Inductis (India) Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 2075/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3289 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2010-2011
• Appeal Filed On: 09-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; Period of limitation; Question of law; Wholly owned subsidiary; Notional interest
• Section: 92B; 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I-2 : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.2075/DEL./2015 (ASSESSMENT YEAR : 2010-11) M/S. INDUCTIS (INDIA) PRIVATE LTD., VS. ITO, WARD 12 (2), 414, 4 TH FLOOR, DLF JASOLA TOWER B, NEW DELHI. PLOT NO.10 & 11, DDA DISTRICT CENTRE, JASOLA, NEW DELHI 110 044. (PAN : AAACI8497C) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VISHAL KALRA, ADVOCATE REVENUE BY : SHRI H.K. CHOUDHARY, CIT DR DATE OF HEARING : 01.02.2018 DATE OF ORDER : 06.03.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, M/S. INDUCTIS (INDIA) PVT. LTD. (HE REINAFTER REFERRED TO AS THE TAXPAYER) BY FILING THE PRESEN T APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 17.02.2015, PASS ED BY THE AO IN CONSONANCE WITH THE ORDERS PASSED BY THE LD. DRP /TPO UNDER SECTION 143 (3) READ WITH SECTION 144C OF THE INCOM E-TAX ACT, 1961 (FOR SHORT THE ACT) QUA THE ASSESSMENT YEAR 2010- 11 ON THE GROUNDS INTER ALIA THAT :- ITA NO.2075/DEL/2015 2 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE ASSESSMENT ORDER PASSED BY THE LD. ASSESSING OFFICER ('LD. AO') IS BAD IN LAW AND VOID AB- INITIO. 2. THAT THE LD. DRP ERRED IN CONFIRMING THE LD. AO / LD. TPO'S ORDER WHICH PROVIDES THAT THE ALLEGED INTERNATIONAL TRANSACTIONS PERTAINING TO OUTSTANDIN G RECEIVABLES DO NOT SATISFY THE ARM'S LENGTH PRINCIP LE ENVISAGED UNDER THE ACT. IN DOING SO, THE LD. AO/LD . DRP HAS GROSSLY ERRED IN: 2.1 RE-CHARACTERIZING THE OUTSTANDING RELATED PART Y RECEIVABLE FROM OVERSEAS AES BEYOND 30 DAYS PERIOD AS SHORT TERM LOANS ADVANCED TO THE AES AND IMPUTING INTEREST THEREON; 2.2 DISREGARDING THE BUSINESS/ COMMERCIAL ARRANGEMENT BY NOT APPRECIATING THE FACT THAT UNLIK E A VIEWED ON A STANDALONE BASIS AND NEEDS TO BE EXAMIN ED WITH THE COMMERCIAL TRANSACTION AS A RESULT OF WHIC H THE DEBIT BALANCE HAS COME INTO EXISTENCE; 2.3 REJECTING THE APPELLANT'S CONTENTION THAT THE IMPACT OF WORKING CAPITAL INVESTMENT MADE BY THE APPELLANT SHOULD BE EVALUATED USING TRANSACTIONAL N ET MARGIN METHOD ('TNMM') AS THE MOST APPROPRIATE METHOD RATHER THAN INDEPENDENTLY BENCHMARKING THE OUTSTANDING RECEIVABLES OF THE APPELLANT BY CONSIDE RING STATE BANK OF INDIA PRIME LENDING RATE ('SBI PLR') FOR COMPARABILITY WHICH DOES NOT AMOUNT TO THE APPLICATION OF COMPARABLE UNCONTROLLED PRICE METHOD ('CUPM') OR ANY OF THE 'METHOD' DEFINED IN THE ACT; 2.4 IGNORING APPELLANT'S CONTENTION THAT, WITHOUT PREJUDICE TO ITS OTHER ARGUMENTS, IF AT ALL INTERES T IS TO BE IMPUTED, INSTEAD OF 14.88%, THE LIBOR