M/s. KH Facility Solutions India Private Limited Vs. Dy. Commissioner of Income Tax

Parties Involved

Facts Summary

The assessee company filed its return of income for the assessment year 2017-18 on 30.11.2017 declaring a loss of Rs. 38,71,38,819/-. The case was selected for scrutiny due to international transactions. The Assessing Officer referred the case to the Transfer Pricing Officer (TPO) for determining the Arm's Length Price (ALP) of the international transaction. The TPO computed the ALP after making certain adjustments. The assessee filed objections before the Learned Dispute Resolution Panel (Ld. DRP) and partly succeeded. The assessee then filed an appeal before the Income Tax Appellate Tribunal (ITAT).…

Legal Issues

• 1. The order of the Assessing Officer is bad in law and liable to be set aside.
• 2. The Assessing Officer erred in making an upward transfer pricing adjustment of INR 9,05,670 by treating the ALP of the international transaction involving receipt of technical services as Nil.
• 3. The Assessing Officer erred in making an upward transfer pricing adjustment of INR 1,27,31,520 by treating the ALP of the international transaction involving receipt of regional support services as Nil.
• 4. The Assessing Officer erred by treating the outstanding receivables from its Associated Enterprises as separate international transaction.
• 5. The Assessing Officer erred by not considering the fact that the Assessee does not charge interest from its non-AE customers for delay in realisation of invoices.
• 6. The Assessing Officer erred by adopting SBI's short-term deposit interest rates for computation of notional interest on outstanding receivables denominated in foreign currencies.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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