ITAT Directs Higher Depreciation on UPS, Limits Transfer Pricing Adjustment; Appeal Dismissed for AY 2013-14 via MAP.

The ITAT partially allowed the appeal for AY 2012-13, directing the AO to grant higher depreciation on UPS while upholding the disallowance of interest for delayed tax payment. For AY 2013-14, the appeal was dismissed as withdrawn due to Mutual Agreement Procedure resolution. In AY 2015-16, the ITAT partially allowed the appeal, directing the AO to restrict the Transfer Pricing adjustment to 50% of the fees paid to the Associated Enterprise.

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Issues:
- Appeal for Assessment Year (AY) 2012-13 involving disallowance of interest for delayed payment of taxes and depreciation on UPS.
- Appeal for AY 2013-14 regarding Transfer Pricing Adjustments.
- Appeal for AY 2015-16 concerning Transfer Pricing Adjustment of administration and support services fees paid to Associated Enterprises (AE).

Analysis:

Assessment Year 2012-13:
- The appeal for AY 2012-13 arose from a final assessment order passed by the Deputy Commissioner of Income Tax. The assessee sought to withdraw Transfer Pricing grounds, which were dismissed. The only remaining issues were disallowance of interest for delayed tax payment and depreciation on UPS.
- The deduction of interest for delayed Tax Deduction at source was denied by the AO and DRP, citing a High Court decision. The Tribunal upheld this decision, dismissing the ground.
- Regarding depreciation on UPS, the AO restricted it to 15%, but the Tribunal disagreed, stating UPS is part of the computer system and should be eligible for a higher rate of depreciation. The Tribunal directed the AO to grant the depreciation as claimed, partially allowing the appeal.

Assessment Year 2013-14:
- The assessee was aggrieved by Transfer Pricing Adjustments but sought to withdraw these grounds due to receiving Mutual Agreement Procedure resolution. As there were no other issues, the appeal was dismissed as withdrawn.

Assessment Year 2015-16:
- The assessee sought to withdraw Transfer Pricing grounds related to adjustments of administration and support services fees paid to Associated Enterprises. Mutual Agreement Procedure resolution led to the withdrawal of 50% of the adjustment.
- Another adjustment related to fees paid to a different Associated Enterprise was contested. The TPO proposed a downward adjustment, which was confirmed by the DRP. The Tribunal directed the AO to restrict the adjustment to 50% of the fees paid to the entity, partially allowing the appeal.

Conclusion:
- The appeals for AY 2012-13 and 2015-16 were partly allowed, while the appeal for AY 2013-14 was dismissed as withdrawn.

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