TaxTMI 
TaxTMI 
TaxTMI 
2019 (6) TMI 38
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....r (IS) licence from the Department of Telecommunications. It commenced its commercial operations on 7th April, 2007. It has entered into service agreements with its customers in India for provision of end-to-end telecom activity services to such customers for transmission of data from source locations in India to destination locations within/outside India. It filed its return of income on 11th November, 2012 declaring an income of Rs. 156.65 crore. The Assessing Officer referred the matter to the TPO u/s 92CA of the Act for determination of the Arm's Length Price (ALP) of the international transaction entered into by the assessee. The TPO, vide order dated 28th January, 2016, recommended an addition of Rs. 19.30 crores being the ALP of the international transaction entered into by the assessee on account of intra group services. The Assessing Officer passed the draft assessment order on 17th February, 2016, determining the total income of the assessee at Rs. 2,32,09,25,823/- wherein the Assessing Officer, apart from making the addition of Rs. 19.30 crore, made various other additions. The DRP issued certain directions, vide its order dated 11th August, 2016. Subsequently, the Asses....
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....documentation and evidences submitted by the Appellant; which contradicts his own contention that the services have actually not been received. 1.6 The Ld. AO/TPO/DRP has erred in arbitrarily challenging the veracity of the contractual service agreement disregarding the actual conduct of the Appellant in the availing of intra-group services from AEs basis the elaborate documentary evidences submitted as part of assessment proceedings. 1.7. Without prejudice to the above, the Hon'ble DRP grossly erred in alleging that payment made by the Appellant for intra-group services is not wholly and exclusively incurred for the purposes of business and directing the Ld. AO to alternatively disallow such expenditure under section 37(1) of the Act, without providing any opportunity of being heard to the Appellant. 2. Disallowance of circuit accruals 2.1. On the facts, in circumstances of the case and in law, the Ld. AO/DRP erred in making a disallowance of Rs. 40,02,308 on account of circuit accruals created towards bandwidth and last mile services availed by the Appellant company, ignoring that the accruals were based on a reasonable and scientific basis. 2.2. On the facts, in ci....
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....subsequent year(s) in which such accruals were reversed or utilised. Therefore, any disallowance on account of year-end accrual is unjustified. 4. Disallowance on account of service tax payable 4.1 On the facts, in circumstances of the case and in law, the Hon'ble DRP/Ld. AO grossly erred in disallowing service tax payable of Rs. 80, 72,791 as on March 31, 2012 without appreciating that the appellant has not debited the service tax to the Profit/Loss Account, accordingly no disallowance of the same can be made. 4.2 Without prejudice to the above, on the facts, in circumstances of the case and in law, the Ld.AO/Hon'ble DRP erred in disallowing service tax payable without appreciating that the evidences with respect to payment of deposit of service tax to the government account were furnished by the appellant company. 4.3 On the facts, in circumstances of the case and in law, the Ld. AO/Hon'ble DRP erred in not allowing the claim of service tax payable disallowed in the preceding assessment year (i.e. AY 2011-12). 5. Disallowance of Support Service Expenditure 5.1. On the facts, in circumstances of the case and in law, the Ld. AO/ Hon'ble DRP erred in disallowing the le....
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.... account of short deduction of tax at source 8.1. On the facts, in the circumstances of the case and in law, the Ld. AO/Hon'ble DRP erred in disallowing an amount of Rs. 20,74,814 under section 40(a) of the Act on account of non-deduction of fax at specified rate @ 10%. 8.2. On the facts, in the circumstances of the case and in law, the Ld. AO/Hon'ble DRP grossly erred in not appreciating that the appellant deducted tax @ 2% instead of 10% which is short deduction of tax at source and that section 4o(a)(ia) of the Act is applicable only to cases involving non-deduction of tax at source and not on short- deduction. 9. Disallowance of foreign exchange loss 9.1. On the facts, in the circumstances of the case and in law, the Ld. AO grossly erred in making disallowance of Rs. 4,80,06,052 on account of foreign exchange loss arising on revenue account. 9.2. On the facts, in the circumstances of the case and in law, the Ld.AO/Hon'ble DRP grossly erred in observing that the foreign exchange loss arises from External Commercial Borrowing (ECB) for procurement of capital goods without appreciating that during the year under consideration, no ECB facility was availed for capital good....
