M/S. RAMPGREEN SOLUTIONS PVT. LTD.,DELHI vs. DCIT, NEW DELHI

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ITA 1066/DEL/2015Status: DisposedITAT Delhi04 November 2015AY 2010-1136 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that foreign exchange fluctuation gains/losses should be treated as operating income/loss for both the tested party and comparables, as they were related to export sales. Regarding working capital adjustment, the Tribunal found that the interest rate should be determined based on the US currency, not the Indian Prime Lending Rate, and remitted the matter to the TPO for fresh determination.

What were the facts?

The assessee, a subsidiary of a US company, provided IT-enabled services to its parent. The Transfer Pricing Officer (TPO) made an adjustment to the arm's length price (ALP) of these services, which was upheld by the Dispute Resolution Panel (DRP). The assessee appealed the order.

What were the issues?

Whether foreign exchange fluctuation gains/losses are to be treated as operating income/loss for ALP determination and whether the correct currency should be used for working capital adjustment interest rate.

Which sections of the Income-tax Act were involved?

Section 92CA,Section 37(1)

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Income Tax Appellate Tribunal, DELHI BENCH “I-2” NEW DELHI

Before: SHRI S.V. MEHROTRA : & SHRI A.T. VARKEY:

For Appellant: Adv. &, Shri R.R. Maurya Adv
Hearing: 28/08/2015

set aside the impugned order and remit the matter to the file of TPO for fresh determination on account of TP adjustment towards interest not realized from its AE on the debts arising during the course of business. Ground is allowed for statistical purposes.

59.

In the result, assessee’s appeal stands partly allowed for statistical purposes.

Order pronounced in open court on 04/11/2015..

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