Pitney Bowes Software India Pvt. Ltd., New Delhi V. ADDL. CIT, SPECIAL RANGE- 7, New Delhi

ITA 7034/DEL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2955 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2013-2014
• Appeal Filed On: 23-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY I BARA
• Assessee Lawyers: NEERAJ JAIN SHRI RAMIT KATYAL
• Keywords: Depreciation; Transfer pricing; Opportunity of being heard; International transaction; Retrospective amendment; Question of law
• Section: 143(3); 92B; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : I-1 : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.7034/DEL/2017 ASSESSMENT YEAR : 2013-14 PITNEY BOWES SOFTWARE INDIA PVT. LTD., 709-710, ANSAL CHAMBERS, BHIKAJI CAMA PLACE, NEW DELHI. PAN: AAECM9134E VS. ADDL. CIT, SPECIAL RANGE-7, NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NEERAJ JAIN, ADVOCATE, SHRI RAMIT KATYAL, CA DEPARTMENT BY : SHRI SANJAY I. BARA, CIT, DR DATE OF HEARING : 12.03.2018 DATE OF PRONOUNCEMENT : 13.03.2018 ORDER PER R.S. SYAL, VP: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE FINAL ASSESSMENT ORDER DATED 31.10.2017 PASSED BY THE ASS ESSING OFFICER (A.O.) ITA NO.7034/DEL/2017 2 U/S 143(3) READ WITH SECTION 144C OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED THE ACT) IN RELATION TO THE ASSESSMEN T YEAR 2013-14. 2. THE FIRST ISSUE RAISED IN THIS APPEAL IS AGAINST THE ADDITION ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT OF RS.104,57,16,656/ - IN THE INTERNATIONAL TRANSACTION OF PROVISION OF SOFTWARE DEVELOPMENT S ERVICES. 3. BRIEFLY STATED, THE FACTS OF THIS ISSUE ARE THAT THE ASSESSEE IS A COMPANY INCORPORATED IN INDIA, WHICH IS SUBSIDIARY OF PITNEY BOWES SOFTWARE INC., USA. IT IS ENGAGED IN THE BUSINESS OF PROVIDING END-TO-END BUSINESS SOLUTIONS IN LOCATION INTELLIGENCE WHICH C OMBINES TECHNOLOGY, DATA AND SERVICES WITH DOMAIN EXPERTISE TO ENABLE A N ORGANIZATION TO MEASURE, COMPARE, VISUALIZE ITS BUSINESS DATA. THE ASSESSEE REPORTED, INTER ALIA, AN INTERNATIONAL TRANSACTION OF PROVISION OF SOFT WARE DEVELOPMENT SERVICES AMOUNTING TO RS.109,01,74,781/-. THE ASSE SSING OFFICER REFERRED THE MATTER OF DETERMINATION OF THE ARMS LENGTH PRI CE (ALP) OF THE INTERNATIONAL TRANSACTIONS TO THE TRANSFER PRICING OFFICER (TPO). THE TPO OBSERVED THAT THE ASSESSEE EMPLOYED THE TRANSACTION AL NET MARGIN METHOD (TNMM) FOR BENCHMARKING ITS INTERNATIONAL TRANSACTI ON OF PROVISION OF ITA NO.7034/DEL/2017 3 SOFTWARE DEVELOPMENT