RATE FOR THE FINANCIAL YEAR 2009-10 SHOULD BE APPLIED FOR IMPUTI NG INTEREST; 2.5 IGNORING THE APPELLANT'S CONTENTION THAT THE RECOVERY OF THE RECEIVABLES IS WITHIN THE TIME LIMI T PRESCRIBED/APPROVED BY RESERVE BANK OF INDIA. ITA NO.2075/DEL/2015 3 3. THAT THE LD. AO/ LD. DISPUTE RESOLUTION PANEL ('LD. DRP') HAS GROSSLY ERRED IN NOT RECTIFYING THE FACTUAL ERROR /MISTAKE COMMITTED BY THE LD. AO IN PASSING THE DRAFT ASSESSMENT ORDER WHEREBY THE LD. AO HAS MADE AN ADDITION OF INR 6,88,184 AS AGAINST THE ADJUSTMENT OF INR 26,735 PROPOSED BY THE LD. TPO IN THE CASE OF RECEIVABLE OUTSTANDING FROM INDUCTIS SINGAPORE. IN DOING SO, THE LD. AO HAS ERRED IN CONSIDERING THE OUTSTANDING RECEIVABLE BEYOND 30 DA YS AS SHORT TERM LOAN ADVANCE TO THE AE (IN THE CASE O F INDUCTIS SINGAPORE) AS AGAINST THE ACTUAL PAYMENT TERMS (OF 90 DAYS) AGREED WITH THE AE CONSIDERED BY THE LD. TPO WHILE MAKING THE ADJUSTMENT. 4. THAT THE REFERENCE MADE BY THE LD. AO SUFFERS FROM JURISDICTIONAL ERROR AS THE LD. AO HAS NOT RECORDED ANY REASONS IN THE DRAFT ASSESSMENT ORDER BASED ON WHICH HE REACHED THE CONCLUSION THAT IT WA S 'NECESSARY OR EXPEDIENT' TO REFER THE MATTER TO THE LD. TPO FOR COMPUTATION OF THE ALP, AS IS REQUIRED UNDE R SECTION 92CA(1) OF THE ACT. 5. THAT THE LD. TPO/ AO ERRED IN ENHANCING THE INCOME OF THE APPELLANT BY RS.2,22,87,655 HOLDING T HAT THE ALLEGED INTERNATIONAL TRANSACTIONS DO NOT SATIS FY THE ARM'S LENGTH PRINCIPLE ENVISAGED UNDER THE ACT AND IN DOING SO HAVE GROSSLY ERRED IN NOT APPRECIATING THA T NONE OF THE CONDITIONS SET OUT IN SECTION 92C(3) OF THE ACT ARE SATISFIED IN THE PRESENT CASE. 6. THAT THE LD. AO HAS GROSSLY ERRED ON FACTS AND I N LAW BY DISREGARDING JUDICIAL PRONOUNCEMENTS IN INDI A IN UNDERTAKING THE TP ADJUSTMENT. 7. THE LD. AO / DRP ERRED IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE BY MAKING NOTIONAL ADDITION OF RS.22,464 PER PROVISIONS OF SECTION 14A OF THE ACT READ WITH RULE 80 OF THE INCOME-TAX RULES, 1962 ('RULES'). 7.1 THE LD. AO / DRP ERRED IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE BY NOT TAKING COGNIZA NCE ITA NO.2075/DEL/2015 4 OF THE DETAILED SUBMISSION FILED BY THE APPELLANT A ND ERRED IN STATING IN THE ASSESSMENT ORDER THAT THE COMPUTATION OF DISALLOWANCE OF EXPENDITURE TO BE MA DE UNDER SECTION 14A OF THE ACT WAS SUBMITTED BY THE APPELLANT AND WAS RELIED UPON BY THE ASSESSING OFFI CER. 7.2 THE LD. AO / DRP ERRED IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE BY MAKING AN ADHOC NOTIONAL ADDITION WITHOUT PROVIDING REASONABLE BASI S OF COMPUTATION OF DISALLOWANCE OF EXPENDITURE TO BE MA DE UNDER SECTION 14A OF THE ACT READ WITH RULE 80 OF T HE RULES. 