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....its AEs. The key functions performed by GCSC is primarily divided into two parts i.e., a) Ticket handling which includes the following services:- - Review ticket status - Customer handling verification - Check action real time - Manual CON notification - Detection and management of major incidents - Creating a case ticket - Creating and linking GenChild tickets with Master ticket - Stopping the clock on a ticket - Updating next check time - Document all ticket related communication - Document diagnostics, troubleshooting efforts in the ticket - Manage ticket queue b) Problem determination (PD)/Triage - CPE verification - Diagnostics and troubleshooting - Problem determination - Assemble appropriate team to address ticket - Review asset history. 6. He submitted that during the impugned assessment year out of the many services for which the assessee has entered into agreement, only one service, namely global customer service centre was availed. Further, the nature of service availed in the present years are exactly similar to the services availed of in the earlier years including the immediately preceding year. He submitted that along with the s....
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....ure of service Evidence(s) submitted Basis of Allocation 2009-10 GCSC The GCSC team is based in Hong Kong and Singapore and is engaged in maintenance and fixing repairs or outages for customers of AGNSI as well as other AT&T group companies in Asia Pacific region. During FY 2009-10, the GCSC team processed over 26,600 tickets for AGNSI The list of the tickets processed along with nature of problem resolved bas been submitted as evidence India related fault tickets as percentage of total fault tickets for Asia Pacific 2012-13 GCSC The GCSC team is based in Hong Kong and Singapore and is engaged in maintenance and fixing repairs or outages for customers of AGNSI as well as other AT&T group companies in Asia Pacific region. During FY 2011-12, the GCSC team processed over 39,000 tickets for AGNSI The list of the tickets processed along with nature of problem resolved bas been submitted as evidence India related fault tickets as percentage of total fault tickets for Asia Pacific 8. He accordingly submitted that the issue stands squarely covered by the decision of the Tribunal in assessee's own case for the assessment year 2009-10 and, therefore, it should be concl....
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....l damage and potential loss to business. Addressing the customer's problems promptly and by a specialized team (which may be an AE) should satisfy the benefit test, as the assessee received an economic benefit to maintain its business operation. Therefore in this regard we are of the view that assessee has substantiated that these services are required by it for its business sustainability. The only allegation which TPO / DRP made was that the assessee has not been able to substantiate need test by way of appropriate documentation and held that the assessee should have availed these services from an independent third party in India rather than from its AE. After going through the fact and submissions placed on record we are of the view that the assessee has satisfied the need/benefit test for availing these services from its AE. Regarding the rendition of the services by the AE, the appellant submitted before the TPO, the copy of inter-company agreements, tickets processed by GCSC, sample list of project assignment on which GCSC team assisted the assessee, list of deals on which GSE presales team assisted the assessee. The assessee also explained the allocation key with detai....
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....le. Accordingly, availability of support in terms of strategy, data usage and administration is essential and indispensable for the assessee in order to achieve cost efficiency and normal functioning of its business operations. For this reason, the assessee is availing such essential services from its AEs. For this purpose, the assessee had entered into an agreement with its AE. These functions or services, if not availed from the AEs, would have to be undertaken by the assessee itself. However, due to very nature of network connectivity services and in order to achieve better economies of scale and synergies, these functions are centralized within the AE of the assessee which renders such services. It is, therefore, clear that such services confer a benefit on the assessee. While examining the arm's length nature of the impugned international transaction, the learned TPO has applied cost-benefits test and attempted to map the benefits received against payment made for such services. While he has concurred with the assessee's contentions regarding receipt of benefits in respect of several services, for certain other services, he has erroneously believed that no benefits hav....