SERVICES. THE ASSESSEE DECLAR ED ITS PROFIT LEVEL INDICATOR (PLI) OF OPERATING PROFIT/TOTAL COST (OP/ TC) AT 9.38%, WHICH WAS COMPARED WITH THE AVERAGE MARGIN OF SEVEN COMPA RABLES AT 13.33%. THAT IS HOW, THE ASSESSEE TRIED TO DEMONSTRATE THAT ITS INTERNATIONAL TRANSACTION WAS AT ALP. THE TPO MADE CERTAIN CHANG ES IN THE LIST OF COMPARABLES MAKING THE NUMBER OF COMPARABLES AT 13 AND THEIR AVERAGE PLI WAS WORKED OUT AT 19.02%. THIS LED TO A TRANSF ER PRICING ADJUSTMENT OF RS.13,75,72,821/-. AFTER CONSIDERING THE DIRECT IONS FROM THE DISPUTE RESOLUTION PANEL (DRP), THE AO FINALLY MADE AN ADDI TION OF RS.10,45,71,656/- ON ACCOUNT OF TRANSFER PRICING AD JUSTMENT IN THE INTERNATIONAL TRANSACTION OF PROVISION OF SOFTWARE DEVELOPMENT SERVICES. THE ASSESSEE IS AGGRIEVED AGAINST THE ADDITION OF R S.10.45 CRORE. 4. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE REL EVANT MATERIAL ON RECORD. THE ASSESSEE ADOPTED TNMM AS THE MOST APPRO PRIATE METHOD QUA THE INTERNATIONAL TRANSACTION OF PROVISION OF SOFT WARE DEVELOPMENT SERVICES, WHICH HAS NOT BEEN DISTURBED BY THE TPO. TWO ISSUES RAISED BEFORE US IN THIS REGARD ARE AGAINST NOT ALLOWING W ORKING CAPITAL ITA NO.7034/DEL/2017 4 ADJUSTMENT AND INCLUSION OF LARSEN & TOUBRO INFOTEC H LTD. (SEG.) IN THE FINAL SET OF COMPARABLES. 5. IN SO FAR AS THE NON-GRANTING OF WORKING CAPI TAL ADJUSTMENT IS CONCERNED, IT IS SEEN THAT IN THE IMMEDIATELY PRECE DING ASSESSMENT YEAR, THE TRIBUNAL HAD AN OCCASION TO CONSIDER THIS ARGUM ENT FOR GRANT OF WORKING CAPITAL ADJUSTMENT. VIDE ORDER DATED 18.02 .2015 (ITA NO.679/DEL/2014), A COPY OF WHICH IS PLACED ON REC ORD, THE TRIBUNAL DIRECTED TO GRANT THE WORKING CAPITAL ADJUSTMENT AN D, ACCORDINGLY, REMITTED THE MATTER TO THE FILE OF TPO/A.O. FOR DOING THE NE EDFUL. THE REVENUE ASSAILED THIS ORDER BEFORE THE HON'BLE HIGH COURT. VIDE JUDGMENT DATED 28.09.2015, THE HON'BLE HIGH COURT HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT NO SUBSTANTIAL QUESTION OF LAW ARISES FROM THE TRIBUNAL ORDER. THE LD. DR ADMITTED THAT THE FACTS AND CIRCUMSTANCES OF THE INSTANT YEAR ARE MUTATIS MUTANDIS SIMILAR TO THOSE OF THE PRECEDING YEAR. RESPECTFULLY FOLLOWING THE PRECEDENT, WE DIRECT TO GRANT THE WORKING CAPITAL ADJUSTMENT AND, ACCORDINGLY, REMIT THE MATT ER TO THE FILE OF A.O./TPO FOR GRANTING SUCH ADJUSTMENT IN THE LIGHT OF THE DIRECTIONS GIVEN ITA NO.7034/DEL/2017 5 BY THE TRIBUNAL IN THE PRECEDING YEAR. NEEDLESS TO SAY, THE ASSESSEE WILL BE ALLOWED A REASONABLE OPPORTUNITY OF BEING HEARD IN SUCH PROCEEDINGS. 