7.3 WITHOUT PREJUDICE TO THE ABOVE, THE LD. AO HAS ERRED IN DISREGARDING THE FACT THAT THE DISALLOWANC E OF RS.22,464 PERTAINS TO THE STPI UNIT OF THE APPELLAN T AND ADDITION MADE TO THE INCOME OF THE APPELLANT OF RS.22,464 SHOULD BE ENTITLED FOR ENHANCED DEDUCTION UNDER SECTION 10A OF THE ACT. 8. THAT THE LD. AO ERRED IN LAW AND ON THE FACTS A ND CIRCUMSTANCE OF THE CASE BY INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : M/S. . INDUCTIS (INDIA) P VT. LTD. (IIPL), THE TAXPAYER IS A WHOLLY OWNED SUBSIDIARY OF INDUCTIS L LC. INDUCTIS LLC WAS ACQUIRED BY EXL HOLDINGS IN JUNE 2006. THE TAXPAYER RENDERED IT ENABLED BACK OFFICE RESEARCH AND DATA A NALYTICS SERVICE TO ITS ASSOCIATED ENTERPRISES (AE). DURING THE YEA R UNDER ASSESSMENT, THE TAXPAYER ENTERED INTO INTERNATIONAL TRANSACTIONS AS UNDER :- ITA NO.2075/DEL/2015 5 S.NO. INTERNATIONAL TRANSACTION AMOUNT (IN RS.) 1 IT ENABLED BACK OFFICE RESEARCH AND DATA ANALYTICS SERVICES TO INDUCTIS LLC 393,062,140 2 IT ENABLED BACK OFFICE RESEARCH AND DATA ANALYTICS SERVICES TO INDUCTIS SINGAPORE, PTE. LTD. 20,215,209 3 IT ENABLED BACK OFFICE RESEARCH AND DATA ANALYTICS SERVICES TO EXL HOLDING INC. 12,773,581 4 MISCELLANEOUS OPERATING EXPENSES INCURRED BY THE ASSESSEE ON BEHALF OF INDUCTIS LLC 24,812,549 5 MISCELLANEOUS OPERATING EXPENSES INCURRED BY THE ASSESSEE ON BEHALF OF INDUCTIS SINGAPORE, PTE. LTD. 3,880,916 3. TRANSFER PRICING OFFICER (TPO) IN ITS TP ANALYSI S FOUND THE TP REPORT PREPARED BY THE TAXPAYER IN ORDER QUA THE MAIN INTERNATIONAL TRANSACTIONS OF THE TAXPAYER FOR PROV IDING IT ENABLED SERVICES (ITES) TO ITS AE. SO, THE MAIN INTERNATIO NAL TRANSACTIONS ENTERED INTO BY THE TAXPAYER WITH ITS AE QUA PROVIS IONS OF ITES AND REIMBURSEMENT OF EXPENSES IS AT ARMS LENGTH. HOWEVER, TPO NOTICED THAT THE TAXPAYER HAS SUBSTANTIAL AMOUNT OF OUTSTANDING RECEIVABLES FROM ITS AE WHICH REMAINED OUTSTANDING WITHOUT ANY INTEREST CHARGED BY THE TAXPAYER FOR A LONGER PERIO D. SO, THE TPO AFTER RECHARACTERIZING THE OUTSTANDING RECEIVABLES AS SHORT TERM LOAN ADVANCED TO THE AE, PROPOSED TO CHARGE AN INTEREST @ 14.88% (SBI PLR + 300 BASIS POINT) FOR A PERIOD OF DELAY IN RES PECT OF PAYMENT BEYOND 30 DAYS AND CONSEQUENTLY MADE AN ADDITION OF RS.2,16,26,206/-. AO MADE AN ADDITION OF RS.22,464 /- WHILE ITA NO.2075/DEL/2015 6 INVOKING THE PROVISIONS CONTAINED U/S 14A OF THE AC T READ WITH RULE 8D OF THE RULES. 4. THE TAXPAYER CARRIED THE MATTER BEFORE THE LD. D RP BY FILING OBJECTIONS WHO HAS CONCURRED WITH THE FINDINGS RETU RNED BY THE LD. TPO AND THEREBY DISMISSED THE OBJECTIONS. FEELING A GGRIEVED, THE TAXPAYER HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUND NO.1 6. GROUND NO.1 IS GENERAL IN NATURE, HENCE DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. GROUNDS NO.2, 2.1, 2.2, 2.3, 2.4, 2.5, 3, 4 & 5 7. UNDISPUTEDLY, THE TAXPAYER ENTERED INTO THE TRAN SACTION AND MADE EXPORTS TO THE FOLLOWING AE AS UNDER :- S.NO. NAME OF THE COMPANY AMOUNT 1 INDUCTIS LLC 371,429,814 2 INDUCTIS SINGAPORE PTE. LTD. 18,733,824 3 EXL HOLDINGS INC. 12,611,954 TOTAL 402,775,592 8. TPO NOTICED THAT THE PAYMENT ON ACCOUNT OF SALES TO AE HAS BEEN REALIZED