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....ws with the views of the assessee. Respectfully following the binding precedent cited above we are of the view that benefit test for determination of Arms length Price is to be viewed from the perspective of the assessee and businessman and not from the perspective of revenue. In this case appellant has demonstrated the benefit which it is expected to derive from the various services rendered by its AE and ld. TPO has erred in replacing with its own judgment of the benefit derived by the assessee, we reject this approach. 52. However for determination of arms Length pricing, the assessee has adopted TNMM as the most appropriate method. The TPO has rejected TNMM as the most appropriate method and applied the CUP method. For this TPO has not given any reasoning. In fact, TPO and DRP has not brought out any data on record for bench marking of intra group transaction and treating the value of services as NIL by applying the CUP method which is against the basic principles of TP regulations. Data availability s the life line of any method adopted in comparability analysis. If there is no data available in that particulars method then comparability analysis under that method fails. In ....
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....wards services provided by other telecom operators. Out of the above amount of Rs. 37.55 crore towards the year end accrual the Assessing Officer disallowed an amount of Rs. 40,02,308/- on account of non-submission of supporting documents which has been upheld by the DRP. 15. It is the submission of the ld. counsel for the assessee that as part of the month end accounting process, the assessee accrues expenses incurred up till the end of a particular month based on the liability incurred/crystalised and estimated expense based on the orders placed for various circuits. Such accruals include expenses incurred in relation to the services rendered during the relevant financial year, estimated on a reasonable and scientific basis for which bills/invoices are not received during the year. It is also his submission that as a practice, accruals for a particular month are reversed in the succeeding month when fresh accruals for the period beginning from the start of the year till such month are made and the payments made against the aforesaid accruals are accounted for in an account, namely, prepaid circuit ledgers and later on reduced from the circuits accrual account at the end of the m....
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....t, the assessee is required to make provision for circuit accruals for the subject financial year. It is also his submission that the assessee has provided evidence to the extent of almost 98% of the expenses represented by year end circuit accruals for utilization/reversal of circuit accruals made in subsequent year and no adverse finding has been given by the Assessing Officer/DRP. We find merit in the arguments advanced by the ld. counsel for the assessee. We find identical issue had come up before the Tribunal in assessee's own case for assessment year 2009-10. We find the Tribunal has discussed the issue at para 34 and 35 of the order and held that the circuit accruals are credited on scientific basis and thus needs to be allowed in the year of creation on accrual basis. The relevant observation in the order of the Tribunal reads as under:- "34. We have carefully considered the rival contentions and perused the order of the ld TPO/ AO/ DRP . The assessee has explained the basis of creating the provisions for circuit accruals, which is calculated automatically and scientifically by the software. As submitted assessee has been followed this basis on a global basis. As explaine....
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....no accruals will be posted prior to the activation date or after the cease date. For the current and prior period GAIM will look at each tariff code for each circuit to determine if there is any invoice cost and circuit accruals are booked accordingly. Prior year expenses are tracked each month and matched against the prior year accrual balance brought forward manually. Accordingly, only the current year accrual balances are booked in the profit and loss account. 35. We find that the process explained is entirely automated process which captures the details vis-à-vis each circuit, amount to be booked against each circuit and the accrual to be created. Further, assessee has been creating the provision on an year on year basis in accordance with the mercantile system of accounting in accordance with accounting standard issued by the ICAI otherwise correct expenditure would not be captured as per the matching principle. The assessee has also demonstrated through evidences that the provision so created is either reversed or expensed off in the subsequent year. The assessee has also been able to submit evidences for most of the reversals before the lower authorities. It is also....
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....es and utilization entries which were allowed by the Assessing Officer in the final assessment order. However, the Assessing Officer disallowed year end accruals of Rs. 1.39 crore (accrual control account and IPA accrual). 22. Aggrieved with such order of the Assessing Officer/TPO/DRP, the assessee is in appeal. 23. The ld. counsel for the assessee submitted that the assessee follows mercantile system of accounting and accordingly, in order to arrive at the correct profit for any given year, it required to account for all the expenses pertaining to the year in accordance with the matching principle. The assessee had accounted for all the expenses relatable to the impugned financial year for which bills/invoices would have been received/paid after the close of the financial year by way of year end accruals. As and when the invoices relatable to the aforesaid year end accruals were received/paid by the assessee in the subsequent years, the actual expenses were charged in the books of account after appropriate deduction of tax on such expenses. Since the year end accruals credited by the assessee represented accruals towards normal business expenditure incurred by the assessee fo....
