आयकर अपीलीय न्यायाधिकरण में, हैदराबाद ‘ए’ बेंच, हैदराबाद IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad , , श्री मंजूनाथ जी माननीय लेखा सदस्य एवं श्री रवीश सूद माननीय न्याययक सदस्य SHRI G. MANJUNATHA, HON’BLE ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER आयकरअपीलसं./I.T.A.No.1862/Hyd/2017 (निर्धारण वर्ा/ Assessment Year: 2013-14)

M/s. Brightcom Group Vs. The Assistant Commissioner of Limited, Income Tax, (Formerly known as Lycos Circle 16(1), Internet Limited), Hyderabad.

Hyderabad.

PAN : AAACL5827B (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent)

करदाता का प्रतततितित्व/ : Shri P. Murali Mohan Rao, Assessee C.A.

Represented by राजस्व का प्रतततितित्व/ : Ms. U. Mini Chandran, CIT-

Department Represented by DR सुिवाई समाप्त होिे की ततति/ : 08.10.2025 Date of Conclusion of Hearing घोर्णध की तधरीख/ : 03.12.2025 Date of Pronouncement

O R D E R

PER MANJUNATHA G., A.M :

This appeal filed by the assessee is directed against the Final Assessment Order dated 30.10.2017 passed by the Assessing Officer (for short “the A.O.”) under Sections 143(3) r.w.s. 92CA(3) r.w.s.

144C(13) of the Income Tax Act, 1961 (for short “the Act”), pertaining to the assessment year 2013-14.

2. The grounds raised by the assessee read as under :

“1. Erred in making the ALP adjustment u/s. 92CA(3) of the Act for Rs. 1,16,97,360/- towards Interest 8% on Outstanding Receivables of Rs.14,62,16,997/- from AE's on hypothetical and notional basis without there being any material on record.

1.1. Erred in not following the directions of DRP wherein the Panel clearly directed to allow a reasonable credit period and make adjustment to outstanding receivables from AE only instead of total receivables while arriving at the interest on outstanding receivables.

1.2. Erred in re-characterizing the nature of transaction from 'Receivables' to 'loan' and charging interest which is not permissible u/s. 145 of the Act.

1.3. Ought to have appreciated the fact that the outstanding receivables are accrued from the sale of services rendered to the AE during the normal course of business and hence it cannot be equated to the term 'capital financing' as interpreted in section 92B of the Act.

1.4. Ought to have appreciated the fact that the outstanding receivables relate to the provision of services and not in the nature of any advance/loans. These are closely linked to the provision of services and hence have to be aggregated for the purpose of economic analysis.

Ought to have appreciated the fact that, the assessee has adopted TNMM method for determining the ALP of its transactions and the operating margin the assessee are much higher than its comparables, hence any adjustment with regard to ALP affecting the operating margin would be unjustifiable and against the provisions of Section 92C of the Act.

1.6. Erred in not following the procedure laid down under the provisions of Section 92C of the Act relating to the 'Computation of Arms Length Price

1.7. Ought to have appreciated the fact that the assessee is following a policy of not charging interest on receivables irrespective of whether the sales are made to AE or Non-AE. Hence, considering the CUP method as well, the transactions with AE are at arm's length.

1.8. Without prejudice to the above grounds, ought to have appreciated the fact that no ALP adjustment is required to be made in a case where after reducing the "adjustment as a percentage of operating cost" still the margin of the assessee is more than comparables.

2. Erred in making addition of Rs.8,73,48,776/- towards foreign currency gain without appreciating the submissions of the assessee.

2.1. Ought to have appreciated the fact that the company has raised invoices to customers in dollars and the Dollars' rate as on 01.04.2012 and as on 31.03.2013 is different to each other and the gain is only a notional gain, which raises in the books and not ultimately realized or actually received as benefit, was not a real income and hence was not taxable, while compu