2023 (3) TMI 809 - AT - Income Tax

Tribunal remits issues for fresh consideration, upholds some decisions.

M/s. Dell International Services India Private Limited, Versus The Joint Commissioner of Income Tax, LTU, Bangalore. And Vice Versa

M/s. Dell International Services India Private Limited, Versus The Joint Commissioner of Income Tax, LTU, Bangalore. And Vice Versa - TMI Issues Involved:1. Bifurcation of Marketing and Business Support Services Segment into ITES and MSS Segments2. Adjustment Determined in Respect of Warranty Cost3. Addition of Deferred Revenue4. Miscellaneous Expenses5. Advances Written Off6. Provision for Warranty and Warranty Expenses7. Disallowance under Section 40(a)(ia) of Rebates Given to Customers8. Disallowance of Future Lease Rentals9. Deduction of Provision Disallowed under Section 40(a)(ia) in AY 2009-10 Reversed in the Current AY10. Disallowance of Expenditure - Repairs and Maintenance11. Short Credit of TDS12. Levy of Interest under Section 234A13. Levy of Interest under Sections 234A, 234B & 234C14. Suppression of Income of Sale of Goods and Services15. Disallowance of Advances Written Off (Revenue's Appeal)16. Addition under Section 69C17. Disallowance of Foreign Exchange Loss18. Disallowance of Other LiabilitiesDetailed Analysis:1. Bifurcation of Marketing and Business Support Services Segment into ITES and MSS Segments:Facts:- The Assessee provides business support services to Dell Global B.V. Singapore Branch.- The TPO bifurcated the services into ITES and MSS segments.- The DRP confirmed the TPO's order.Decision:- The Tribunal remitted the issue back to the AO/TPO for fresh consideration in light of the DRP's directions for AY 2013-2014.2. Adjustment Determined in Respect of Warranty Cost:Facts:- The TPO made an adjustment based on the claim that the Assessee had not made any recovery towards warranty services.- The Assessee contended that it had recovered the expenses with a mark-up of 5%.Decision:- The Tribunal directed the TPO to re-examine the issue afresh.3. Addition of Deferred Revenue:Facts:- The AO added deferred revenue of Rs. 124,88,69,986/- by holding that the income accrued in the current year.- The DRP upheld the AO's decision.Decision:- The Tribunal deleted the addition, holding that the Assessee's method of recognizing revenue over the period of service was correct.4. Miscellaneous Expenses:Facts:- The AO disallowed Rs. 15,99,17,645 for want of evidence.- The DRP confirmed the disallowance.Decision:- The Tribunal admitted additional evidence and remitted the issue back to the AO for verification.5. Advances Written Off:Facts:- The AO disallowed advances written off, including fixed deposits and service tax receivables.- The DRP allowed the claim for receivables from Intel but confirmed disallowance for others.Decision:- The Tribunal remitted the issue back to the AO for verification of evidence.6. Provision for Warranty and Warranty Expenses:Facts:- The AO disallowed the entire provision for warranty.- The DRP directed the AO to allow actual expenditure incurred.Decision:- The Tribunal directed the AO to allow the provision made towards warranty, following the decision in the Assessee's own case for AY 2009-10.7. Disallowance under Section 40(a)(ia) of Rebates Given to Customers:Facts:- The AO disallowed Rs. 20,37,71,038/- for non-deduction of tax at source.- The Assessee contended that the rebates were not subject to TDS.Decision:- The Tribunal remitted the issue to the AO for verification of agreements with distributors.8. Disallowance of Future Lease Rentals:Facts:- The AO added Rs. 7,58,53,797/- as future lease rentals.- The DRP confirmed the disallowance.Decision:- The Tribunal deleted the addition, following the decision in the Assessee's own case for AY 2009-10.9. Deduction of Provision Disallowed under Section 40(a)(ia) in AY 2009-10 Reversed in the Current AY:Facts:- The AO disallowed Rs. 5,09,07,923/- for want of evidence of TDS.Decision:- The Tribunal admitted additional evidence and remitted the issue back to the AO for verification.10. Disallowance of Expenditure - Repairs and Maintenance:Facts:- The AO disallowed Rs. 25,68,87,844/- for want of evidence.- The DRP directed the AO to allow Rs. 22,34,94,650/- after verification.Decision:- The Tribunal remitted the issue back to the AO for verification of evidence.11. Short Credit of TDS:Decision:- The Tribunal remitted the issue back to the AO for verification.12. Levy of Interest under Section 234A:Decision:- The Tribunal deleted the levy of interest as the return was filed before the due date.13. Levy of Interest under Sections 234A, 234B & 234C:Decision:- The Tribunal held these grounds as consequential and did not warrant separate adjudication.14. Suppression of Income of Sale of Goods and Services:Facts:- The AO made an addition of Rs. 319,62,03,391/- for discrepancies in sales tax and service tax returns.- The DRP granted relief except for Rs. 124,88,69,986/- deferred revenue.Decision:- The Tribunal upheld the DRP's decision to delete the additions based on the reconciliation provided by the Assessee.15. Disallowance of Advances Written Off (Revenue's Appeal):Decision:- The Tribunal dismissed the ground as it was already decided in favor of the Assessee in the Assessee's appeal.16. Addition under Section 69C:Facts:- The AO added Rs. 15,56,565/- as unexplained expenditure.Decision:- The Tribunal upheld the DRP's decision to delete the addition.17. Disallowance of Foreign Exchange Loss:Facts:- The AO disallowed Rs. 24,59,80,821/- for want of evidence.Decision:- The Tribunal dismissed the ground, following the decision in the Assessee's own case for AY 2009-10.18. Disallowance of Other Liabilities:Facts:- The AO disallowed Rs. 41,05,56,400/- as bogus purchases.Decision:- The Tribunal upheld the DRP's decision to delete the addition.Conclusion:- The Assessee's appeal is partly allowed.- The Revenue's appeal is partly allowed for statistical purposes.