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....e find identical issue had come up before the Tribunal in assessee's own case for assessment year 2010-11. We find the Tribunal vide ITA No.1059/Del/2015, order dated 18th September, 2017, has discussed the issue and deleted the addition by observing as under:- "16. We have carefully considered the rival contentions and also perused the facts of the case. The assessee has explained the basis of creating the provisions for year-end accruals. As explained by the appellant, we note that the assessee has been creating the provision on any year on year basis in accordance with the mercantile system of accounting otherwise correct expenditure would not be captured as per the matching principle. The assessee has demonstrated through evidences that the provision so created is either reversed or expensed off in the subsequent year. The assessee has also been able to submit evidences for most of the reversals before the lower authorities. We also find that the lower authorities allowed the entire claim of expenditure in the next year when such reversals are made. Thus, this practice of disallowing the claim of year end accrual in the year of creation and allowing it in the next year is not....
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....ot claimed any deduction as the input service tax and the output service tax have never been routed through the P&L Account. However, in the interest of justice and fair play, we restore this issue to the files of the Assessing Officer. The assessee is directed to explain the entries and the Assessing Officer is directed to verify the same and decide the issue as per the provisions of the law. Ground No.2 is treated as allowed for statistical purposes." 28. Respectfully following the same, we restore the issue to the file of the Assessing Officer with a direction to grant an opportunity to the assessee to explain the entries and the Assessing Officer shall decide the issue as per fact and law, after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The ground raised by the assessee is accordingly allowed for statistical purposes. 29. Ground No.5 relates to the disallowance of support service expenditure. 30. After hearing both the sides, we find the assessee has incurred support service expenditure of Rs. 11,87,48,765/- paid to its group company i.e., AT&T Communication Services India Pvt. Ltd. (ACSI) for support services rendered by it. The....
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.... 548) iv. Calcutta Landing and Shipping Co Ltd vs. CIT (65 ITR 1) (Cal High Court) v. CIT Vs B Dalmia Cement Ltd (254 ITR 377) 76. Respectfully following the principles laid down in the aforesaid judicial precedents, we find that where the appellant has actually incurred the aforesaid support services cost and no evidence has been brought by the Department to controvert the same, such expenditure cannot be disallowed merely on suspicion. We affirm the finding of the ld DRP on this issue. In view of the above, the appeal of the revenue on this ground is dismissed. 31. Since the assessee had not submitted the requisite details before the Assessing Officer, therefore, we restore this issue to the file of the Assessing Officer with a direction to give an opportunity to the assessee to submit the details and decide the issue in the light of the decision of the Tribunal for A.Y. 2009-10 as reproduced above. This ground by the assessee is accordingly allowed for statistical purposes. 32. Ground No.6 relates to the disallowance of annual revenue share based licence fee. 33. Facts of the case, in brief are that the assessee during the impugned assessment year incurred expenses of....
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.... Bench of the Tribunal in the case of Bharti Airtel Ltd. vs. ACIT vide ITA No.398/Mum/2006, order dated 25th June, 2010, he submitted that the Tribunal in the said decision has held that the deduction for annual licence fee paid to the Department of Telecommunications should be allowed u/s 37(1) of the Act. Merely because the Revenue has not accepted the decision of the Hon'ble Delhi High Court and an SLP has been filed against the said order, the same cannot be a ground to disallow the expenditure. Referring to the decision of the Tribunal in assessee's own case for assessment year 2010-11 vide ITA no.1059/Del/2015, order dated 18th September, 2017, he submitted that under identical circumstances, the Tribunal has deleted the disallowance made by the Assessing Officer. He accordingly submitted that this being a covered matter in favour of the assessee, the disallowance made by the Assessing Officer which has been upheld by the DRP should be deleted. 34. The ld. DR, on the other hand, strongly supported the order of the Assessing Officer and DRP. 35. We have considered the rival arguments made by both the sides and perused the orders of the authorities below. We find identica....
