Albany Molecular Research Hyderabad Research Center Pvt..Ltd., Hyd, R.R.Dist V. DCIT, Circle-1(1), Hyderabad, Hyderabad

ITA 425/HYD/2015

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2310 (ITAT-HYDERABAD)
• Duration Of Justice: 5 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 04-09-2020
• Assessment Year: 2010-2011
• Appeal Filed On: 16-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Keywords: Transfer pricing; International transaction; Application of stay; Corroborative evidences; Notional interest; TDS
• Section: 143(3); 92B; 13; 22; 92CA; 15; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENCH HYDERABAD (VIRTUAL COURT) BEFORE SHRI C.N. PRASAD, JM & SHRI M.BALAGANESH, AM ITA NO. 425/HYD/2015, 233 & 107/HYD/2016, 2184/HYD/2017 & 2376/HYD/2018 A.YS : 2010 - 11 TO 2014 - 15 SA NO.51/HYD/2020 (ARISING OUT OF ITA NO.107/HYD/2016) A.YS : 2012 - 1 3 SA NO.52/HYD/2020 (ARISING OUT OF 2376/HYD/2018) A.Y. 2014 - 15 M/S. ALBANY MOLECULAR RESEARCH HYDERABAD RESEARCH CENTER PRIVATE LIMITED, PLOT NO. 9, SY.NO. 230 - 243, PHASE - I, SHAPOORJI PALLONJI BIOTECH PARK PVT. LTD., GENOME VALLEY, TURKAPALLY, SHAMEERPET, R.R. DIST., HYDERABAD 500 078. VS. DCIT, CIRCLE - 1(1), HYDERABAD (RESPONDENT) PAN/GIR NO. AAFCA1469D (APPELLANT ) .. (RESPONDENT ) 2 ITA NOS. 425 /HYD/2015 AND OTHER APPEALS ALBANY MOLECULAR RESEARCH HYD. RESEARCH CENTERPVT. LTD. &ANR . ITA NO. 333/HYD/2015 A.Y.2010 - 11 DCIT, CIRCLE - 1(1), HYDERABAD (APPELLANT) VS. ALBANY MOLECULAR RESEARCH HYDERABAD RESEARCH CENTER PRIVATE LIMITED, PLOT NO. 9, SY.NO. 230 - 243, PHASE - I, SHAPOORJI PALLONJI BIOTECH PARK PVT. LTD., GENOME VALLEY, TURKAPALLY, SHAMEERPET, R.R. DIST., HYDERABAD 500 078. PAN/GIR NO. AAFCA1469D (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI AJIT TOLANI, SHRI DARPAN KIRPALANI& MS. BHAVYA BANSAL GOYAL (AR) REVENUE BY SHRI Y V S T SAI, CIT DR DATE OF HEARING 04/09/2020 DATE OF PRONOUNCEMENT 26/ 11 /2020 O R D E R PER M.BALAGANESH, AM: THE CAPTIONED APPEALS FILED BY THE ASSESSEE , M/S. ALBANY MOLECULAR RESEARCH HYDERABAD RESEARCH CENTER PVT. LTD. AND THE REVENUE ARE AGAINST THE ORDERS OF THE ASSESSING OFFICER DATED 30.01.2015 , 06.01.2016 , 22.12.2016 , 11.10.2017 AND 24.10.2018 FOR 3 ITA NOS. 425 /HYD/2015 AND OTHER APPEALS ALBANY MOLECULAR RESEARCH HYD. RESEARCH CENTERPVT. LTD. &ANR . ASSESSMENT YEARS 2010 - 11 TO 2014 - 15 RESPECTIVELY PASSED UNDER SECTION 143(3) R.W.S. 144C, 143(3) R.W.S 92CA, 1 43(3) R.W.S. 144C(13), 143(3) R.W.S. 144C(13) R.W.S. 92CA AND 143(3) R.W.S. 144C(5) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . STAY APPLICATION NOS. 51/HYD/2020 IS ARISING OUT OF 107/HYD/2016 ) FOR A.Y . 2012 - 13 & SA NO.52/HYD/2020 IS ARISING OUT OF ITA NO. 2376/HYD/2018 FOR A.Y.2014 - 15. T HE IDENTICAL ISSUE IS INVOLVED IN ALL THESE ASSESSEE APPEALS AND HENCE THEY ARE TAKEN UP TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE FIRST IDENTICAL ISSUE INVOLVED IN ALL THESE APPEALS IS AS TO WHETHER THE LD. DRP WAS JUSTIFIED IN TR EATING OUTSTANDING RECEIVABLES FROM AES AS A SEPARATE INTERNATIONAL TRANSACTION AND MAKING ADJUSTMENT BY WAY OF IMPUTATION OF INTEREST THEREON. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF PROVIDING RESEARCH SERVICES IN THE FIELD OF MEDICINAL CHEMISTRY. EVEN THOUGH THE COMMON ISSUE INVOLVED IN ALL THE ASSESSMENT Y EARS I.E.2010 - 11 TO 2014 - 15 IN ASSESSEE APPEALS, IS WITH REGARD TO TRANSFER PRICING ADJUSTMENT OF IMPUTING NOTIONAL INTEREST ON OUTSTANDING RECEIVABLES, THEY HAVE GOT VERY MINOR VARIATION WITH REGARD TO TREATMENT GIVEN BY THE LD. TPO AND THE LD. DRP FOR TH E SAME FOR EACH OF THE ASSESSMENT YEARS . 4 ITA NOS. 425 /HYD/2015 AND OTHER APPEALS ALBANY MOLECULAR RESEARCH HYD. RESEARCH CENTERPVT. LTD. &ANR . THE ENTIRE PROCEEDINGS BEFORE THE LD. TPO FOR EACH OF THE ASSESSMENT COULD BE SUMMARISED IN THE FOLLOWING TABULAR FORM : - 3.1. ACCORDINGLY, THE LD. TPO HAD MADE TRANSFER PRICING ADJUSTMENTS OF IMPUTING NOTIONAL INTEREST ON DEFERRED RECEIVABLES FOR EACH OF THE ASSESSMENT YEARS AS ABOVE. 