BY THE TAXPAYER AFTER A LONG GAP AND IN SOME CASES, ITA NO.2075/DEL/2015 7 AFTER A GAP OF UPTO 364 DAYS. TPO TAKEN A VIEW THA T IN TRADE PRACTICE SUCH KIND OF DELAY ATTRACT PENAL RATE OF I NTEREST AS NO INDEPENDENT ENTERPRISE WOULD HAVE ALLOWED THIRD PAR TIES TO MAKE LATE PAYMENT WITHOUT CHARGING HIGHER PRICES FOR THE DELAYED PAYMENTS. TPO FURTHER NOTICED FROM THE CHARGES AN D TERMS OF PAYMENTS ARTICLE THAT ALL INVOICES SHALL BE BASED ON THE PROJECTS AND SHALL BE PAYABLE TO SERVICE PROVIDER WITHIN 15 DAYS FROM THE DATE OF RECEIPT OF INVOICE BY INDUCTIS UNLESS OTHER WISE AGREED UPON. THE TPO AFTER RECHARACTERIZING THE OUTSTANDING RECE IVABLES AS SHORT TERM LOAN ADVANCED TO THE AE PROPOSED TO CHARGE INT EREST @ 14.88% (SBI PLR + 300 BASIS POINT) FOR THE PERIOD O F DELAY IN RECEIPT OF PAYMENT BEYOND 30 DAYS AND THEREBY COMPU TED THE ARMS LENGTH INTEREST AT RS.2,16,26,206/-. 9. IT IS ALSO NOT IN DISPUTE THAT THE TAXPAYER IS A N IT ENABLED CAPTIVE SERVICE PROVIDER. THERE ARE TWO AGREEMENTS ENTERED INTO BETWEEN THE TAXPAYER AND ITS AE AND VIDE ONE AGREEM ENT, THE PAYMENT PERIOD IS AGREED UPON AS 15 DAYS AND IN AN OTHER PERIOD OF PAYMENT IS 90 DAYS WITH NO PENAL INTEREST CLAUSE. IT IS ALSO NOT IN DISPUTE THAT SOME OF THE PAYMENTS HAVE BEEN RECEIVE D BY THE TAXPAYER IN ADVANCE AND SOME OF THE PAYMENTS HAVE B EEN RECEIVED WITHIN TIME AND SOME OF THE PAYMENTS HAVE BEEN RECE IVED BEYOND ITA NO.2075/DEL/2015 8 THE PERIOD OF LIMITATION. IT IS ALSO NOT IN DISPUT E THAT THE TAXPAYER IS A DEBT FREE COMPANY. 10. IN THE BACKDROP OF THE AFORESAID UNDISPUTED FAC TS AND CIRCUMSTANCES OF THIS CASE, ORDER PASSED BY THE REV ENUE AUTHORITIES BELOW, GROUNDS RAISED IN THE PRESENT APPEAL AND THE ARGUMENTS ADVANCED BY LD. REPRESENTATIVES OF THE PARTIES, THE SOLE QUESTION ARISES FOR DETERMINATION IN THIS CASE IS :- AS TO WHETHER OUTSTANDING RELATED PARTY RECEIVABLE S FROM OVERSEAS AES BEYOND A PERIOD OF 30 DAYS CAN BE RECHARACTERIZED AS SHORT TERM LOAN ADVANCED TO THE AE BY CHARGING NOTIONAL INTEREST IN ORDER TO BRING IT TO TAX? 11. THE LD. AR FOR THE TAXPAYER BY RELYING UPON THE DECISION RENDERED BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASES OF KADIMI TOOL MANUFACTURING CO. (P.) LTD. VS. DCIT (2017) 87 TAXMANN.COM 42 (DELHI TRIB.) AND M/S. GLOBAL LOGIC INDIA LTD. VS. DCIT IN ITA NOS.1104/DEL/2015 & 1115/DEL/2017 F OR AYS 2010-11 & 2012-13 ORDER DATED 12.12.2017 CONTENDED THAT OUTSTANDING RELATED PARTY RECEIVABLES FROM AES BEYO ND A PERIOD OF 30 DAYS CANNOT BE CHARACTERIZED AS A SHORT TERM LOA N TO THE AE FOR THE PURPOSE OF CHARGING INTEREST THEREON SO AS TO B RING IT TO TAX. THE COORDINATE BENCH OF THE TRIBUNAL WHILE DECIDING THE IDENTICAL ISSUE IN KADIMI TOOL MANUFACTURING CO. (P.) LTD. (SUPRA) RETURNED ITA NO.2075/DEL/2015 9 THE FINDINGS IN FAVOUR OF THE TAXPAYER, THE OPERATI VE PART OF WHICH IS REPRODUCED AS UNDER :- 10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE B Y BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE DRP AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THE ONLY ISSUE T O BE DECIDED IN THE ABOVE GROUND IS REGARDING AS TO WHET HER THE RECEIVABLES BEYOND THE PERIOD MENTIONED IN THE SERVICE AGREEMENT IS INTERNATIONAL TRANSACTION AND AS TO WHETHER ANY ADJUSTMENT U/S. 92CA(3) OF THE I.T. ACT IS REQUIRED ON ACCOUNT OF DELAY IN RECOVERING OUTSTAND ING RECEIVABLES FROM THE AE. WE FIND THE ASSESSING OFFI CER, AFTER THE DIRECTION OF THE DRP, MADE AN ADJUSTMENT OF RS. 6,36,894/- ON ACCOUNT OF THE INTEREST THAT SHOU LD HAVE BEEN CHARGED BY THE ASSESSEE ON THE OUTSTANDIN G AMOUNT FROM THE AE. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT IN VIEW OF THE DECISI ON OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF BECHTEL INDIA (P) LTD. (SUPRA) AND IN THE CASE OF KUSUM HEA LTH CARE (P) LTD. (SUPRA), NO ADJUSTMENT IS REQUIRED ON ACCOUNT OF NOTIONAL INTEREST ON RECEIVABLES. WE FIN D MERIT IN THE ABOVE ARGUMENT OF THE ID. COUNSEL FOR THE ASSESSEE. WE FIND THE HON'BLE DELHI HIGH COURT IN T HE CASE OF BECHTEL INDIA (P) LTD. (SUPRA) HAS HELD THA T WHERE THE ASSESSEE IS A DEBT FREE COMPANY THE QUEST ION OF RECEIVING ANY INTEREST ON RECEIVABLES DID NOT AR ISE. CONSEQUENTLY, NO ADJUSTMENT FOR INTEREST ON RECEIVA BLES IS REQUIRED. THE DECISION OF THE HON'BLE HIGH COURT WAS CHALLENGED BY THE REVENUE AND THE SLP WAS DISMISSED BY THE HON'BLE SUPREME COURT VIDE CC NO(S).4956/2017 ORDER DATED 21.07.2017. 10.1 WE ALSO FIND THE HON'BLE DELHI HIGH COURT IN THE CASE OF KUSUM HEALTH CARE (P.) LTD. (SUPRA) WHILE DECIDING AN IDENTICAL ISSUE HAS OBSERVED AS UNDER : - '10. THE COURT IS UNABLE TO AGREE WITH THE ABOVE SUBMISSIONS. THE INCLUSION IN THE EXPLANATION TO SECTION 92B OF THE ACT OF THE EXPRESSION 'RECEIVABLES' DOES NOT MEAN THAT DE HORS THE ITA NO.2075/DEL/2015 10 CONTEXT EVERY ITEM OF 'RECEIVABLES' APPEARING IN THE ACCOUNTS OF AN ENTITY, WHICH MAY HAVE DEALINGS WITH FOREIGN AES WOULD AUTOMATICALLY BE CHARACTERISED AS AN INTERNATIONAL TRANSACTION. THERE MAY BE A DELAY IN COLLECTION OF MONIES FOR SUPPLIES MADE, EVEN BEYOND THE AGREED LIMIT, DUE TO A VARIETY OF FACTORS WHICH WILL HAVE TO BE INVESTIGATED ON A CASE TO CASE BASIS. IMPORTANTLY, THE IMPACT THIS WOULD HAVE ON THE WORKING CAPITAL OF THE ASSESSEE WILL HAVE TO BE STUDIED. IN OTHER WORDS, 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 REFLECTS AN INTERNATIONAL TRANSACTION INTENDED TO BENEFIT THE AE IN SOME WAY. 11. THE COURT FINDS THAT THE ENTIRE FOCUS OF THE AO WAS ON JUST ONE A Y AND THE FIGURE OF RECEIVABLES IN RELATION TO THAT A Y CAN HARDLY REFLECT A PATTERN THAT WOULD JUSTIFY A TPO CONCLUDING THAT THE FIGURE OF RECEIVABLES BEYOND 180 DAYS CONSTITUTES AN INTERNATIONAL TRANSACTION BY ITSELF. WITH THE ASSESSEE HAVING ALREADY FACTORED IN THE IMPACT OF THE RECEIVABLES ON THE WORKING CAPITAL AND THEREBY ON ITS PRICING/PROFITABILITY VIS-A-VIS THAT OF ITS COMPARABLES, ANY FURTHER ADJUSTMENT ONLY ON THE BASIS OF THE OUTSTANDING RECEIVABLES WOULD HAVE DISTORTED THE PICTURE AND RE-CHARACTERISED THE TRANSACTION. THIS WAS CLEARLY IMPERMISSIBLE IN LAW AS EXPLAINED BY THIS COURT IN CIT V. EKL APPLIANCES LTD. (2012) 345 ITR 241 (DELHI). 