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....cer on account of annual revenue share based licence fee is deleted. The ground raised by the assessee is accordingly allowed. 37. Ground No.7 relates to the lease line charges on account of non-deduction of tax at source. 38. Facts of the case, in brief are that the assessee, during the impugned assessment year, incurred lease line expenses which represent telecom charge paid/payable to other telecom operators for provision of telecom connectivity services required for transmission of data. The assessee, on a conservative basis, withheld taxes on leaseline expenses/connectivity charges paid to other telecom operators under section 194J of the Act except on amount of Rs. 6,50,79,639/-. The Assessing Officer asked the assessee to provide justification for not withholding taxes on leaseline expenses as appearing under the Note No.1 of Appendix IX of Tax Audit Report vide order sheet entry dated 21st December, 2015. It was submitted that the leaseline services are standard automated services which are availed by any telecom service provider for the transmission of data. Therefore, the arrangement between AGNS and other telecom operators is not an exclusive arrangement. It was submit....
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.... has been made for availing the facility of connectivity services from vendors required for transmission of data and is not for use of any asset involved in provision of such facility covered u/s 194I of the Act. He submitted that the assessee was neither in possession nor control of equipments which were used for providing internet and communication facilities. Therefore, there was a clear absence of the element of leasing of equipment as a fall out of which the applicability of the provisions of section 194I stood clearly excluded. Since the payment is not at all related to any use of equipment, the assessee was under no obligation to deduct tax at source u/s 194I. Referring to the decision of the Hon'ble Madras High Court in the case of Skycell Communications vs. DCIT reported in 251 ITR 53 (Mad), he submitted that such connectivity services are in the nature of standard facility/service and, therefore, the assessee is not obliged to deduct tax at source on the payment made to such service provider. Referring to the decision of the Mumbai Bench of the Tribunal in the case of Destimony Securities Pvt. Ltd. vide ITA No.4106/Mum/2014, order dated 21st June, 2017 for assessment ....
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....Deduction of tax at source - Fees for technical/professional services - Assessee was a cellular service provider - It had an interconnect agreement with BSNL/MTNL under which it paid interconnect/access/port charges to BSNL/MTNL - Question that arose for consideration was whether TDS was deductible by assessee on interconnect/access/port charges paid to BSNL/MTNL - Whether in absence of any expert evidence from department to show how mutual intervention was involved in technical operations by which assessee was given facility by BSNL/MTNL for interconnection, matter could not be decided - Held, yes - Whether, therefore, Assessing Officer was to be directed to decide matter after examining a technical expert from side of department - Held, yes [Matter remanded]" 40. He accordingly submitted that in view of the above judicial precedents, the disallowance of expenses made by the Assessing Officer in the hands of the assessee on account of non-deduction of tax which has been upheld by the DRP should be deleted. 41. The ld. DR, on the other hand, heavily relied on the order of the Assessing Officer/TPO/DRP. 42. We have considered the rival arguments made by both the sides and perused....
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....of deduction u/s 80 IA(iv), he submitted that any disallowances made by the A.O. would go to increase the income and consequently the assessee would be eligible for deduction u/s 80 IA on such increased profits. He relied on the order in the case of "Gem Plus Jewellery India Pvt. Ltd." (2011) reported in 330 ITR 175 (Bom) in support of his contentions. For levy of interest u/s 234C, he recorded that such interest is levied only on returned income and not on assessed income. 9.2. In reply, the Ld.D.R., though not leaving his ground, submitted that he relies on the order of the A.O. and the reasoning thereof for disallowance made u/s 40A(i)(a) of the Act. 9.3. On the additional grounds the Ld.D.R. submitted that the A.O. may be directed to examine the same, if the Tribunal chose to admit these grounds. 10. Rival contentions heard. On a careful consideration of the facts and circumstances of the case and on a perusal of the papers on record and orders of the authorities below, case laws cited, we hold as follows. 11. We first take up corporate tax issues which is ground no.5 for the A.Y. 2007-08. The assessee is a licensed internet provider. During the year it procured, dome....