3.2. THE ASSESSEE FILED VARIOUS OBJECTIONS BEFORE T HE LD. DRP INCLUDING MAKING PRELIMINARY OBJECTION THAT OUTSTANDING RECEIVABLES WOULD NOT PER SE CONSTITUTE A SEPARATE INTERNATIONAL TRANSACTION. THE LD. DRP DISMISSED THE PRELIMINARY PLEA OF THE ASSESSEE AND HELD THAT OUTSTANDING RECEIVABLES WOULD CONSTITU TE SEPARATE INTERNATIONAL TRANSACTION AS IT TANTAMOUNTS TO FUNDS OF THE ASSESSEE GETTING LOCKED WITH AE AND BY ALLOWING THE AE TO ENJOY THE EXTENDED CREDIT PERIOD, THE ASSESSEE HAD EFFECTIVELY FUNDED THE AE WHICH REQUIRES TO BE DULY COMPENSATED BY THE PARTICULARS AY 2010 - 11 AY 2011 - 12 AY 2012 - 13 AY 2013 - 14 AY 2014 - 15 METHOD OF DETERMINING INTEREST INVOICE BY INVOICE LUMPSUM OUTSTANDING RECEIVABLES AMOUNT LUMPSUM OUTSTANDING RECEIVABLES AMOUNT LUMPSUM OUTSTANDING RECEIVABLES AMOUNT INVOICE BY INVOICE RESTRICTED INTEREST UP TO 31 MARCH OF FY NO NO NO NO YES CREDIT PERIOD 30 DAYS NOT PROVIDED NOT PROVIDED NOT PROVIDED 30 DAYS INTEREST RATE 12% P.A. 12% P.A. 12% P.A. 14.45% (SBI PRIME LENDING RATES) SBI TERM DEPOSIT RATES PAYABLES NETTED OFF AGAINST OUTSTANDING RECEIVABLES NO NO NO NO NO ADJUSTMENT AMOUNT 5,72,39,075 5,52,89,675 9,60,38,036 4,41,45,048 3,16,63,391 5 ITA NOS. 425 /HYD/2015 AND OTHER APPEALS ALBANY MOLECULAR RESEARCH HYD. RESEARCH CENTERPVT. LTD. &ANR . AE T O THE ASSESSEE IN THE FORM OF INTEREST. SINCE THIS WAS NOT DONE BY THE AE, THE PROVISIONS OF CHAPTER X OF THE ACT IN RESPECT OF TRANSFER PRICING WOULD BE SQUARELY APPLICABLE AND THE SAME WOULD HAVE TO BE BENCHMARKED BY IMPUTING NOTIONAL INTEREST ON OUTSTAN DING RECEIVABLES. THE LD. DRP ALSO HELD THAT EVEN THE AMENDMENT BROUGHT IN CLAUSE C OF EXPLANATION TO SECTION 92B OF THE ACT BY THE FINANCE ACT 20 12 ALSO MAKES THIS ISSUE VERY CLEAR. WITH THESE OBSERVATIONS, THE LD. DRP DISMISSED THE PRELIMINARY PLEA OF TH E ASSESSEE THAT OUTSTANDING RECEIVABLES IS NOT A SEPARATE INTERNATIONAL TRANSACTION. 3.3. THE ENTIRE PROCEEDINGS BEFORE THE LD. DRP ON MERITS OF THE ISSUE WOULD BE SUMMARISED FOR EACH OF THE ASSESSMENT YEARS IN THE FOLLOWING TABULAR FORM WITH SPECIFIC REF ERENCE TO THE RELEVANT PAGE NUMBERS: - PARTICULARS AY 2010 - 11 ( REFER PG 6 OF DRP ORDER ) AY 2011 - 12 ( REFER PARA 2.1 OF DRP ORDER ) AY 2012 - 13 ( REFER PG 6 OF DRP ORDER ) AY 2013 - 14 ( REFER PG 9 - 11 OF DRP ORDER ) AY 2014 - 15 ( REFER PG 6 OF DRP ORDER ) METHOD OF DETERMINING INTEREST INVOICE BY INVOICE LUMPSUM OUTSTANDING RECEIVABLES AMOUNT INVOICE BY INVOICE ( PARTIAL RELIEF. NOT GIVEN EFFECT BY LD. AO/ TPO ) INVOICE BY INVOICE ( PARTIAL RELIEF ) INVOICE BY INVOICE RESTRICTED INTEREST UP TO 31 MARCH OF FY NO YES ( PARTIAL RELIEF. NOT GIVEN EFFECT BY LD. AO/ TPO ) YES ( PARTIAL RELIEF. NOT GIVEN EFFECT BY LD. AO/ TPO ) YES ( PARTIAL RELIEF ) YES CREDIT PERIOD 30 DAYS NOT PROVIDED 30 DAYS ( PARTIAL RELIEF ) 15 DAYS 30 DAYS INTEREST RATE LIBOR + 200 BASIS POINTS ( PARTIAL RELIEF ) 5% ( PARTIAL RELIEF ) SBI TERM DEPOSIT RATES ( PARTIAL RELIEF. NOT GIVEN EFFECT BY LD. AO/ TPO ) SBI TERM DEPOSIT RATES ( PARTIAL RELIEF ) SBI TERM DEPOSIT RATES 6 ITA NOS. 425 /HYD/2015 AND OTHER APPEALS ALBANY MOLECULAR RESEARCH HYD. RESEARCH CENTERPVT. LTD. &ANR . PAYABLES NETTED OFF AGAINST OUTSTANDING RECEIVABLES NO YES ( PARTIAL RELIEF. NOT GIVEN EFFE CT BY LD. AO/ TPO ) NO NO NO ADJUSTMENT AMOUNT (INR) 1,59,31,542 2,30,37,364 9,60,38,036 3,38,52,968 3,16,63,391 3.4. THE MAIN ESSENCE OF THE ARGUMENTS ADVANCED BY THE LD. AR C OULD BE SUMMARISED AS UNDER: - A . THE ASSESSEE COMPANY HAS GOT A CONSISTENT POLICY FOR NOT CHARGING ANY INTEREST ON OUTSTANDING RECEIVABLES FROM ITS AES AND ALSO NOT PAYING ANY INTEREST ON OUTSTANDING PAYABLES TO ITS AES. THE LD. AR PLEADED THAT THE TRADE PAYABLES TO AES WERE ULTIMATELY PA ID AFTER A CONSIDERABLE PERIOD OF DELAY RANGING FROM 365 DAYS TO 1460 DAYS. THE ASSESSEE AS PER THE SERVICE AGREEMENT ENTERED INTO WITH ITS AE H AS TO REALISE THE OUTSTANDING RECEIVABLES WITHIN 15 DAYS FROM THE DATE OF RAISING OF THE INVOICE WHEREAS , THE AS SESSEE HAS BEEN REALISING ITS RECEIVABLES FROM ITS AES WITH A CONSIDERABLE PERIOD OF DELAY RANGING FROM 354 DAYS TO 410 DAYS. THE LD. AR VEHEMENTLY ARGUED THAT PERIOD OF DELAY IN REALISATION OF RECEIVABLES FROM AE WAS LESS THAN THE PERIOD OF DELAY IN PAYME NT OF TRADE PAYABLES TO AE BY THE ASSESSEE. HENCE, IT IS EFFECTIVELY THE CASE OF THE AE FUNDS GETTING LOCKED WITH ASSESSEE WITHOUT ANY INTEREST. THE LD. AR DULY DREW OUR ATTENTION TO VARIOUS PA GES OF THE ORDER OF THE LD. TPO, THE LD. DRP AND VARIOUS PAGES OF THE PAPER BOOK FOR EACH OF THE ASSESSMENT YEARS WHEREIN THE DETAILS OF AMOUNTS PAYABLE TO AES WERE ALSO DULY FURNISHED BEFORE THE LOWER AUTHORITIES. THE 7 ITA NOS. 425 /HYD/2015 AND OTHER APPEALS ALBANY MOLECULAR RESEARCH HYD. RESEARCH CENTERPVT. LTD. &ANR . RELEVANT REFERENCE TO VARIOUS PAGES OF THE PAPER BOOK AND THE ORDERS OF THE LOWER AUTHORITIES FOR EA CH OF THE ASSESSMENT YEARS ARE TABULATED AS UNDER: - PARTICULARS AY 2010 - 11 AY 2011 - 12 AY 2012 - 13 AY 2013 - 14 AY 2014 - 15 BEFORE LD. TPO PG 7 OF TPO ORDER PG 4 OF TPO ORDER PG 3 OF PAPER BOOK OF RELEVANT AY PG 203 OF PAPER BOOK OF RELEVANT AY PG 255 OF PAPER BOOK OF RELEVANT AY BEFORE HONBLE DRP - PG 3 OF ADDITIONAL SUBMISSION BEFORE DRP ENCLOSED IN APPEAL SET PG 35 OF PAPER BOOK OF RELEVANT AY PG 18 OF OBJECTIONS FILED BEFORE DRP ENCLOSED IN APPEAL SET PG 18 OF OBJECTIONS FILED BEFORE DRP ENCLOSED IN APPEAL SET B . OUTSTANDING RECEIVABLES PER SE IS NOT AN INTERNATIONAL TRANSACTION AND HENCE, THERE IS NO NEED TO MAKE ANY TRANSFER PRICING ADJUSTMENT THEREON. WITHOUT PREJUDICE TO THIS ARGUMENT, THE LD. AR ALSO ARGUED THAT CLAUS E C OF EXPLANATION TO SECTION 92B WAS INTRODUCED ONLY BY THE FINANCE ACT 2012 AND HENCE, THE SAME WOULD BE HAVING ONLY PROSPECTIVE EFFECT FROM A.Y.2013 - 14 AND THE SAME CANNOT BE MADE APPLICABLE FOR EARLIER ASSESSMENT YEARS. IN THIS REGARD, HE PLACED RELIANC E ON THE DECISION OF MUMBAI TRIBUNAL IN THE CASE OF FIRESTONE DIAMOND PVT. LTD., VS. ITO IN ITA NO.139/MUM/2014 DATED 31/03/2016 WHEREIN MUMBAI TRIBUNAL HAD HELD THAT EXPLANATION TO SECTION 92B WOULD HAVE ONLY PROSPECTIVE EFFECT AND CANNOT BE MADE APPLICAB LE IN EARLIER ASSESSMENT YEARS PRIOR TO THE A.Y.2013 - 14. THE LD. AR ALSO 8 ITA NOS. 425 /HYD/2015 AND OTHER APPEALS ALBANY MOLECULAR RESEARCH HYD. RESEARCH CENTERPVT. LTD. &ANR . PLACED RELIANCE ON THE FOLLOWING DECISIONS WHICH SUPPORTED SAME CONTENTIONS: - DECISION OF HYDERABAD TRIBUNAL IN THE CASE OF IVY COMPTECHPVT. LTD., VS DCIT IN ITA NO.1403/HYD/2016 DATED 31/01/2019 DECISION OF MUMBAI TRIBUNAL IN THE CASE OF JEWEL MARK INDIA PVT. LTD., VS ITO IN ITA NO.431 & 582/MUM/2014 DATED 15/04/2015. C . THE ASSESSEE HAS NOT BEEN CHARGING ANY INTEREST ON ITS OUTSTANDING RECEIVABLES FROM BOTH AES AS WELL AS NON - AES A ND IN THIS REGARD HEAVY RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INDO AMERICAN JEWELLERY LTD., REPORTED IN 223 TAXMAN 8 WHEREIN IT WAS HELD THAT THERE WAS COMPLETE UNI FORMI TY IN THE A CT OF ASSESSEE NOT CHA RGING THE INTEREST FROM AE AS WELL AS NON - AE FOR DELAY IN REALISATION OF EXPORT PRO CEEDS, THEN NO ADJUSTMENT COULD BE MADE TOWARDS INTEREST ON DELAYED REALISATION OF SUNDRY DEBTORS IN THE COURSE OF TP PROCEEDINGS. APART FROM THAT , THE LD. AR ALSO PLACED R ELIANCE ON THE FOLLOWING DECISIONS: - UNILEVER INDIA EXPORTS LTD. (ITA NO. 2096/MUM/2017) DATED 31/07/2019 SUASHISH DIAMONDS LTD (ITA NO. 7058, 7508/MUM/2014) DATED 31/05/2019 MASTEK LIMITED (ITA NO. 3120/AHD/2010) DATED 29/02/2012 INDO AMERICAN JEWELLERY L TD (ITA NO. 1053 OF 2012) DATED 08/01/2013 LINTAS INDIA PRIVATE LIMITED (ITA NO 2024/MUM/2007) DATED 09/11/2012 9 ITA NOS. 425 /HYD/2015 AND OTHER APPEALS ALBANY MOLECULAR RESEARCH HYD. RESEARCH CENTERPVT. LTD. &ANR . D . WORKING CAPITAL ADJUSTMENT GRANTED BY THE LD. TPO TAKES INTO ACCOUNT THE IMPACT OF OUTSTANDING RECEIVABLES AS IT GETS SUBSUMED THEREON. HENCE, NO FURTHER TRANSFER PRICING ADJUSTMENT ON OUTSTANDING RECEIVABLES IS WARRANTED. IN THIS REGARD, HE PLACED RELIANCE ON THE FOLLOWING DECISIONS: - DECISION OF DELHI TRIBUNAL IN THE CASE OF KUSUM HEALTHCARE PVT. LTD., VS. ACIT IN ITA NO.6814/DEL/2014 DATED 31/03/2015. DECISION OF HYDERABAD TRIBUNAL IN THE CASE OF HEXOGEN CAPABILITY CENTRE INDIA PVT. LTD., VS. ACIT IN ITA NOS.251/HYD/2016 AND 84/HYD/2017 FOR A.YRS 2011 - 12 AND 2012 - 13 RESPECTIVELY DATED 08/06/2018 AND ITA NO.258/HYD/2016 FOR A.Y.2011 - 12 (REVEN UE APPEAL) DATED 08/06/2018. 4. WITHOUT PREJUDICE TO THE AFORESAID ARGUMENTS, THE LD. AR ALSO VEHEMENTLY PLEADED THAT OUTSTANDING PAYABLES TO AES SHOULD BE NETTED OFF AGAINST THE OUTSTANDING RECEIVABLES FROM AES. 4.1. WITHOUT PREJUDICE TO THE AFORESAID ARGUMENTS, THE LD. AR VEHEMENTLY PLEADED FOR APPLYING LIBOR RATES OF INTEREST + REASONABLE BASIS POINTS FOR IMPUTING INTEREST ON OUTSTANDING RECEIVABLES AND THE SAME SHOULD BE CALCULATED TILL THE END OF THE RELEVANT ASSESSMENT YEARS ONLY. 5. WE FIND AT TH E OUTSET, THE LD. AR HAD MADE A PRELIMINARY OBJECTION THAT DEFERRED RECEIVABLES PER S E IS NOT AN INTERNATIONAL TRANSACTION AND HENCE, NO 10 ITA NOS. 425 /HYD/2015 AND OTHER APPEALS ALBANY MOLECULAR RESEARCH HYD. RESEARCH CENTERPVT. LTD. &ANR . SEPARATE TRANSFER PRICING ADJUSTMENT NEED TO BE MADE THEREON. IN THIS REGARD, WE FIND THAT THE ASSESSMENT YEARS INVOLVED BEFORE US ARE A.YRS. 2010 - 11, 2011 - 12, 2012 - 13, 2013 - 14 AND 2014 - 15. WE FIND THAT CLAUSE C OF E XPLANATION TO SECTION 92B HAS BEEN INTRO DUCED BY THE FINANCE ACT, 2012 IN THE STATUTE. I N VIEW OF THE DECISION OF THE CO - ORDINATE BENCH OF MUMBAI TRIBUNAL IN THE CASE OF FIRE STONE DIAMONDS PVT. LTD., VS. ITO IN ITA NO.139/MUM/2014 FOR A.Y.2008 - 09 DATED 31/03/2016, WHEREIN THE AMENDMENT BROUGHT I N THE EXPLANATION TO SECTION 92B OF THE ACT HAS BEEN HELD TO BE APPLICABLE FROM A.Y.2013 - 14 AND ONWARDS AND CANNOT BE APPLIED RETROSPECTIVELY FOR EARLIER YEARS PRIOR TO THE A.Y.2013 - 14. IN THIS REGARD, THE RELEVANT OPERATIVE PORTION OF THE SAID JUDGMENT IS REPRODUCED HEREIN: - 43. WHEN SUCH ARE THE VIEWS OF HONBLE HIGH COURT, IT IS NOT OPEN TO US TO PROCEED ON THE BASIS THAT EVEN THOUGH THE AMENDMENT IS REQUIRED TO BE READ AS PROSPECTIVE, THE TRIBUNAL CANNOT DO SO AS IT IS A CREATURE OF THE INCOME TAX ACT ITSELF. IN OUR CONSIDERED VIEW, AND FOR THE DETAILED REASONS SET OUT ABOVE, AT BEST THE AMENDMENT IN SECTION 92B, AT LEAST TO THE EXTENT IT DEALT WITH THE QUESTION OF INTEREST ON DELAYED REALIZATION OF DEBTORS, IS EFFECTIVE FROM 1ST APRIL 2012. THE ASSESSM ENT YEAR BEFORE US BEING AN ASSESSMENT YEAR PRIOR TO THAT DATE, THE AMENDED PROVISIONS OF SECTION 92 B HAVE NO APPLICATION IN THE MATTER. 5.1. RESPECTIVELY FOLLOWING THE AFORESAID JUDICIAL PRECEDENT, WE HOLD THAT NO TRANSFER PRICING ADJUSTMENT COULD BE M ADE ON OUTSTANDING RECEIVABLES BY WAY OF IMPUTATION OF NOTIONAL INTEREST FOR A.YRS. 2010 - 11, 2011 - 12 AND 2012 - 1 3 AS THEY DO NOT FALL UNDER THE CATEGORY OF INTERNATIONAL TRANSACTION FOR THOSE YEARS. 11 ITA NOS. 425 /HYD/2015 AND OTHER APPEALS ALBANY MOLECULAR RESEARCH HYD. RESEARCH CENTERPVT. LTD. &ANR . 5.2. IN VIEW OF OUR AFORESAID DECISION , THE ARGUMENTS ADVA NCED BY THE LD. AR AND THE LD. DR NEED TO BE LOOKED INTO ONLY FOR A.YRS. 2013 - 14 AND 2014 - 15 BEFORE US. AT THE COST OF REPETITION, THE FOLLOWING PRIMARY FACTS WHICH REMAIN UNDISPUTED BEFORE US ARE RELEVANT: - A. ASSESSEE HAS REALISED ITS RECEIVABLES FROM IT S AE AFTER A CONSIDERABLE PERIOD OF DELAY RANGING FROM 354 TO 410 DAYS AS AGAINST THE AGREED CREDIT PERIOD OF 15 DAYS AS PER THE SERVICE AGREEMENT WITH THE AE. B. WORKING CAPITAL ADJUSTMENT AT THE END OF THE YEAR WAS GIVEN TO THE ASSESSEE BY THE LD. TPO F OR A.Y.2013 - 14 AND A.Y 2014 - 15 AND THE LD DRP HAD ALSO DISCUSSED ABOUT THE SAME IN ITS DIRECTIONS . C. THE LD. DRP HAS PROVIDED CREDIT PERIOD OF 15 DAYS WHEREAS F OR A.YRS. 2010 - 11, 2012 - 13 AND 2014 - 15, THE LD. DRP PROVIDED CREDIT PERIOD OF 30 DAYS IN RESP ECT OF RECEIVABLES OF AES. D . THE ASSESSEE IS ONLY CAPTIVE SERVICE PROVIDER TO ITS AE. IT DOES NOT RENDER ANY SERVICES TO NON - AES. THE ASSESSEE HAS GOT TRADE PAYABLES TO AES WHICH ARE ALSO PAID AFTER A CONSIDERABLE PERIOD OF DELAY RANGING FROM 365 TO 1460 DAYS. THE DETAILS OF THESE TRADE PAYABLES ARE DULY REFLECTED IN THE FINANCIAL STATEMENTS MORE PARTICULARLY IN THE RELATED PARTY DISCLOSURES IN THE NOTE S FORMING PART OF THE ASSESSEE. MOREOVER , THE DETAILS OF TRADE PAYABLES TO AES FOR EACH OF THE ASSESSMENT YEARS WERE INFACT DULY PROVIDED BY THE ASSESSEE TO THE LD. TPO AND THE LD. DRP. 12 ITA NOS. 425 /HYD/2015 AND OTHER APPEALS ALBANY MOLECULAR RESEARCH HYD. RESEARCH CENTERPVT. LTD. &ANR . 5. 