income has is declared over and above the interest income as reported in Form 26AS the addition of Rs. 1,94,081/- is not warranted. The Ld. DR referred to the order of the Ld. AO wherein it was established that the assessee has declared short interest received from HSBC to the extent of Rs. 19 1,94,081/-. The Ld. DR therefore pleaded that the addition may be upheld. 21. We have heard both the sides and perused the material available on record and the orders of the Ld. Revenue Authorities. The Ld. AO in his draft order U/s. 144C of the Act in para 5 has reconciled the interest accounted from books of accounts and interest as per 26AS. The Ld. AR found that an amount of Rs. 1,94,081/- has been admitted shortly by the assessee while filing the return of income arising out of interest received / receivable from HSBC. We therefore find no infirmity in the order of the Ld. AO on this ground and therefore dismiss the ground raised by the assessee. 22. In the result, appeal filed by the assessee is partly allowed for statistical purposes as indicated herein above. Pronounced in the open Court on the 23 rd January, 2023 . Sd/- Sd/- (दुåवूǽ आर.एल रेɬडी) (एस बालाकृçणन) (DUVVURU RL REDDY) (S.BALAKRISHNAN) ÛयाǓयकसदèय/JUDICIAL MEMBER लेखा सदèय/ACCOUNTANT MEMBER Dated : 23.01.2023 20 OKK - SPS आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy of the order forwarded to:- 1. Ǔनधा[ǐरती/ The Assessee – Teejay India Private Limited, Plot No. 15, Brandix, APSEZ, Pudimadaka Road, Atchutapuram Mandal, Visakhapatnam-530011. 2. राजèव/The Revenue – Asst. Commissioner of Income Tax, DC/AC- 4(1), Visakhapatnam, Andhra Pradesh. 3. The Principal Commissioner of Income Tax, (ii) The Dispute Resolution Panel-1, Kendriya Sadan, 4 th Floor, C- Wing, Bengaluru-560034. 4. आयकर आयुÈत (अपील)/ The Commissioner of Income Tax (ii) Deputy Commissioner of Income Tax, Transfer Pricing Officer-1, Hyderabad. 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, ͪवशाखापटणम/ DR, ITAT, Visakhapatnam 6. गाड[ फ़ाईल / Guard file आदेशानुसार / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam