2022 (5) TMI 1567

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....PO/ld. AO and Hon'ble DRP erred in making an adjustment of INR 19,08,408/- by imputing interest on outstanding inter-company receivables and in doing so have grossly erred in: 3.1 The facts and in law, in treating outstanding receivables from AEs as a separate international transaction requiring separate compensation. 3.2 The facts and in law, in arbitrarily without applying any method specified under transfer pricing regulations. 3.3 Without prejudice, not considering the effect f outstanding payables for the purpose of the adjustment. 3.4 Disregarding the fact that the appellant has not charged interest on receivables both from AEs and non AEs which establishes that the appellant is acting under arm's l....

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.... S. No. Name of the AE Relationship with AE Receivable Balance (A) Payable Balance (B) Difference Amount (A-B) 1 Rockwell Automation Inc, USA Ultimate Holding Company 44,541,345 376,160,226 (331,618,881) 2 Rockwell Automation Asia Pacific Ltd, Hong Kong Fellow Subsidiary 10,357,533 - 10,357,533 3 Rockwell Automation  BV Netherlands Fellow Subsidiary 45,271,184 - 45,271,184 4 Rockwell Automation, Pty Ltd, South Africa Fellow Subsidiary 5,145,938 - 5,145,938 5 Rockwell Samsung Automation Ltd. Korea Fellow Subsidiary 9,206,873 - 9,206,873 6 Rockwell Automation Australia Ltd. Fellow Subsidiary 340,682 - 340,682 7 ....

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....ssee is higher than working capital adjusted margin of comparable. 10. The Hon'ble Delhi Tribunal in case of Ameriprise India P. Ltd. vs. ACIT (ITA No. 2010/Del/2014) [order dated 14.08.2015] considered the decision of coordinate bench in the case of Kusum Healthcare and held that the allowing working capital adjustment in the international transaction of rendering services can have no impact on the determination of ALP of the international transaction of interest on receivables from AEs. The Delhi Tribunal in the case of McKinsey Knowledge Centre Pvt. Ltd. Vs. DCIT [ITA No. 154/Del/2016] (order dated 15.12.2016) followed their finding in the case of Ameriprise India (supra). 11. In the meanwhile, the Hon'ble Delhi High Court, vide or....

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....d in concluding that charging of interest on delayed receipt, of receivables is a separate international transaction which requires to be benchmarked independently, is incorrect. 14. Aggrieved, the taxpayer (Mckinsey Knowledge) filed Review Petition before the Hon'ble High Court against the order dated 09.08.2018 and the Hon'ble High Court, vide order dated 16.04.2019 in Review Pet. No. 360/2018, was pleased to recall/correct their order dated 09.08.2018, holding as under: "9. As far as the first argument by the review petitioner, i.e., the answer to the question of bringing to tax the interest amounts goes, this Court is of the opinion that the fact that the order of 07.02.2018 referred to Kusum Health Care had expressly remitted th....