TaxTMI 
TaxTMI 
2019 (2) TMI 2101
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....sfer Pricing Officer-1(3)(2), and the final order passed by the Assistant Commissioner of Income Tax, Circle-4(1), Gurgaon pursuant to the directions of Dispute Resolution Panel-1, New Delhi ("Hon'ble DRP"), are bad in law and void-ab-initio. 2. The learned AO following the order of the learned TPO and the Hon'ble DRP has erred in law and on the facts of the case in determining the total income of the Appellant at Rs. 31,54,03,810/- as against the returned income of Rs. 30,78,39,530/- and thereby made an upward adjustment of Rs. 33,17,758/- on account of transfer pricing matter, disallowed the claim of "Stock written-off" amounting to Rs. 25,20,421, disallowed excess depreciation of Rs. 16,56,842/- claimed and disallowed excess foreign exchange loss of Rs. 69,261/- claimed by the Appellant on account of corporate tax matters. Part I-Transfer Pricing Grounds 3. That on facts of the case and in law, the DRP/TPO/AO have erred in rejecting the economic analysis undertaken by the Appellant by conducting a fresh economic analysis for the impugned transactions. 4. That on facts and in law, the DRP/TPO/AO have grossly erred by charging interest o....
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....excess depreciation claim on fixed assets. Part III-Consequential grounds of appeal 9. That on the facts and in the circumstances of the case and in law, the Ld. AO has erred in initiating penalty under section 271(1)(c) of the Act. 10. That on the facts and in the circumstances of the case and in law, the Ld. AO has erred in charging interest under section 234A of the Act. The above grounds of appeal are mutually exclusive & without prejudice to each other. The Appellant craves leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal. The Appellant prays for appropriate relief based on the said grounds of appeal and the facts and circumstances of the case. 2. Briefly stated facts of the case are that the assessee company is a subsidiary of "Teradata Belgium Holdings LLC" and was incorporated on 22/05/2007. The "Teradata Group" provides data warehousing solutions to customers around the world. During the year under consideration, the assessee company was engaged as local sales and distribution affiliate for the Indian market and it also performed ce....
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....4C of the Act on 29/10/2018 and assessed total income at Rs. 31,54,03,810/-. Aggrieved with the order of the Assessing Officer, the assessee is in appeal before the Tribunal raising the grounds as reproduced above. 3. The grounds No. 1 and 2 of the appeal were claimed to be general in nature by the Ld. counsel of the assessee and, thus, we are not required to adjudicate upon. 4. In grounds No. 3 to 5, the assessee has challenged transfer pricing addition on account of outstanding receivables. The learned counsel submitted that identical issue has been adjudicated in favour of the assessee in assessment year 2012-13 and 2013-14 by the Tribunal and no appeal has been preferred by the Department against the said decision of the Tribunal. The learned counsel submitted that the Tribunal has upheld that there is no requirement of separate adjustment on account of outstanding receivables when working capital adjustment has been considered. 4.1 The learned DR, on the other hand, submitted that working capital adjustment only take care of outstanding receivables/payable at the opening and closing of the year and any abnormal delay in receiving the outstanding receivables is not tak....
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....on to that AY can hardly reflect a pattern that would justify a TPO concluding that the figure of receivables beyond 180 days constitutes an international transaction by itself. With the Assessee having already factored in the impact of the receivables on the working capital and thereby on its pricing/profitability vis-a-vis that of its comparables, any further adjustment only on the basis of the outstanding receivables would have distorted the picture and re-characterized the transaction. This was clearly impermissible in law as explained by this Court in CIT v. EKL Appliances Ltd. (2012) 345 ITR 241 (Delhi). The issue in the present appeal is also identical therefore, squarely covered by this judgment in favour of the assessee. Therefore, Ground No. 4 & 5 are allowed." 4.3 In assessment year 2013-14, in ITA No. 7885/del/2017, also the Tribunal following the decision, allowed the appeal of the assessee observing as under: "8. After considering the rival submissions, we are of the view that the issue is covered in favour of the assessee by the order of the ITAT, Delhi Bench in the case of same assessee vide order dated 08th August, 2017, in which the Tribunal f....
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.... that no such report from the Engineer or production head or third-party certificate was produced before the learner DRP, thus the Assessing Officer was directed to verify the submission of the assessee and bring out the facts properly and passed a speaking order on the issue. The Direction of the learned DRP have been reproduced on page 37 of the impugned order. For ready reference, the said direction is reproduced as under: "2.8.2 The AO has disallowed the said claim with the observations that assessee had claimed the expenditure in respect of obsolete inventory. However, the assessee apart from furnishing the ledger account could not be able to furnish the report of any engineer, production head, certificate of third party which suggests that the inventory had become obsolete. Further, no list of the stock that is written off submitted by the assessee neither any evidence was produced by the assessee to substantiate that the stock written off was genuine or to substantiate the fact that the spare parts written off were in fact obsolete. It is pertinent to note here that an addition on similar facts was made in the earlier assessment year. In view of the above and in abs....
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....endered obsolete were produced before the Assessing Officer. The relevant finding of the Assessing Officer in para 10 of the impugned order is reproduced as under: "10. As per the DRP Directions for ground No, 15 for disallowance of stock written off. The assessee in its submission dated 25.09.2018, stated that: "1.6 Further, we would like to highlight that in the instant case provision for obsolescence of inventory is itself disallowed by the assessee on voluntary basis. The amount in question is actual write off of spare parts which were found obsolete by the assessee during the course of stock verification. 1.7 It has been observed by the auditors that the assessee is maintaining proper records of inventory and there is no material discrepancy in the same. Attention in this regard is drawn to the para (it) on page 3 of the audit report filed with your goodself for the captioned AY. Relevant extract from the Audit Report has been attached as Annexure 3 for your quick reference. 1.8 Further as directed by the Hon'ble DRP, a confirmation letter from the management of the assessee regarding write off of obsolete stock of spare parts was submit....
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....e relevant material on record. The learned DRP rejected the claim of the depreciation following the direction of the DRP in preceding assessment years. The finding of the learned DRP is reproduced as under: "2.9.1 The issue of disallowance of depreciation on the fixed assets acquired by the assessee from NCR Corporation in FY 2007-08 is a legacy issue which has been dealt with in earlier assessment years (2009-10, 2010-11, 2011-12, 2012-13 and 2013-14) also and the objections of the assessee were dismissed. The facts of the matter being same in this year as well, following the DRP Directions of earlier years the action of the AO is upheld. The objection is accordingly rejected." 6.4 The Tribunal in ITA No. 7885/Del/2017 for assessment year 2013-14 has restored the issue to the file of the Assessing Officer observing as under: "19.1. Learned Counsel for the Assessee submitted that this issue is covered in favour of the assessee by the order of ITAT, Delhi Bench for A.Y. 2012-2013 in ITA. No. 87/Del./2017 dated 08th August, 2017, in which in para-10, the Tribunal restored the matter to the file of the A.O. to verify the claim of assessee-company as per law. The f....