3 . WITH REGARD TO THE ARGUMENT ADVANCED BY THE LD. AR THAT ASSESSEE HAS CONSISTENTLY HAVING A POLICY OF NOT CHARGING ANY INTEREST ON DELAYED RECEIVABLES FROM ITS AES AND ALS O NOT PAYING ANY INTEREST ON DELAYED PAYABLES TO ITS AES, IS CONCERNED, AND ALSO ON THE POINT OF SERVICE AGREEMENT WITH AE FOR NOT PROVIDING ANY CLAUSE ON THE CHARGEABILITY OF INTEREST FOR DELAYED REALISATION, WE HOLD THAT THE PARTIES I.E. ASSESSEE AND ITS AE CANNOT HAVE ANY CLAUSE SPECIFICALLY OR BY CONVENIENTLY NOT PROVIDING FOR ANY CLAUSE IN THE AGREEMENT, WHICH ACT DETRIMENTAL TO THE INTERESTS OF THE REVENUE. IN OTHER WORDS, ANY UNDERSTANDING OR ARRANGEMENT BETWEEN THE ASSESSEE AND ITS AE WHICH IS DETRIM ENTAL TO REVENUE OR AGAINST THE PRINCIPLES OF SCHEME OF CHAPTER X OF THE INCOME TAX ACT, 1961, CANNOT COME TO THE RESCUE OF THE ASSESSEE. HENCE, MERELY BECAUSE, THERE IS NO PROVISION FOR CHARGEABILITY OF INTEREST IN THE AGREEMENT ENTERED WITH AES FOR DELAY ED REALIZATION AND MERELY BECAUSE ASSESSEE DOES NOT PAY ANY INTEREST TO ITS AES ON THE PAYABLES, THE REVENUE CANNOT BE DEPRIVED OF ITS LEGITIMATE SHARE IN ACCORDANCE WITH THE SCHEME OF CHAPTER X OF THE ACT AND THE PURPOSE BEHIND THE PROVISIONS OF CHAPTER X OF THE ACT. 5. 4 . WITH REGARD TO YET ANOTHER ARGUMENT ADVANCED BY THE LD. AR THAT ASSESSEE DOES NOT CHARGE INTEREST FROM ITS NON - AES FOR DELAYED RECEIVABLES, WE FIND THAT ASSESSEE IS ONLY A CAPTIVE SERVICE PROVIDER TO AES AND DOES NOT HAVE NON - AES AT ALL. HENCE, THE POLICY OF THE ASSESSEE THAT NO INTEREST IS CHARGED FOR BOTH AES AS WELL AS NON - AES WOULD NOT ADVANCE THE CASE OF THE 13 ITA NOS. 425 /HYD/2015 AND OTHER APPEALS ALBANY MOLECULAR RESEARCH HYD. RESEARCH CENTERPVT. LTD. &ANR . ASSESSEE. WITH REGARD TO RELIANCE PLACED IN THIS REGARD ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INDO AMERICAN JEWELLER Y LTD., REPORTED IN 223 TAXMAN 8 TOGETHER WITH MUMBAI TRIBUNAL DECISION IN THE CASE OF UNILEVER INDIA EXPORTS LTD. (ITA NO. 2096/MUM/2017) DATED 31/07/2019 ; SUASHISH DIAMONDS LTD (ITA NO. 7058, 7508/MUM/2014) DATED 31/05/2019 ; LINTAS INDIA PRIVATE LIMITED (ITA NO 2024/MUM/2007) DATED 09/11/2012 ) AND THE DECISION OF AHMEDABAD TRIBUNAL IN MASTEK LIMITED (ITA NO. 3120/AHD/2010) DATED 29/02/2012 , THE SAME DOES NOT COME TO THE RESCUE OF THE ASSESSEE AS IN ALL THESE CASES, THE ASSESSEE HAD TRANSACTIONS WITH AES AS WELL AS NON - AES AND CONSISTENTLY ASSESSEE HAD NOT CHARGED INTEREST FROM BOTH. WHEREAS IN THE INSTANT CASE BEFORE US, THE ASSESSEE , BEING A CAPTIVE SERVICE PROVIDER DOES SERVICES ONLY TO ITS AES. HENCE, WE HOLD THAT THE AFORESAID CASES ARE FACTUALLY DIS TINGUISHABLE WITH THAT OF THE ASSESSEE. 5.5. FOR THE A.YRS 2013 - 14 AND 2014 - 15, THERE IS NO DISPUTE THAT ASSESSEE HAD REALISED ITS RECEIVABLE FROM ITS AES AFTER ABNORMAL DELAY BEYOND THE AGREED CREDIT PERIOD . THIS, IN OUR CONSIDERED OPINION, TANTAMOUNT TO INDIRECT FUNDING MADE BY THE ASSESSEE TO ITS AES BY ALLOWING THE AE TO UTILIZE FUNDS OF THE ASSESSEE AS PER ITS WHIMS AND FANCIES. MERELY BECAUSE THE ASSESSEE IS A DEBT FREE COMPANY EXCEPT ECB LOAN , IT CANNOT ALLOW ITS FUNDS TO BE UTILIZED BY ITS AE FOR A N INDEFINITE PERIOD OF TIME BEYOND THE AGREED CREDIT PERIOD. WE FIND THAT CLAUSE - C OF EXPLANATION TO SECTION 92B OF THE ACT HAS BEEN INTRODUCED IN 14 ITA NOS. 425 /HYD/2015 AND OTHER APPEALS ALBANY MOLECULAR RESEARCH HYD. RESEARCH CENTERPVT. LTD. &ANR . THE STATUTE BY THE FINANCE ACT 2012. FOR THE SAKE OF CONVENIENCE, CLAUSE C OF RELEVANT EXPLANATION IS REPRODU CED HEREUNDER: - (C) CAPITAL FINANCING, INCLUDING ANY TYPE OF LONG - TERM OR SHORT - TERM BORROWING, LENDING OR GUARANTEE, PURCHASE OR SALE OF MARKETABLE SECURITIES OR ANY TYPE OF ADVANCE, PAYMENTS OR DEFERRED PAYMENT OR RECEIVABLE OR ANY OTHER DEBT ARISING DURING THE COURSE OF BUSINESS; THE AFORESAID CLAUSE C STATES CAPITAL FINANCING TO INCLUDE DEBT ARISING DURING THE COURSE OF BUSINESS. MANIFESTLY, IN THE INSTANT CASE, THE DEFERRED RECEIVABLES FALL SQUARELY WITHIN THE AMBIT OF DEBT ARISING DURING THE C OURSE OF BUSINESS WHICH IS INCLUDED IN THE CATEGORY OF EXPRESSION CAPITAL FINANCING UNDER CLAUSE C OF EXPLANATION OF SECTION 92B OF THE ACT. HENCE, WE HOLD THAT THE OUTSTANDING RECEIVABLES FROM AE CONSTITUTE A SEPARATE INTERNATIONAL TRANSACTION AND ON WH ICH INTEREST IS TO BE IMPUTED THEREON AND CONSEQUENTLY ALP ADJUSTMENT TO BE MADE. HENCE, THE PRIMARY ARGUMENT MADE BY THE LD. AR THAT THE ADJUSTMENT MADE ON ACCOUNT OF OUTSTANDING RECEIVABLES CANNOT BE CONSTRUED AS AN INTERNATIONAL TRANSACTIONS IS HEREBY R EJECTED AND DISMISSED. 