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....by the ld. AR support this view. As far as the observation of the ld. CIT(A) that the payment made otherwise is covered u/s. 194I, we must observe in case of Hero Moto Corp. Ltd. (supra)and Global India (supra), the tribunal has held that the broadband/lease line facilities provided by the service provider for transmission of data does not come in the category of payment made towards rent for equipment, plant and machinery. Therefore, respectfully following the decisions of the ITAT, we set aside the order of the ld. CIT(A) on this issue. Grounds raised are allowed." 43. We find the Hon'ble Karnataka High Court in the case of Vodafone South Ltd. (supra), while deciding an identical issue, has observed as under:- "8. We have heard Mr.K.V.Aravind, learned counsel appearing for the appellants - Revenue in all the appeals. The learned Counsel relied upon two decisions of the Apex Court for canvassing the contention that the roaming charges paid by the assessee to the other service provider can be said as 'technical services'; one was the decision of the Apex Court in the case of Commissioner of Income-tax, Delhi vs. Bharti Cellular Limited, reported at [2010] 193 Taxman 97 (SC);....
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....to its subscriber or customer, but the subject matter is utilization of the roaming facility by payment of roaming charges by one mobile service provider Company to another mobile service provider Company. Hence, we do not find that the observations made are of any help to the Revenue. 12. As such, even if we consider the observations made by the Apex Court in the case of Bharti Cellular Limited, supra, whether use of roaming service by one mobile service provider Company from another mobile service provider Company, can be termed as "technical services" or not, is essentially a question of fact. The Tribunal, after considering all the material produced before it, has found that roaming process between participating entities is fully automatic and does not require any human intervention. Coupled with the aspect that the Tribunal has relied upon the decision of the Delhi High Court for taking support of its view. 13. In our view, the Tribunal is ultimately fact finding authority and has held that the roaming process between participating company cannot be termed as technical services and, therefore, no TDS was deductible. We do not find that any error has been committed by the T....
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....ere taxes have been deducted at a lower rate than the rate applicable under the normal provisions:- i) DCIT vs. Chandabhoy Jassobhoy in ITA No.20/Mum/2010 (Mumbai Tribunal) ii) DCIT vs. M/s S.K. Tekriwal, ITA No.1135/Kol/2010 (Kolkata Tribunal) iii) Roca Bathroom Products (P) Ltd. vs. JCIT,,175 TTJ 450 iv) Hero MotoCorp. Ltd. vs. Addl.CIT, 156 TTJ 139 (Del-Trib) v) UE Trade Corpn (India) Ltd. vs. DCIT 54 SOT 596 vi) ACIT vs. Pankaj Bhargava. 48. The ld. DR, on the other hand, heavily relied on the order of the Assessing Officer/TPO/DRP. 49. We have considered the rival arguments made by both the sides and perused the material available on record. We have also considered the various decisions cited before us. The only issue to be decided in the impugned ground is as to whether any addition can be made on account of short-deduction of tax by invoking the provisions of section 40(a)(ia) of the IT Act. Admittedly, the assessee in the instant case has deducted the tax @ 2% instead of 10% u/s 194J of the Act. We find an identical issue had come up before the Mumbai Bench of the Tribunal in the case of Dish TV India Ltd. (supra). We find the Tribunal, after considering vario....
