DCIT, CIRCLE- 1(1)(1), INTERNATIONAL TAXATION, NEW DELHI vs. AT KEARNEY LTD.- INDIA BRANCH OFFICE, GURGAON

Per Dr. B. R. R. Kumar, Accountant Member:

2. Whether in the facts and circumstances of the case Hon'ble CIT(A) was right in holding that the TPO has re- characterized the intra group services transaction?

3. Whether in the facts and circumstances of the case the Hon’ble C1T(A) was right in not appreciating that TPO has not disallowed the intra group services merely on the issue of non-substantiation of commercial expediency by the assessee but on several factors? 4. Whether in the facts and circumstances of the case the Hon'ble CIT(A) was justified in law to delete the adjustment towards the interest on receivables without considering the fact that deferred payment or receivable or any other debt arising during the course of business money is held to be an "International Transaction" within the meaning of section 92B(1) of the Act?”

1.

1. Interest on outstanding receivables ('Receivables') 2. Receipt of support services ('Intra-group services' or 'IGS') 4. The Ld. CIT(A) vide the order adjudicated on the additions on account of Receivables and IGS. Out of these two issues, the Ld. CIT(A) deleted the addition on account of Receivables. With regard IGS. the Ld. CIT(A) partly allowed the international transaction, thereby reducing the adjustment under Section 92CA of the Income Tax Act, 1961 to 11,22,46,547/- as against INR 18,27,21,720/-.

5. The Assessee and the revenue are in appeal before Tribunal.

6. The ld AR submitted that both issues are subject matter of a Bilateral Advance Pricing Agreement ('APA') between India and USA with Profit Split method ('PSM') being selected as the most appropriate method where AY 2014-15 is the first year of APA roll back. The bilateral APA dated 24 March 2022 has been signed and executed by all the parties.

7. Further, in relation to IGS, all the services forming part of the pool of IGS are covered as per Form No. 3CEF filed after the execution of the bilateral APA. It is submitted that with regard to receivables , the interest on the outstanding receivables has been considered while filing the Form 3CEF per the bilateral APA.

8. As per Rule 10RA(5) of Income Tax Rules, 1962 when an APA has been signed and executed, all the appeals pertaining to the decided years should be withdrawn as no further adjudication is required. The said rule is reproduced below for ready reference -

"Rule 10RA. Procedure for giving effect to rollback provision of an Agreement ...(5) If any appeal filed by the Assessing Officer or the Principal Commissioner or Commissioner is pending before the Appellate Tribunal or the High Court for a rollback year, on the issue which is subject matter of the rollback provision for that year, the said appeal to the extent of the subject covered under the agreement shall be withdrawn by the Assessing Officer or the Principal Commissioner or the Commissioner, as the case may be, within three months of filing of modified return by the applicant."

Order Pronounced in the Open Court on 18/11/2022.