TaxTMI 
TaxTMI 
2020 (4) TMI 746
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....ains from business or profession, as the same pertains to reversal of provision of prior years. 3. The learned AO failed to appreciate that such amount was already disallowed at the time of making provision in the prior years. 4. The learned AO has erred in not following the directions of the learned Dispute Resolution Panel ("learned DRP") to verify the fact that the provision for doubtful debts written back has been disallowed in the earlier years. 5. The learned AO has erred in not providing Appellant an opportunity to substantiate the claim pursuant to directions of the learned DRP. II. Disallowance of Management fees 6. The learned AO and learned DRP has erred in disallowing the management fees being cost contribution expenses amounting to Rs. 6,29,93,042 on the basis that tax has not been deducted at source on such payments. 7. The learned AO and learned DRP has erred in contending that the cost contribution expenses are in the nature of technical services liable for withholding taxes under section 195 of the Act. 8. The learned AO and learned DRP failed to appreciate the fact that the services availed from Ingersoll-Rand Company, USA ("IRC") do not fall within....
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....APPEAL (i) The directions of the Dispute Resolution Panel are opposed to law and facts of the case (ii) In the facts and circumstances of the case, the DRP erred in deleting the provision for warranty without appreciating the fact that mere comparison of the provision and the actual expenses do not establish Scientific relationship and the claim was only an estimation. (iii) The DRP erred in concluding that the conditions extolled in the decision of the Apex Court in the case of M./s Rotork Control India (P) Ltd had been fulfilled by the assessee. (iv) For these and other grounds that may be urged at the time of hearing, it is prayed that the directions of the Dispute Resolution Panel in so far as it relates to the above grounds be reversed. (v) The appellant craves leave to add, alter, amend and/or delete any Of the grounds mentioned above. CO 97/Bang/2017 (A's Appeal) GROUNDS OF CROSS-OBJECTIONS 1. The Hon'ble DRP while rejecting Acropetal Technologies Ltd. on onsite filter has grossly erred in not adjudicating on the following grounds: * Fails employee cost filter * Different business model 2. The Hon'ble DRP has grossly erred in rejecting compa....
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....] erred in disallowing provision for warranty amounting to Rs. 11,14,118 contending that the same is not being created on a scientific basis. 2. The learned AO and the learned DRP has erred in concluding that the provision for warranty is created on an adhoc basis. 3. The learned AO and the learned DRP has erred in not appreciating the fact that the appellant creates provision for warranty on accrual basis in the year of sale on the basis of percentage of sales (which is based on past experience). 4. The learned AO and the learned DRP have erred in contending that appellant has failed to furnish scientific basis on which such provision has been created. 5. Notwithstanding the above, the learned AO and the learned DRP have failed to appreciate that provision for warranty disallowed in the earlier years and offered to tax, consequent relief should be granted towards reversal/utilization in this year amounting to Rs. 35.69,647. 6. The learned AO and the learned DRP erred in concluding that the Appellant is making a fresh claim in relation to provision for warranty reversed. In this regard. the Appellant is seeking that in case warranty provision created during the year is to....
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....tment at Rs. 5,55,53,912/-. Thereafter Ld.AO while passing draft assessment order proposed following addition: * depreciation on patents disallowed Rs. 2,58,366/- * expenditure on computer software disallowed Rs. 46,46,027/- * provision for slow moving inventory and provisions for warranty disallowed Rs. 93,17,250/- Against proposed additions, on transfer pricing and corporate tax issues, assessee preferred objections before DRP. 2.2. DRP upheld objections of assessee transfer pricing issues in respect of M/s. Acropetal Technologies and objections is regarding other comparables, challenged for exclusion was dismissed. DRP refused adjustment on account of risk. Regarding corporate tax issues, and following additions were upheld by observing as under: * Software expenses amounting to Rs. 46, 46, 027/- 2.3. As regards corporate tax issues disallowances made by Ld. AO was upheld in respect of software expenditure of Rs. 39,09,580/- and treating the same as capital in nature. However, DRP granted depreciation on the same amounting to Rs. 19,78,025/-, resulting in net disallowance of Rs. 19,31,554/-. With respect to balance Rs. 27,14,473/- being nature of provision, DRP upheld....
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.... considered by Ld.TPO. Under such circumstances, we are of the opinion that transfer pricing adjustment made by Ld. AO/TPO needs to be re-looked in accordance with law. It is observed that Ld. AO while passing final assessment order in computation of assessed income has not considered transfer pricing adjustment that has been made in para 3 of assessment order. This shows a sheer negligence on behalf of Ld. AO and non-application of mind. We therefore set aside, transfer pricing issues, raised by assessee as well as revenue in cross objection and appeals, respectively for considering it afresh. Accordingly, appeal filed by revenue and cross objection filed by assessee stands allowed for statistical purposes. Assessee's Appeal: 7. In the appeal filed by assessee, issues alleged are in respect of corporate tax grounds. Ld. AR do not wish to press Ground No.1-4 & 6 as being general in nature. 8. He submitted that the only issue that needs to be adjudicated is Ground No. 5 in respect of provision for warranty disallowed in earlier year and offered to tax which has been sought as relief on reversal/utilisation during the year amounting to Rs. 35,69,647/-. In support of the same, as....
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....e had international transactions with its associated enterprises exceeding Rs. 15 crores and therefore reference to transfer pricing officer was made Ld. TPO upon receipt of reference determined arm's length adjustment at Rs. 7,38,07,223/-. Thereafter Ld.AO while passing draft assessment order proposed following addition: * provision for warranty on account of replacement of spare and accessories and slow-moving inventory is disallowed Rs. 5,52,52,583/- * provision for doubtful debts disallowed Rs. 1,42,41,195/- * management fees disallowed under section 40 (A) Rs. 9,00,50,109/- * reimbursement of expenses disallowed Rs. 1,62,42,886/- 15. Further Ld.AO initiated penalty under section 271C for failure to deduct TDS on Rs. 9,00,50,109/-. Against proposed additions, on transfer pricing and corporate tax issues, assessee preferred objections before DRP. 16. DRP directed Ld. AO to delete proposed addition of Rs. 3,68,32,834/- on account of provision for warranty and Rs. 1,84,19,749/- in respect of provision for slow moving inventory by directing Ld.AO to verify claim in terms of conditions laid down by Hon'ble Supreme Court in case of Rotork Controls India (P) Ltd., vs CIT (su....