TaxTMI 
TaxTMI 
2017 (10) TMI 1470
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....d 'aggregation approach' of TP study of the assessee in benchmarking the said transactions with the AEs. The TPO adopted a segmental or sub-segmental approach and bench marked accordingly. The said approach/benchmarking gave rise to the said adjustments and are part of the assessment order. In addition, the Assessing Officer made a couple of corporate additions (i) on account of provisions of warranty and (ii) bad debts. The assessee filed an application before the DRP against the draft assessment order. The TPO's adjustments were deleted by DRP and directed the AO accordingly. Thus the assessee's income is determining at Rs. 124,22,88,270/-. However, ld. DRP confirmed other corporate additions on account of bad debts and provision of warranty. 3. Aggrieved with the relief granted by the DRP, the Revenue filed an appeal before us vide appeal No.282/PUN/2015. Further, aggrieved with the confirmation of addition on account of provision of warranty and bad debts, assessee filed appeal vide ITA No. 412/PUN/2015. 4. The grounds raised by the Revenue reads as under : "1. Hon'ble DRP has erred while directing that all International transactions of Tetra Pak Indi....
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....ion approach' adopted by the assessee. On this issue, Ld. D.R for Revenue relied heavily on the order of TPO and mentioned that the segmental approach adopted by the AO/TPO is proper in this case. Similar approach was adopted while benchmarking the international transactions for A.Y. 2009-10. Therefore, finality on the said decision of the AO for A.Y. 2009-10 is relevant for the year under consideration. 7. Per contra, Ld. AR for the assessee submitted that assessee is engaged in various business activities i.e. i) manufacturing packaging materials ii) trading of said materials iii) import of straws and iv) import of capital equipments etc. Further, Ld. AR submitted that it is a case of the assessee that all these activities are interlaced and therefore, segmental or sub-segmental approach is not reliable one. Further, he mentioned that identical issues came up for adjudication before the Tribunal for A.Y. 2009-10. Eventually, the aggregation approach of the assessee in benchmarking the international transaction by aggregation method was approved by Tribunal for A.Y. 2009-10. Bringing our attention to Page No. 125 of the paper book, where copies of orders of the Tribun....
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.... by the Revenue are dismissed. 10. In the result, appeal of the Revenue is dismissed. ITA No. 412/PUN/2015 ( By Assessee) (A.Y. 2010-11) : 11. There are two issues that require adjudication by the Tribunal. The first issue relates to the "provision for warranty". On this issue, Ld. Counsel for the assessee submitted that this issue now stands covered by the order of Tribunal in assessee's own case for A.Ys. 2002-03 & 2004-05 in ITA Nos. 1586 & 1587/PUN/2014 and Cross Objection Nos. 13 & 14/PUN/2016 dated 24.08.2017. By filing the said copy of order of the Tribunal (supra.), Ld. Counsel for the assessee brought our attention to Para-21 of the said order and submitted that the issue is consistently covered by the order of the Tribunal being commonness of the facts relating the issue of provision of warranty. 12. We heard both sides and perused the contents of Para No. 21 to 23 of the said order and the same are extracted here in below : "21. Regarding Ground No.2 relating to allowing of warranty provisionsit is the submission of the Ld. Counsel for the assessee that the said issue now stands covered in assessee's own case in favour of the assessee by the order of the Tribunal....
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....s. In view of undertaking given by the assessee by way of warranty on the equipment sold by it to the prospective purchasers, the assessee was maintaining a systematic method, wherein the provision was made on account of warranty. In case any part ofthe warranty was utilized, then the same was so debited or / and the balance on expiry of period of warranty was written back. This method was regularly and systematically followed by the assessee. The CIT(A) has referred to the factual aspects of the case and pointed out that the machinery sold by the assessee was in the range of Rs. 4-6 crores and there were limited buyers of said machinery. In view of said facts and circumstances, where the assessee was engaged in the manufacture of specialized machinery for packaging and the assessee had warranty clause against supply of the said machinery, then the recognition of application of warranty by way of making the provision in the books of account is accepted accounting practice and such a liability recognized by the assessee is Contingent Liability. Following the ratio laid down by the Hon'ble Supreme Court in Rotork Controls India P. Ltd. Vs. CIT (sup....
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....econd issue raised relates to "bad debts". Relevant facts on this issue include that the assessee claims bad debts of Rs. 85,00,273/-. The Assessing Officer called for explanation for justification of claim of bad debts involving thirteen debts. The details are given in Para No. 6 of the order of AO. The Assessing Officer found that as per section 36(2) of the Income Tax Act, 1961, the deduction for claim of bad debts written off during the year was available to the assessee. For this, he relied on the decisions of Hon'ble Supreme Court in the case of T.R.F Ltd. Vs. CIT reported in 323 ITR 397(SC) and many others decisions. Eventually, on finding that the assessee had business transactions with the said debtors in the later period, Assessing Officer suspected to the claim of assessee and made an addition on account of "bad debts" as per discussion given in Para No. 7 of his order. The DRP confirmed the same stating certain debts cannot be written off when the assessee is still in business with the debtors even after the debts became bad. Referring to the decision of the Madras High Court in the case of South Surgical Ltd. Vs. ACIT reported in 287 ITR 62 and distinguishing....