5. 6. WE FIND THAT THE LD. AR VEHEMENTLY ARGUED THAT THE WORKING CAPITAL ADJUSTMENT HAS BEEN GRANTED BY THE LD . TPO TO THE ASSESSEE FOR BOTH THE YEARS AND HENCE, THERE CANNOT BE FURTHER IMPUTATION OF INTEREST ON OUTSTANDING RECEIVABLES AS THE SAME GETS SUBSUMED IN THE WORKING CAPITAL ADJUSTMENT ITSELF. IN THIS REGARD THE LD. AR PLACED RELIANCE ON THE DECISION OF DELHI HIGH COURT IN THE CASE OF KUSUM HEALTHCARE PVT. LTD., IN ITA NO.765 OF 2016 DATED 25/07/2017 AND ALSO THE CO - OR D INATE BE NCH DECISION IN THE CASE OF 15 ITA NOS. 425 /HYD/2015 AND OTHER APPEALS ALBANY MOLECULAR RESEARCH HYD. RESEARCH CENTERPVT. LTD. &ANR . V ALUE LABS LLP. 1909 AND 1910/HYD/2017 DATED 09/07/2020. WE FIND THAT THERE IS ABSOLUTELY NO DISPUTE THAT WORKING CAPITAL ADJUSTMENT HAD INDEED BEEN GRANTED BY LD. TPO TO THE ASSESSEE FOR A.Y.2013 - 14 AND 2014 - 15. INFACT, THERE I S ALSO AN EXCLUSIVE DISCUSSION MADE BY THE LD. DRP IN PARA 2.1.12 OF ITS ORDER REGARDING THE SAME FOR A.Y. 2014 - 15 . HENCE, BY APPLYING THE RATIO OF THE HONBLE DELHI HIGH COURT IN THE CASE OF KUSUM HEALTHCARE REFERRED TO SUPRA, NO IMPUTATION OF INTEREST ON OUTSTANDING RECEIVABLES COULD BE MADE THEREON FOR BOTH THE YEARS . HOWEVER, IN RESPECT OF INVOICES RAISED IN EARLIER YEARS, WHERE THE AMOUNTS WERE REALIZED DURING THE YEAR UNDER CONSIDERATION BUT BEYOND THE AGREED CREDIT PERIOD, IMPUTATION OF INTEREST BY A PPLYING LIBOR + 200 BASIS POINTS IS TO BE MADE FROM 1 ST DAY OF APRIL OF THE RELEVANT YEARS TILL THE DATE OF REALIZATION OF DEBTS. IN RESPECT OF INVOICES RAISED DURING THE RESPECTIVE YEARS, WHERE THE AMOUNTS WERE REALIZED DURING THE RESPECTIVE YEARS ITSELF, BUT BEYOND THE AGREED CREDIT PERIOD, IMPUTATION OF INT EREST BY APPLYING LIBOR +200 BASIS POINTS IS TO BE MADE FROM THE DATE OF EXPIRY OF AGREED CREDIT PERIOD FROM THE DATE OF RAISING THE INVOICE AND THE SAME IS TO BE CHARGED TILL THE DATE OF REALIZATION OF DEBTS. WE HOLD THAT THE DECISION OF THE HONBLE DELHI HIGH COURT IN KUSUM HEALTHCARE TALKS ABOUT ONLY OUTSTANDING RECEIVABLES AT THE END OF THE YEAR I.E. TO SAY WHEN WORKING CAPITAL ADJUSTMENT IS GIVEN TO THE ASSESSEE, NO SEPARATE ADJUSTMENT NEED TO BE MADE ON THE OUTSTANDING RECEIVABLES AT THE END OF THE YE AR. IN OUR CONSIDERED OPINION, THE DECISION OF HONBLE DELHI HIGH COURT DOES NOT SPEAK ABOUT THE INVOICES THAT 16 ITA NOS. 425 /HYD/2015 AND OTHER APPEALS ALBANY MOLECULAR RESEARCH HYD. RESEARCH CENTERPVT. LTD. &ANR . WERE REALIZED FROM THE AE BEYOND THE AGREED CREDIT PERIOD DURING THE YEAR. HENCE, IT COULD BE SAFELY CONCLUDED THAT THE DECISION OF THE HONBLE D ELHI HIGH COURT IN KUSUM HEALTHCARE DOES NOT GIVE ANY FINDING WITH REGARD TO INVOICES REALIZED DURING THE YEAR FROM AE. TO THAT EXTENT ALONE, WE ARE GIVING OUR INDEPENDENT FINDING BY TREATING THAT AS A SEPARATE INTERNATIONAL TRANSACTION AND DIRECTING THE L D. TPO TO CHARGE INTEREST BY APPLYING LIBOR + 200 BASIS POINTS IN THE AFORESAID MANNER. 5. 7 . IT WOULD BE RELEVANT TO NOTE IN THE AFORESAID PARAGRAPH THAT ASSESSEE HAD TO RECEIVE ITS OUTSTANDING RECEIVABLE S FROM ITS AE IN FOREIGN CURRENCY, IT WOULD BE JUST AND FAIR TO ADOPT LIBOR RATE + 200 BASIS POINTS AS THE APPLICABLE ALP INTEREST RATE FOR THE PURPOSE OF IMPUTATION OF INTEREST ON OUTSTANDING RECEIVABLES FROM AES. NEEDLESS TO MENTION THAT THE SAID IMPUTATI ON OF INTEREST IS TO BE MADE ON INVOICE TO INVOICE BASIS ON OUTSTANDING RECEIVABLES SO THAT THE PERIOD OF DELAY IN RESPECT OF EACH INVOICE COULD BE ACTUALLY WORKED OUT. 5.8. THE GROUND RAISED BY THE ASSESSEE FOR BOTH THE YEARS PRAYING FOR NETTING OF OUTS TANDING PAYABLES TO AES WITH OUTSTANDING RECEIVABLES FROM AES CANNOT BE ENTERTAINED IN VIEW OF OUR DIRECTION THAT IMPUTATION OF INTEREST IS TO BE MADE ON INVOICE TO INVOICE BASIS ON SUPPLIES MADE / SERVICES RENDERED BY THE ASSESSEE TO ITS AES. IN VIEW OF T HIS DIRECTION AND IN VIEW OF THE FACT THAT DATE OF RAISING OF EXPORT INVOICE ON AE WOULD BE DIFFERENT FROM DATE OF PURCHASE OF 17 ITA NOS. 425 /HYD/2015 AND OTHER APPEALS ALBANY MOLECULAR RESEARCH HYD. RESEARCH CENTERPVT. LTD. &ANR . GOODS OR IMPORT OF SERVICES FROM AE. ACCORDINGLY, THE GROUND RAISED ON NETTING OF OUTSTANDING PAYABLE WITH OUTSTANDING RECEIVABLE IS HEREBY DISMISSED FOR BOTH THE YEARS. 