12. CONSEQUENTLY, THE COURT IS UNABLE TO FIND ANY ERROR IN THE IMPUGNED ORDER OF THE ITAT GIVING RISE TO ANY SUBSTANTIAL QUESTION OF LAW FOR DETERMINATION. THE APPEAL IS, ACCORDINGLY, DISMISSED. ' 11. SIMILAR VIEW HAS BEEN TAKEN BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF TERADATA INDIA (P.) ITA NO.2075/DEL/2015 11 LTD. (SUPRA) WHEREIN THE TRIBUNAL FOLLOWING THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF KUSUM HEALTH CARE (P.) LTD. (SUPRA) HAS HELD THAT N O ADJUSTMENT CAN BE MADE ON ACCOUNT OF INTEREST ON RECEIVABLES ON CREDIT GRANTED BY THE INDIAN SUBSIDI ARY TO ITS FOREIGN AE. RESPECTFULLY FOLLOWING THE DECIS IONS CITED ABOVE, WE HOLD THAT THE TPO IS NOT JUSTIFIED IN MAKING ADJUSTMENT OF INTEREST AMOUNTING TO RS.6,36,894/- ON ACCOUNT OF ALLEGED DELAY IN RECOVE RING THE OUTSTANDING TOWARD RECEIVABLES FROM THE AE AS P ER THE PROVISIONS OF SECTION 92CA(3) OF THE LT. ACT. T HE FIRST ISSUE RAISED BY THE ASSESSEE IN THE GROUNDS O F APPEAL IS ACCORDINGLY ALLOWED. 12. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE AND BY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNA L IN KADIMI TOOL MANUFACTURING CO. (P.) LTD. (SUPRA) WHICH HAS BEEN CONFIRMED BY THE HONBLE HIGH COURT AS WELL AS HON BLE APEX COURT, WE ARE OF THE CONSIDERED VIEW THAT WHEN UNDI SPUTEDLY, THE TAXPAYER IS A DEBT FREE COMPANY, THERE IS NO QUESTI ON OF CHARGING ANY INTEREST ON RECEIVABLES BY RECHARACTERIZING THE TRANSACTION AS LOAN FROM ITS AE AND AS SUCH, NO ADJUSTMENT ON ACCO UNT OF ARMS LENGTH INTEREST ON RECEIVABLES CAN BE MADE. CONSEQ UENTLY ADJUSTMENT MADE BY THE TPO/DRP ON ACCOUNT OF ARMS LENGTH INTEREST ON RECEIVABLES IS NOT SUSTAINABLE IN THE E YES OF LAW, HENCE ORDERED TO BE DELETED. CONSEQUENTLY, GROUNDS NO.2, 2.1, 2.2, 2.3, 2.4, 2.5, 3, 4 & 5 ARE DETERMINED IN FAVOUR OF THE TAXPAYER. ITA NO.2075/DEL/2015 12 GROUND NO.6 13. GROUND NO.6 IS GENERAL IN NATURE, HENCE DOES NO T REQUIRE ANY SPECIFIC ADJUDICATION. GROUND NO.7, 7.1, 7.2 & 7.3 14. LD. AR FOR THE TAXPAYER AFTER ARGUING FOR SOMET IME ON THESE GROUNDS STATED THAT IN VIEW OF THE MEAGER AMOUNT OF THE ADDITIONS OF RS.22,464/- U/S 14A READ WITH RULE 8D, THESE GRO UNDS ARE NOT PRESSED. SO, GROUNDS NO.7, 7.1, 7.2 & 7.3 ARE DISP OSED OF ACCORDINGLY. GROUND NO.8 15. GROUND NO.8 IS PREMATURE, HENCE DOES NOT REQUIR E ANY ADJUDICATION. ORDER PRONOUNCED IN OPEN COURT ON THIS 6 TH DAY OF MARCH, 2018. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 6 TH DAY OF MARCH, 2018 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A) 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.