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....8. Before us the Ld. Counsel has pointed out that there is a divergent view also taken by the Hon'ble Kerala High Court in the case of P V M Memorial Hospital (supra). But such a decision may not have a persuasive value as it is quite a trite law that if there are two conflicting decisions of non- Hon'ble Jurisdictional High Courts, then the decision in favour of the assessee should be taken. We agree with such a contention raised by the assessee that, if there are two conflicting decisions and in absence of any Hon'ble Jurisdictional High Court, decision one favourable to the assessee should be preferred and this proposition has been long back settled by the Hon'ble Supreme Court in the case of Vegetable Products Ltd. (supra). Thus, we hold that, no disallowance under section 40(a)(ia) should be made on short deduction of tax under different or wrong provision of the section." Similarly, Visakhapatnam Bench of this Tribunal in the case of P.S.R. Associates vs. ACIT in ITA No. 345/Viz/2013 vide order dated 6th January, 2016 had also an occasion to consider both the decisions of Hon'ble Calcutta High Court as well as that of Hon'ble Kerala High Court on t....
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.... Tribunal or of the Hon'ble Jurisdictional High Court or Hon'ble Supreme Court was placed before us. We, therefore, are bound to follow the decision of the Coordinate Bench. Therefore, we do not find any infirmity or illegality in the order of the CIT(A) in holding that provisions of Section 40(a)(ia) will not be applicable in the case of the assessee as there is nothing in the section to treat the assessee as defaulter where there is shortfall in deduction of TDS. We, therefore, affirm the CIT(A) and dismiss the grounds taken by the Revenue in both the appeals. 17. In the result, both the appeals filed by the assessee are allowed for statistical purposes while both the appeals of the Revenue are dismissed." 50. The various other decisions relied on by the ld. counsel for the assessee also support his case that provisions of section 40(a)(ia) cannot be applied for making disallowance where there is shortfall in deduction of tax. In view of the above discussion, we direct the Assessing Officer to delete the disallowance. Ground of appeal No.8 of the assessee is accordingly allowed. 51. Ground No.9 relates to the disallowance on account of foreign exchange loss of Rs. 4,8....
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....h substantiates the veracity of the nature of transaction. 54. The ld. DR, on the other hand, while supporting the order of the Assessing Officer and DRP, submitted that due to non-substantiation of the genuineness of the foreign exchange loss, the Assessing Officer disallowed the same which has been upheld by the DRP. He accordingly submitted that the order of the Assessing Officer be upheld and the ground raised by the assessee on this issue should be dismissed. 55. We have considered the rival arguments made by both the sides and perused the orders of the authorities below. We have also considered the various decisions cited before us. We find the Assessing Officer disallowed the foreign exchange fluctuation loss of Rs. 4,80,06,052/- on the ground that the assessee failed to demonstrate the genuineness of the loss. We find the DRP also upheld the action of the Assessing Officer and the Assessing Officer, in the final order, has disallowed the same. It is the submission of the ld. counsel for the assessee that the additional evidences filed now will substantiate the genuineness of the loss. Considering the totality of the facts of the case and in the interest of justice, we adm....
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.... assessment proceedings to erroneously assume that 'no benefit' has been conferred upon the Appellant from the international transactions pertaining to availing of intra-group services and thereafter re-determining the ALP of the said transaction as 'NIL'; 1.4. disregarding the receipt of services by the Appellant from its AEs which is contrary to the facts of the present year as well as to the stand taken by the Ld. TPO in prior year despite no change in the nature of services involved. Further, the Ld. TPO erred in contending that the services received are duplicative and stewardship in nature, ignoring the documentation and evidences submitted by the Appellant; which contradicts his own contention that the services have actually not been received; 1.5. arbitrarily challenging the veracity of the contractual service agreement disregarding the actual conduct of the Appellant in the availing of intra-group services from AEs basis the elaborate documentary evidences submitted as part of assessment proceedings; and 1.6. disregarding the judicial pronouncement/ finding of the Hon'ble ITAT in Appellant's own case for assessment years 2009-10, 2010-11 and 2011-12 TP adjustment....