6. THE ONLY OTHER ISSUE IN RELATION TO THE INTERNAT IONAL TRANSACTION OF PROVISION OF SOFTWARE DEVELOPMENT SERVICES IS THE INCLUSION OF LARSEN & TOUBRO INFOTECH LTD.(SEG.). THE ASSESSEE RAISED OB JECTION AGAINST THE INCLUSION OF THIS COMPANY BEFORE THE TPO BY CONTEND ING THAT IT WAS FUNCTIONALLY NOT COMPARABLE AND WAS ALSO HAVING HIG H TURNOVER. THE TPO REJECTED THE ASSESSEES CONTENTION AND PROCEEDED TO INCLUDE INDUSTRIAL CLUSTER SEGMENT OF THIS COMPANY FOR THE PURPOSE OF COMPARABILITY. IN THIS REGARD, IT WAS OBSERVED THAT THIS COMPANY REPORTED THREE SEGMENTS VIZ., SERVICE CLUSTERS, INDUSTRIAL CLUSTERS AND TELECOM C LUSTERS. THE TPO CONSIDERED ONLY THE INDUSTRIAL CLUSTER AS THE RELEV ANT SEGMENT FOR THE PURPOSE OF COMPARISON, WHOSE OP/OC WAS COMPUTED AS UNDER :- PARTICULARS INDUSTRIAL CLUSTER REVENUE 16,380,087,222 EXPENSE 11,384,705,358 PROFIT 4,995,381,864 OP/OC 43.88% ITA NO.7034/DEL/2017 6 7. OPERATING PROFIT RATE OF L&T INFOTECH LTD. ( SEGMENT) AT 43.88% WAS CONSIDERED FOR COMPUTING THE AVERAGE MARGIN OF COMP ARABLES FOR THE PURPOSE OF MAKING TRANSFER PRICING ADJUSTMENT IN TH IS INTERNATIONAL TRANSACTION. 8. THE LD. AR CONTENDED BEFORE US THAT WHILE COMPUT ING OP/OC OF THE RELEVANT SEGMENT OF L&T INFOTECH LTD., THE TPO DID NOT CONSIDER `UNALLOCATED EXPENSES TO THE RELEVANT SEGMENT. WE HAVE GONE THROUGH THE ANNUAL REPORT OF THIS COMPANY, WHOSE COPY IS PL ACED AT PAGE 73 ONWARDS OF THE PAPER BOOK. IT CAN BE SEEN FROM PAG E 101 OF THE PAPER BOOK THAT THIS COMPANY HAS REPORTED REVENUES FROM T HREE SEGMENTS AND THE REVENUE FROM INDUSTRIAL CLUSTER SEGMENT IS RS.1638, 00,87,222/-, AS HAS BEEN RIGHTLY ADOPTED BY THE TPO. THE NEXT ITEM ON PAGE 101 UNDER THE INDUSTRIAL CLUSTER SEGMENT IS SEGMENTAL OPERATING P ROFIT OF RS.527,75,53,809/-. IF WE EXCLUDE SEGMENTAL OPERAT ING PROFIT FROM THE SEGMENTAL REVENUE, THE AMOUNT OF THE `OPERATING COS TS COMES TO RS.1111 CRORE AND ODD. AS AGAINST THIS FIGURE, THE TPO HAS TAKEN OPERATING EXPENSES AT RS.1138/- CRORE AND ODD. THUS, THERE I S DIFFERENCE OF RS.27 CRORE AND ODD BETWEEN THE TWO FIGURES. IN THE SAME TABLE ON PAGE 101 OF ITA NO.7034/DEL/2017 7 THE PAPER BOOK, THIS COMPANY HAS SHOWN THE AMOUNT O F `UNALLOCABLE EXPENSES UNDER THE HEAD TOTAL AT RS.225.73 CROR E. IN ADDITION, THERE ARE ITEMS OF DEPRECIATION AND AMORTIZATION OF INTANGIBL E ASSETS. THESE TWO ITEMS OF DEPRECIATION AND AMORTIZATION OF INTANGIBL E ASSETS WHEN APPORTIONED ON THE BASIS OF REVENUE FROM THE INDUST RIAL CLUSTER VIS--VIS TOTAL REVENUE, GIVE THE FIGURE OF RS.27 CRORE TO MA TCH WITH THE FIGURE OF TOTAL OPERATING EXPENSES TAKEN BY THE TPO AT RS.113 8 CRORE. THUS, IT IS CLEAR THAT IN COMPUTING THE OPERATING PROFIT FROM T HE INDUSTRIAL CLUSTER SEGMENT, THE TPO, FIRSTLY, ALLOCATED DEPRECIATION AND AMORTIZATION OF INTANGIBLE ASSETS ON THE BASIS OF GROSS REVENUE AND NOT THE ACTUALS OF THIS SEGMENT AND SECONDLY, EXCLUDED `UNALLOCABLE EXPENS ES OF RS.225.73 CRORE ALTOGETHER. 9. UNALLOCATED EXPENSES OBVIOUSLY COMPRISE SEV ERAL ITEMS OF EXPENSES OF DISTINCT NATURE AND HENCE THERE CANNOT BE A UNIF ORM KEY OF APPORTIONMENT. FOR EXAMPLE, `RENT PAID BY AN ASSES SEE CANNOT BE BIFURCATED ON THE BASIS OF REVENUE FROM DIFFERENT S EGMENTS, SUCH AS, MANUFACTURING, TRADING AND SERVICES. THE EXTENT OF AREA USED BY EACH BUSINESS SEGMENT VARIES AS PER THE NATURE OF TRANSA CTION, WHICH MAY HAVE ITA NO.7034/DEL/2017 8 NO RELATION WITH THE GROSS REVENUE. FOR EXAMPLE, A MANUFACTURING UNIT WILL NEED RELATIVELY MORE AREA THAN A TRADING UNIT. SIMI LARLY, A SERVICE UNIT WILL NEED STILL LESSER AREA. IN SUCH CIRCUMSTANCES, APPO RTIONING COMMON RENT EXPENDITURE ON THE BASIS OF GROSS REVENUE FROM SUCH VARIED DIVISIONS, WILL GIVE SKEWED RESULTS OF SEGMENT PROFITABILITY. SIMIL ARLY, CONTRIBUTION OF VARIOUS SEGMENTS TO OTHER ITEMS OF EXPENSES VARIES DEPENDING UPON THE NATURE OF TRANSACTION, EXTENT OF CAPITAL AND LABOUR REQUIRED ETC. ETC. SO ALL COMMON EXPENSES CANNOT BE APPORTIONED IN THE RATIO OF GROSS REVENUE FROM DIFFERENT SEGMENTS, EACH HAVING ITS OWN SEPARA TE FEATURES AND CHARACTERISTICS. ONE CAN LOGICALLY MAKE ALLOCATION DEPENDING UPON THE NATURE OF EXPENDITURE AND APPROPRIATE ALLOCATION KE Y. 10. ADVERTING TO THE FACTS OF THE INSTANT CASE, WE FIND THAT FIRSTLY, THE TPO DID NOT ALLOCATE `UNALLOCABLE EXPENSES, WHICH ARE NECESSARY INGREDIENT OF `OPERATING COSTS, WITHOUT WHICH CORR ECT AMOUNT OF OPERATING PROFITS CANNOT BE ASCERTAINED. SECONDLY, NEITHER TH E NATURE OF COMMON UNALLOCATED EXPENSES IS KNOWN NOR THE INFORMATION C ONCERNING THE APPROPRIATE ALLOCATION KEYS IS AVAILABLE. UNDER SU CH CIRCUMSTANCES, THE VERY INCLUSION OF LARSEN & TOUBRO INFOTECH LTD. (SE G.) IN THE LIST OF ITA NO.7034/DEL/2017 9 COMPARABLES VITIATES THE COMPARABILITY. THE DELHI BENCH OF THE TRIBUNAL IN CEVA FREIGHT INDIA PRIVATE LIMITED. (ITA NO.495 6/DEL/2013), VIDE ITS ORDER DATED 18.01.2012, HAS DIRECTED THE EXCLUSION OF A COMPANY IN SIMILAR CIRCUMSTANCES WHICH ALSO HAD CERTAIN UNALLOCABLE EX PENSES, NOT CAPABLE OF PROPER ALLOCATION. 11. BE THAT AS IT MAY, THE LD. AR HAS PLACED ON RECORD A CALCULATION IN WHICH `UNALLOCABLE EXPENSES OF LARSEN & TOUBRO INF OTECH LTD., HAVE BEEN APPORTIONED ON THE BASIS OF GROSS REVENUE, WHI CH GIVES SEGMENTAL PROFIT RATE OF THE INDUSTRIAL CLUSTER SEGMENT OF L& T AT 34.9%. THE LD. AR CONTENDED THAT EVEN IF THE SEGMENT OF L&T IS INCLUD ED WITH THIS AMENDED PROFIT RATE, ITS MARGIN WILL BE WITHIN THE PERMISSI BLE RANGE. SINCE WE HAVE HELD, IN PRINCIPLE, THAT A COMPANY WITH `UNALLOCABL E EXPENSES, IN THE ABSENCE OF THE AVAILABILITY OF NATURE OF EXPENSES A ND PROPER ALLOCATION KEYS, HAS TO BE EXCLUDED AT THE THRESHOLD, THERE I S NO NEED FOR EXAMINING THE APPORTIONMENT OF `UNALLOCABLE EXPENSES AS PUT FORTH BY THE LD. AR. WE, THEREFORE, DIRECT TO EXCLUDE LARSEN & TOUBRO IN FOTECH LTD. (SEG.) FROM THE LIST OF COMPARABLES. ITA NO.7034/DEL/2017 10 12. THE ONLY OTHER ISSUE RAISED IN THIS APPEAL IS A GAINST THE TRANSFER PRICING ADJUSTMENT OF RS.11,57,791/- ON ACCOUNT OF INTEREST ON DELAY IN REALIZATION OF RECEIVABLES FROM THE ASSOCIATED ENTE RPRISES (AES). 13. BRIEFLY STATED, THE FACTS OF THIS GROUND ARE TH AT THE TPO NOTED ON PAGE 53 OF HIS ORDER THAT THE INVOICES FROM THE AES WERE REALIZED LATE. CONSIDERING A PERIOD OF 30 DAYS AS A GRACE PERIOD F OR REALIZATION OF INVOICES, HE WENT ON TO COMPUTE A TRANSFER PRICING ADJUSTMENT OF RS.11,57,791/- ON ACCOUNT OF INTEREST ON RECEIVABLE S. NO RELIEF WAS ALLOWED BY THE DRP, WHICH RESULTED INTO AN ADDITION OF EQUAL AMOUNT IN THE FINAL ASSESSMENT ORDER. 14. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSIN G THE RELEVANT MATERIAL ON RECORD, IT IS NOTICED THAT THE ASSESSEE ARGUED BEFORE THE TPO THAT INTEREST ON RECEIVABLES IS NOT AN INTERNATIONA L TRANSACTION. AT THIS STAGE, IT WOULD BE APPOSITE TO NOTE THAT THE FINANC E ACT, 2012 HAS INSERTED EXPLANATION TO SECTION 92B WITH RETROSPECTIVE EFFEC T FROM 1.4.2002. CLAUSE (I) OF THIS EXPLANATION, WHICH IS OTHERWISE ALSO FOR REMOVAL OF DOUBTS, GIVES MEANING TO THE EXPRESSION INTERNATIO NAL TRANSACTION IN AN ITA NO.7034/DEL/2017 11 INCLUSIVE MANNER. SUB-CLAUSE (C) OF CLAUSE (I) OF THIS EXPLANATION, WHICH IS RELEVANT FOR OUR PURPOSE, PROVIDES AS UNDER :- ` EXPLANATION. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY CLARIFIED T HAT (I) THE EXPRESSION 'INTERNATIONAL TRANSACTION' SH ALL INCLUDE (A) (B) .. (C) CAPITAL FINANCING, INCLUDING ANY TYPE OF LONG-TERM OR SHORT-TERM BORROWING, LENDING OR GUARANTEE, PURCHASE OR SALE O F MARKETABLE SECURITIES OR ANY TYPE OF ADVANCE, PAYMENTS OR DEFERRED PAYMEN T OR RECEIVABLE OR ANY OTHER DEBT ARISING DURING THE COURSE OF BUSINESS; . 15. ON GOING THROUGH THE RELEVANT PART OF THE EX PLANATION INSERTED WITH RETROSPECTIVE EFFECT FROM 1.4.2002, THEREBY ALSO CO VERING THE ASSESSMENT YEAR UNDER CONSIDERATION, THERE REMAINS NO DOUBT TH AT APART FROM ANY LONG- TERM OR SHORT-TERM LENDING OR BORROWING ETC. OR ANY TYPE OF ADVANCE PAYMENTS OR DEFERRED PAYMENTS, ANY OTHER DEBT ARISING DURING THE COURSE OF BUSINESS HAS ALSO BEEN EXPRESSLY RECOGNIZED AS AN INTERNAT IONAL TRANSACTION. THAT BEING SO, THE PAYMENT/NON-PAYMEN T OF INTEREST OR RECEIPT/NON-RECEIPT OF INTEREST ON THE LOANS ACCEPT ED OR ALLOWED IN THE CIRCUMSTANCES AS MENTIONED IN THIS CLAUSE OF THE EXPLANATION , ALSO BECOME INTERNATIONAL TRANSACTION, REQUIRING THE DETERMINAT ION OF THE ALP. IF ITA NO.7034/DEL/2017 12 PAYMENT OF INTEREST IS EXCESSIVE OR THERE IS NO OR LOW RECEIPT OF INTEREST, THEN SUCH INTEREST EXPENSE/INCOME NEED TO BE BROUGH T TO ITS ALP. THE EXPRESSION DEBT ARISING DURING THE COURSE OF BUSINESS IN COMMON PARLANCE ENCOMPASSES, INTER ALIA, ANY TRADING DEBT ARISING FROM THE SALE OF GOODS OR SERVICES RENDERED IN THE COURSE OF CARRYIN G ON THE BUSINESS. ONCE ANY DEBT ARISING DURING THE COURSE OF BUSINESS HAS BEEN ORDAINED BY THE LEGISLATURE AS AN INTERNATIONAL TRANSACTION, IT IS, BUT, NATURAL THAT IF THERE IS ANY DELAY IN THE REALIZATION OF DEBTS ARISING DURIN G THE COURSE OF BUSINESS, IT IS LIABLE TO BE VISITED WITH THE TP ADJUSTMENT O N ACCOUNT OF INTEREST INCOME SHORT CHARGED OR UNCHARGED. UNDER SUCH CIRC UMSTANCES, THE CONTENTION TAKEN BY THE ASSESSEE BEFORE THE TPO THA T IT IS NOT AN INTERNATIONAL TRANSACTION, TURNS OUT TO BE BEREFT O F ANY FORCE. 16. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PATNI COMPUTER SYSTEMS LTD., (2013) 215 TAXMANN 108 (BOM. ) DEALT, INTER ALIA , WITH THE FOLLOWING QUESTION OF LAW:- (C) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL DID NOT ERR IN HOLDING THAT THE LOSS SUFFERED BY THE ASSESSEE BY ALLOWING EXCESS PERIOD OF CREDIT TO THE ASSOCIATED ENTERPRISES WITHOUT CHARGING AN INTEREST DURING SUCH CREDIT PERIOD WOULD NOT AMOUNT TO INTERNATIONAL TRANSACTION WHEREAS SECTION 92B(1) OF THE INCOME-TAX ACT, ITA NO.7034/DEL/2017 13 1961 REFERS TO ANY OTHER TRANSACTION HAVING A BEARI NG ON THE PROFITS, INCOME, LOSSES OR ASSETS OF SUCH ENTERPRISES? 