5. 9 . TO SUM UP FOR THE A.YRS 2013 - 14 & 2014 - 15, WE HOLD THAT THE OUTSTANDING RECEIVABLES FROM AES WOULD CONSTITUTE A SEPARATE INTERNATIONAL TRANSACTION ON WHICH IMPUTATION OF INTEREST IS TO BE MADE BY APPLYING LIBO R + 200 BASIS POINTS AS UNDER: - A . IN RESPECT OF INVOICES RAISED IN EARLIER YEARS BY THE ASSESSEE ON ITS AES, WHERE THE AMOUNTS WERE REALIZED DURING THE YEAR UNDER CONSIDERATION BUT BEYOND THE AGREED CREDIT PERIOD, IMPUTATION OF INTEREST IS TO BE MADE FROM FI RST DAY OF APRIL OR FROM THE EXPIRY OF THE AGREED CREDIT PERIOD (I.E 30 DAYS AS ACCEPTED BY LD DRP) WHICHEVER IS LATER TILL THE DATE OF REALIZATION OF DEBTS. B . IN RESPECT OF INVOICES RAISED DURING THE YEAR ON ITS AES, WHERE THE AMOUNTS WERE REALIZED DURING THE YEAR ITSELF BUT BEYOND THE AGREED CREDIT PERIOD, IMPUTATION OF INTEREST IS TO BE MADE FROM THE DATE OF EXPIRY OF AGREED CREDIT PERIOD TILL THE DATE OF REALIZATION OF DEBTS. 5.10 . ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE FOR A.YRS. 2013 - 14 AND 2014 - 15 WITH REGARD TO TRANSFER PRICING ADJUSTMENT MADE ON ACCOUNT OF 18 ITA NOS. 425 /HYD/2015 AND OTHER APPEALS ALBANY MOLECULAR RESEARCH HYD. RESEARCH CENTERPVT. LTD. &ANR . IMPUTATION OF INTEREST ON OUTSTANDING RECEIVABLES FROM AES ARE DISPOSED OFF IN THE AFORESAID MANNER. 6 . THE GROUND NO.3 RAISED FOR A.Y.2014 - 15 BY THE ASSESSEE IS WITH REGARD TO DETERMINATION OF ALP @5% OF REIMBURSEMENT FROM AE . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN THIS REGARD: - A . MARKING UP@5% ON THE EXPENSES BEING THE TRAVEL COST OF DEPUTED EMPLOYEES PAID ON BEHALF OF AE AND RECOVERED THE SAME AT COST FROM AES AS RELATED TO PROVISION OF SERVICES. B . NOT UNDERTAKING ANY ANALYSIS TO DETERMINE THE ALP OF THE REIMBURSEMENT TRANSACTION AND MARKING UP @5% ON ADHOC BASIS. 6 .1. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT NO ARGUMENTS WERE ADVANCED BY THE LD. AR WITH REGARD TO THESE GROUNDS. WE FIND THAT THE LD. DRP HAD DISMISSED THIS ISSUE ON THE GROUND THAT ASSESSEE HAS NOT FILED ANY DETAILS TO DEMONSTRATE THAT THESE WERE MERE REIMBURSEMENTS ON COST TO COST BASIS. ACCORDINGLY, THE LD. DRP FOUND IT APPROPRIATE TO DIRECT THE LD. TPO TO APPLY MARK UP OF 5% (AS AGAINST 10% ADOPTED BY THE LD. TPO) AND RECOMPUTE THE ADJUSTMENT. NO EFFORTS WERE TAKEN BY THE ASSESSEE BEFORE U S TO IMPROVE ITS CASE BEYOND WHAT WAS STATED BEFORE LD. DRP WITH REGARD TO THIS ISSUE . HENCE, WE DO NOT DEEM IT FIT TO INTERFERE WITH THE DIRECTIONS OF LD. DRP AND CONSEQUENTIAL LY IN THE FINAL ASSESSMENT ORDER PASSED BY THE LD. AO PURSUANT TO DIRECTIONS OF LD. DRP IN 19 ITA NOS. 425 /HYD/2015 AND OTHER APPEALS ALBANY MOLECULAR RESEARCH HYD. RESEARCH CENTERPVT. LTD. &ANR . RESPECT OF THIS GROUND. ACCORDINGLY, THE GROUND RAISED ON MARK UP ON REIMBURSEMENTS IS HEREBY DISMISSED. 7 . SINCE THE APPEAL S FOR A.Y. S 2012 - 13 AND 2014 - 15 ARE DISPOSED OFF, THE STAY PETITION S FOR A.Y. S 2012 - 13 AND 2014 - 15 WHICH WERE CLUBBED WI TH THE MAIN APPEAL BECOMES INFRUCTUOUS AND ACCORDINGLY, THE SAME ARE DISMISSED AS INFRUCTUOUS. 8 . THE DECISION RENDERED BY US FOR A.Y.2014 - 15 ON THE GROUND RAISED IN RESPECT OF DETERMINATION OF ALP BY WAY OF MARK - UP ON REIMBURSEMENT SHALL APPLY WITH EQUAL FORCE FOR A.YRS. 2010 - 11, 2011 - 12,2012 - 13 & 2013 - 14 EXCEPT WITH VARIANCE IN FIGURES AND VARIANCE IN MARK - UP PERCENTAGE. 9 . THE GROUND NO. 3 RAISED BY THE ASSESSEE FOR A.Y.2010 - 11 IS WITH REGARD TO SEEKING CREDIT FOR TDS AND PAYMENT OF S ELFA SSES S M E NT TAX . THE LD. AO IS DIRECTED TO VERIFY THE RECORDS AND THE SUPPORTING EVIDENCES THEREON AND GRANT CREDIT FOR SELF ASSESSMENT TAX AND THE TDS TO THE ASSESSEE AS PER LAW. 1 0 . THE NEXT GROUND FOR A.Y.2010 - 11 RAISED BY THE ASSESSEE IS WITH REG ARD TO CHARGEABILITY OF INTEREST U/S.234B OF THE ACT WHICH IS CONSEQUENTIAL IN NATURE. 