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....nting standards notified under section 145(2) of the Act, the appellant was required to make provision for circuit accruals for the subject financial year. 2.4. On the facts, in circumstances of the case and in law, the Ld. AO/Hon'ble DRP erred in not appreciating that the appellant produced evidences to the extent of 99% for utilisation/reversal of circuit accruals made in subsequent years and no adverse finding has been given by the Ld. AO/Hon'ble DRP on the same. 2.5. Without prejudice to the above, on the facts, in circumstances of the case and in law, where any disallowance is made in respect of the aforesaid accruals for the year under consideration, deduction in respect of the disallowed amount should be allowed in the subsequent year(s) in which such accruals were reversed or utilised. 2.6. On the facts, in circumstances of the case and in law, the Hon'ble DRP erred in ignoring that the aforesaid disallowance of circuit accruals has been deleted by the Hon'ble ITAT in Appellant's own case for assessment years 2009-10, 2010-11, 2011-12. Therefore, any disallowance on account of circuit accrual is not tenable. 3. Disallowance of vear-end accruals 3.1. On the facts....
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....P erred in disallowing an amount of Rs. 34,23,30,432 (being disallowance of Rs. 39,52,72,350 in AY 2013-14 less credit of Rs. 2,18,10,669 for AY 2012-13, Rs. 1,66,89,296 for AY 2011- 12 and of Rs. 1,44,41,953 for AY 2010-11) under the head licence fees debited to Profit & Loss Account by holding that annual license fee is not allowable as a revenue expenditure and it should be amortised under section 35ABB of the Act. 5.2. On the facts, in the circumstances of the case and in law, the Ld. AO/Hon'ble DRP erred in not following the judgment of the Hon'ble jurisdictional Delhi High Court in the case of Bharti Hexacom Ltd. [2014] 265 CTR 130 (Delhi) wherein it was held that annual revenue share based license fee paid by the telecom operators is revenue expenditure, allowable under section 37(1) of the Act and not a capital expenditure amortizable under section 35ABB of the Act. 5.3. On the facts, in the circumstances of the case and in law, the Hon'ble DRP has erred in not following its own direction in the assessment year 2011- 12 wherein the adjustment was directed to be deleted. Further, the Hon'ble DRP erred in ignoring that the aforesaid disallowance has been deleted by the Ho....
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....r A.Y. 2009-10 has observed as under:- "65. We therefore accept the plea of assessee and hold that the ld TPO is only duty bound to determine the ALP of the royalty payments. 66. With respect to analysis under CUP method by the ld TPO, we fully agree with him in rejecting internal CUP as it pertains to related party transactions which are between its fellow AEs. We also agree with him in rejecting external CUP data as the assessee has not submitted any data regarding similarity in terms and conditions of the royalty agreements. He also rightly held that even from the limited data submitted are for different industries/ geographical location /duration and amounts. No analysis of the royalty agreements between the various parties and the accompanying circumstances and conditions therein has been done by assessee. We also agree that even a minor difference in royalty agreement may have a significant effect on the royalty rates. 67. According to us the royalty payments needs to be tested on the basis of factum and quantum both aspects. It also needs to be looked at the functions to be performed by the parties for royalty payments. It also nees to be looked in to nature of the use....
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....ntical to Ground of appeal No. 3 to 3.4 in ITA No.5535/Del/2016. We have already decided the issue and the grounds raised by the assessee have been allowed. Following the similar reasonings, the above grounds by the assessee are allowed. 63. Ground of appeal No.4 to 4.3 relates to disallowance of support service expenditure. After hearing both the sides we find that the above grounds are identical to Ground of appeal No. 5 to 5.3 in ITA No.5535/Del/2016. We have already decided the issue and the matter has been restored to the file of the Assessing Officer/TPO with certain directions. Following similar reasonings, the above grounds are restored to the file of the Assessing Officer and accordingly allowed for statistical purposes. 64. Ground of appeal No.5 to 5.3 relates to disallowance of annual revenue share based licence fee. After hearing both the sides we find that the above grounds are identical to Ground of appeal No. 6 to 6.3 in ITA No.5535/Del/2016. We have already decided the issue and the grounds raised by the assessee have been allowed. Following the similar reasonings, the above grounds by the assessee are allowed. 65. Ground of appeal No.6 to 6.1 relates to leaseli....