17. WHILE ANSWERING THE ABOVE QUESTION, THE HON BLE HIGH COURT NOTICED THAT AN AMENDMENT TO SECTION 92B HAS BEEN CARRIED O UT BY THE FINANCE ACT, 2012 WITH RETROSPECTIVE EFFECT FROM 1.4.2002. SETT ING ASIDE THE VIEW TAKEN BY THE TRIBUNAL, THE HONBLE HIGH COURT RESTORED TH IS ISSUE TO THE FILE OF THE TRIBUNAL FOR FRESH DECISION IN THE LIGHT OF THE LEGISLATIVE AMENDMENT. 18. THE FOREGOING DISCUSSION DIVULGES THAT NON-C HARGING OR UNDER- CHARGING OF INTEREST ON THE EXCESS PERIOD OF CREDIT ALLOWED TO THE AE FOR THE REALIZATION OF INVOICES AMOUNTS TO AN INTERNATI ONAL TRANSACTION AND THE ALP OF SUCH AN INTERNATIONAL TRANSACTION IS REQUIRE D TO BE DETERMINED. 19. NOW, WE COME TO THE COMPUTATION OF THE ALP OF T HE INTERNATIONAL TRANSACTION OF DEBTS ARISING DURING THE COURSE OF B USINESS. THE TPO HAS CALCULATED TP ADJUSTMENT ON ACCOUNT OF INTEREST ON OUTSTANDING DEBTS BEYOND A PERIOD OF 30 DAYS BY NOTING THE NUMBER OF DAYS AFTER WHICH THE RELEVANT INVOICES WERE REALIZED. THE LD. AR DID NOT DISPUTE THE CORRECTNESS OF THE PERIOD OF 30 DAYS ALLOWED BY THE TPO. HE, H OWEVER, CONTENDED THAT ITA NO.7034/DEL/2017 14 IN NONE OF THE CASES, THE ASSESSEE REALIZED INVOICE S BEYOND 30 DAYS FROM ITS AES. HE SUBMITTED THAT THE TPO INADVERTENTLY C ONSIDERED REALIZATION FROM NON-AE TRANSACTIONS FOR THE PURPOSE OF DETERMI NATION OF TRANSFER PRICING ADJUSTMENT. A CHART HAS BEEN PLACED ON REC ORD WHICH SHOWS THE DATES OF REALIZATION OF INVOICES. SINCE SUCH DETAI LS WERE NOT BEFORE THE TPO WHO PROCEEDED TO COMPUTE THE AMOUNT OF TRANSFER PRICING ADJUSTMENT BY CONSIDERING REALIZATION BEYOND 30 DAYS, WHICH IS NOT A CORRECT FACTUAL POSITION AS PER THE LD. AR, WE DEEM IT FIT TO SET A SIDE THE IMPUGNED ORDER ON THIS SCORE AND REMIT THE MATTER TO THE FILE OF A .O./TPO FOR CONSIDERING THE ASSESSEES CONTENTION AND THEN DECIDING THIS IS SUE AFRESH AS PER LAW, AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HE ARD TO THE ASSESSEE. 20. TO SUM UP, THE DETERMINATION OF ALP AND THE CON SEQUENTIAL ADDITION ON ACCOUNT OF TRANSFER PRICING ADJUSTMENTS IN RESPE CT OF THE INTERNATIONAL TRANSACTIONS OF PROVISION OF SOFTWARE DEVELOPMENT SERVICES AND INTEREST RECEIVABLES IS SENT BACK TO THE FILE OF A.O./TPO F OR DOING IT AFRESH IN ACCORDANCE WITH OUR ABOVE GUIDELINES AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ITA NO.7034/DEL/2017 15 21. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 13.03.201 8. SD/- SD/- [SUCHITRA KAMBLE] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED,13 TH MARCH, 2018. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.