1 1 . WE FIND THAT FOR A.Y. 2011 - 12 THE ASSESSEE HAD RAISED AN ADDITIONAL GROUND THAT RECEIVABLES DUE FROM OVERSEAS AES ARE TO BE BENCHMARKED BY APPLYING THE LIBOR RATES ON W ITHOUT PREJUDICE BASIS. WE HAVE ALREADY 20 ITA NOS. 425 /HYD/2015 AND OTHER APPEALS ALBANY MOLECULAR RESEARCH HYD. RESEARCH CENTERPVT. LTD. &ANR . ADJUDICATED THIS ASPECT OF THE ISSUE IN OUR REGULAR GROUNDS ITSELF AND WE ADMIT THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE AND THE DECISION RENDERED EARLIER IN THIS REGARD WOULD APPLY FOR ADDITIONAL GROUNDS ALSO. 1 2 . THE GROUND NOS. 4 & 5 RAISED BY THE ASSESSEE FOR A.Y.2012 - 13 ARE WITH REGARD TO CHARGEABILITY OF INTEREST U/S.234B AND 234C OF THE ACT WHICH ARE CONSEQUENTIAL IN NATURE. 1 3 . THE GROUND NO.3 RAISED BY THE ASSESSEE FOR A.Y. 13 - 14 IS FOR SEEKING TDS CRED IT OF RS.826366/ - . WE DIRECT THE LD. AO TO VERIFY THE ELIGIBILITY OF THE ASSESSEE IN THIS REGARD. THE LD. AO SHOULD VERIFY THE SUPPORTING EVIDENCES AND GRANT THE TDS CREDIT AS PER LAW. 1 4 . THE GROUND NO.4 RAISED BY THE ASSESSEE FOR A.Y.2013 - 14 IS WITH REG ARD TO CHARGEABILITY OF INTEREST U/S.234B OF THE ACT WHICH IS CONSEQUENTIAL IN NATURE. ITA NO . 333/HYD/2015 (AY 2010 - 11) REVENUE APPEAL 1 5 . THE FIRST GROUND RAISED BY THE REVENUE FOR A.YR 2010 - 11 IS CHALLENGING THE DIRECTION OF THE LD. DRP TO ADOPT MARK - UP OF 10% ON THE REIMBURSEMENT RECEIVED BY THE ASSESSEE FROM AES. WE FIND THAT THE LD. TPO HAD ADOPTED ON ADHOC BASIS OF 10% MARK - UP ON REIMBURSEMENT FROM AES WHICH WAS REDUCED BY THE LD. DRP TO 5%. WE HAVE ALREADY HELD IN ASSESSEES APPEAL IN RESPECT OF THIS ISSUE THAT ASSESSEE HAD NOT PROVIDED ANY FURTHER DETAILS TO PROVE THAT THE REIMBURSEMENT FROM AE WAS DONE ON COST TO COST BASIS. IN THE ABSENCE OF THOSE DETAILS, THERE IS NOTHING WRONG IN ADOPTING MARK - UP ON SOME REASONABLE 21 ITA NOS. 425 /HYD/2015 AND OTHER APPEALS ALBANY MOLECULAR RESEARCH HYD. RESEARCH CENTERPVT. LTD. &ANR . BASIS. WE FIND THAT MAR K - UP OF 5% ADOPTED BY THE LD. DRP IS REASONABLE IN THE FACTS AND CIRCUMSTANCES IN THE INSTANT CASE AND DOES NOT WARRANT ANY INTERFERENCE THEREON. ACCORDINGLY, THE GROUND NO.1 RAISED BY THE REVENUE IS DISMISSED. 1 6 . THE GROUND NO.2 RAISED BY THE REVENUE IS CHALLENGING THE ACTION OF THE LD. DRP TO APPLY LIBOR RATES AS THE APPLICABLE ALP RATE FOR IMPUTATION OF INTEREST ON DEFERRED RECEIVABLES. WE HAVE ALREADY HELD THAT DEFERRED RECEIVABLES CANNOT BE CONSTRUED AS A SEPARATE INTERNATIONAL TRANSACTION FOR A.YRS. 2010 - 11, 2011 - 12 AND 2012 - 13 IN ASSESSEES APPEAL SUPRA BY PLACING RELIANCE ON THE DECISION OF MUMBAI TRIBUNAL IN THE CASE OF FIRESTONE DIAMOND PVT. LTD., VS. ITO IN ITA NO.139/MUM/2014 DATED 31/03/2016. HENCE, THERE CANNOT BE ANY IMPUTATION OF INTEREST A T ALL ON OUTSTANDING RECEIVABLES FOR THOSE ASSESSMENT YEARS. ACCORDINGLY, THE ADJUDICATION OF GROUND NO.2 RAISED BY THE REVENUE WOULD BE INFRUCTUOUS AND IS ACCORDINGLY DISMISSED. 17. TO SUM UP SR. NO. ITA NO. A.Y APPEAL BY RESULT 1 425/HYD/2015 2010 - 11 ASSESSEE PARTLY ALLOWED 2 333/HYD/2015 2010 - 11 REVENUE DISMISSED 3 233/HYD/2016 2011 - 12 ASSESSEE PARTLY ALLOWED 4 107/HYD/2016 2012 - 13 ASSESSEE PARTLY ALLOWED 22 ITA NOS. 425 /HYD/2015 AND OTHER APPEALS ALBANY MOLECULAR RESEARCH HYD. RESEARCH CENTERPVT. LTD. &ANR . 5 2184/HYD/2017 2013 - 14 ASSESSEE PARTLY ALLOWED FOR STATISTICAL PURPOSES 6 2376/HYD/2018 2014 - 15 ASSESSEE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 7 SA NO. 51/HYD/2020 2012 - 13 A S S E S S E E DISMISSED AS INFRUCTUOUS 8 SA NO. 52/HYD/2020 2014 - 15 A S S E S S E E DISMISSED AS INFRUCTUOUS ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 / 11 /20 20 SD/ - ( C.N. PRASAD ) SD/ - ( M.BALAGANESH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED 26 / 11 /20 20 KARUNA SR. PS 23 ITA NOS. 425 /HYD/2015 AND OTHER APPEALS ALBANY MOLECULAR RESEARCH HYD. RESEARCH CENTERPVT. LTD. &ANR . COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, HYDERABAD 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), HYDERABAD . 4. CIT 5. DR, ITAT, HYDERABAD 6. GUARD FILE. //TRUE COPY//