ORACLE INDIA PRIVATE LIMITED,NEW DELHI V. DCIT CIRCLE-19(1), NEW DELHI

ITA 1750/DEL/2020

AI Insights

Oracle India Pvt. Ltd. appealed against the order of the CIT(A)-20, which confirmed the addition of notional interest on outstanding receivables from Oracle Systems Corporation, USA, amounting to Rs. 302,117,692. The assessee argued that the CIT(A) erred in law by confirming the addition without actual interest being charged or received, and that the CIT(A) failed to appreciate the principles of charging only real income to tax and the factual inaccuracies regarding the delay in realization of receivables. The Tribunal noted the assessee's ongoing settlement under the Direct Tax Vivad se Vishwas Act, 2020 and dismissed the appeal with the option to revive it depending on the outcome of the settlement.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471613 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIJAY B.VASANTA
• Assessee Lawyers: KALRAV MEHROTRA
• Keywords: Principle of natural justice; Notional interest
• Section: 147; 250; 234B; 244A; 20

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘D’, NEW DELHI Before Sh. Satbeer Singh Godara, Judicial Member & Sh. S. Rifaur Rahman, Accountant Member ITA No. 1750/Del/2020 : Asstt. Year: 2005-06 Oracle India Pvt. Ltd., F-01/02, First Floor, Salcon Rasvillas, D-1, District Centre, Saket, New Delhi-110017 Vs DCIT, Circle-19(1), New Delhi-110002 (APPELLANT) (RESPONDENT) PAN No. AAACO0158L Assessee by : Sh. Kalrav Mehrotra, Adv. Revenue by : Sh. Vijay B. Vasanta, CIT-DR Date of Hearing: 10.03.2025 Date of Pronouncement: 19.03.2025 ORDER Per Satbeer Singh Godara, Judicial Member: This assessee’s appeal for Assessment Year 2005-06, arises against the CIT(A)-20, Delhi’s DIN & order No. ITBA/APL/S/250/2020-21/1027816822(1) dated 27.08.2020, in proceedings u/s 147 of the Income Tax Act, 1961 (in short “the Act”). 2. Heard both the parties at length. Case file perused. 3. The assessee pleads the following substantive grounds in the instant appeal: “1. That on the facts of the case and in law, the order dated August 27, 2020 passed under section 250 of the Act ITA No. 1750/Del/2020 Oracle India Pvt. Ltd. 2 by the Learned Commissioner of Income Tax - 20 [hereinafter referred to as CIT(A)] is bad-in-law, to the extent the CIT(A) has confirmed the addition(s) made in the re-assessment order dated March 19, 2014. 2. That on the facts of the case and in law, the CIT(A) erred in confirming the addition made by AO towards notional interest amounting to Rs. 302,117,692 on outstanding receivables from Oracle Systems Corporation, USA (OSC) by applying adhoc interest rate of 12% and ignoring the fact that no such interest has been actually charged or received by the Appellant. 2.1 That while holding so, the CIT(A) failed to appreciate that only real income can be charged to tax and not any hypothetical I notional income. 2.2 That the CIT(A) further erred in not appreciating that the allegation of AO regarding delay in realization of receivable from OSC was factually incorrect. 2.3 That the CIT(A) further erred in observing that Appellant was afforded sufficient opportunity by the AO during the course of assessment, and thereby, dismissing the ground raised by the Appellant on the issue of violation of principle of natural justice. WITHOUT PREJUDICE GROUNDS 2.4 Without prejudice to above, the CIT(A) has further erred in not appreciating that the Appellant was following a consistent policy not to charge any interest on receivables both from related parties (AE’s) and from unrelated third party customers, and hence, in view of judicial rulings no adjustment should be made for notional interest on outstanding receivables from AE’s. 2.5 Without prejudice to above, the CIT(A) further erred in not appreciating that Appellant is a debt free company, therefore no adjustment on account of interest on delayed realization of receivable is required in view of Jurisdictional High Court ruling. 2.6 Without prejudice to above, the CIT(A) further erred in not appreciating that receivables from OSC was not a separate international transaction requiring identified / separate compensation. 2.7 Without prejudice to above, the CIT(A) further erred in not appreciating that once impact of working capital adjustment is considered, it already takes into account the impact of outstanding receivables on profitability, and therefore, no separate adjustment for notional interest is required. ITA No. 1750/Del/2020 Oracle India Pvt. Ltd. 3 2.8 Without prejudice to above, the CIT(A) further erred in not dealing with specific ground raised by the Appellant regarding ad-hoc interest rate of 12 percent applied by AO for calculating notional interest, instead of LIBOR based interest rate. 3. That on the facts of the case and in law, the CIT(A) further erred in upholding the ground relating to levy of interest under section 234B of the Act.” 4. Suffice to say, it is already come on record that the assessee has opted for settlement under the Direct Tax Vivad se Vishwas Act, 2020 by filing the corresponding declaration which is stated to be pending on the issue of section 244A interest computation before the departmental authorities. 5. That being the case, we are of the considered view that the assessee’s instant appeal deserves to be dismissed for the above precise reason with a rider that it shall indeed at liberty to revive the same in case the foregoing settlement under the Direct Tax Vivad se Vishwas Act, 2020, does not attain finality for any reason; whatsoever. Ordered accordingly. 6. This assessee’s appeal is dismissed as withdrawn in above terms subject to all just exceptions. Order Pronounced in the Open Court on 19/03/2025. Sd/- Sd/- (S. Rifaur Rahman) (Satbeer Singh Godara) Accountant Member Judicial Member Dated: 19/03/2025 *Subodh Kumar, Sr. PS* "