AI Drafter 
TaxTMI 
TaxTMI 
2025 (6) TMI 653
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....rm's Length Price (ALP) of transaction pertaining to payment of royalty to Inventio AG as Nil instead of INR 20,49,44.986 by: a. ignoring the transfer pricing documentation prepared by the Appellant; b. exceeding his jurisdiction in questioning the commercial expediency of the Appellant for payment of royalty, c. exceeding his jurisdiction in applying the benefit test to the payment of royalty and holding that the Appellant had not received any benefit from payment of royalty; d. not taking into cognizance the commercial/business rationale justifying the payment of royalty, documents demonstrating availing of technology/tradename/trademark, intercompany agreement and the benefit test documentation submitted by the Appellant; e. holding that the Appellant had not been provided with a single new technology from the AE during the year, for which the royalty payment was necessary, and f. holding that payment of royalty should not be made by the Appellant as the Schindler Group had certain obligations towards the Appellant as shareholder activity. The Appellant prays that the addition of INR 20,49,44,986 be deleted. ....
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....s. 64,426/- to PF under section 36(1)(va) of the Act be deleted. Ground No. 5: On the facts and in circumstances of the case and in law, the Ld. AO has granted TDS credit of Rs. 11.53.59,382 as against TDS credit of Rs. 11,79,95,590 appearing in Form 26AS, thereby resulting in a short credit of Rs. 26,36,208 to the Appellant. The Appellant prays that the Ld. AO be directed to allow additional TDS credit of Rs. 26,36,208. Ground No. 6: On the facts and circumstances of the case and in law, the Ld. AO has erred in not granting MAT credit of Rs. 1,87,30,304 under section 115 JAA of the Act. The Appellant prays that the Ld. AO be directed to allow the MAT credit of Rs. 1,87,30,304 as per section 115JAA of the Act. Ground No. 7: On the facts and circumstances of the case and in law, the Ld. AO has computed interest (consequential) of Rs. 5,69,46,890 under section 234B of the Act. The Appellant prays that the Ld. AO be directed to re-compute interest under section 234B of the Act. Ground No. 8: On the facts and in the circumstances of the case and in law, the Ld. AO has erred in computing i....
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....med by the DRP in terms of addition of provision of bad and doubtful debts to the books profits computed u/s. 115JB of the Act. 8. In this regard, during the course of hearing the Ld.AR submitted that the assessee has claimed a deduction for provision for bad and doubtful debts amounting to Rs. 1,09,72,163/- while computing the total income under the normal provisions of the Act. It was submitted that the AO has taken note of the said fact in the assessment order that the impugned amount of provision was reduced from the debtors balance appearing in the Balance Sheet and accordingly constituted an actual write off and the assessee's claim under the normal provisions of the Act was allowed by the AO. At the same time, it was submitted that while computing the book profits, the AO has made an addition of the said amount under clause (i) of the Explanation to Section 115JB of the Act. 9. It was submitted that a similar issue had arisen in assessee's own case for the AY. 2008-09 and the same has been decided by the Co-ordinate Bench of the Tribunal in assessee's favour in M.A. No. 89/Mum/2022, following the decision of the Hon'ble Bombay High Courtin case of CIT vs. Tainwala Chem....
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....sion for Doubtful Debts. Where besides debiting the profit and loss account and creating a provision for bad and doubtful debt we have simultaneously obliterated the said provision from its accounts by reducing corresponding amount from loans and advances/debtors on the assets side of the balance-sheet, there is an actual write off of debtors by us and hence, the conditions of section 36(1)(vii) are satisfied. Assessee also placed reliance on the recent ruling of Hon'ble Mumbai Tribunal decision in the case of KEC International Ltd Vs. DCIT (33 taxmann.com 243) which was passed by relying on the decision of the Hon'ble Supreme Court in the case of Vijaya Bank reported in 323 ITR 166 and therefore, requested that their claim of provision for bad and doubtful debts be allowed. The assessee company also relied upon the judgement in the case of Arrow Coated Products Ltd vs ACIT (136 ITR 315) (The ITAT, Mumbai) 6.2 The facts of these cases do not match to that of the assessee's case. The submissions of the representative have been duly considered with regard to the computation of income under normal provisions in view of several case laws. However, the aforesaid rul....
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....he Hon'ble Supreme Court cited supra cannot be extended for the purpose of interpreting S.115JB as under: "..... Under the provisions of sec. 115JB of the Act, the assessee is required to prepare the Profit and Loss account for the purposes of sec. 115JB in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956. When the Profit and Loss account is prepared in accordance with the Companies Act, in our view, the meaning of the terms "amount or amounts set aside as provision for diminution in the value of any asset has to be understood only in accordance with the Companies Act. The term "Provision" has been defined in Part III to Schedule VI as under: "7. (1) For the purposes of Parts I and II of this Schedule, unless the context otherwise requires:- (a) The expression "Provision" shall, subject to sub-clause (2) of this clause, mean any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets, or retained by way of providing for any known liability of which the amount cannot be determined with substantial accuracy" Thus, it may be noted that, according t....
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.... (c) is concerned, the Tribunal by the impugned order has followed the decision of the Apex court in the matter of Vijaya Bank Ltd. v. CIT [2010] 323 ITR 166/190 Taxman 257, wherein it has been held that once the provision of doubtful debt has been debited to the profit and loss account and corresponding provision has been credited or reduced from the debtors account in the balance-sheet, then, this would amount to writing off. In the present case, the Tribunal recorded a finding of fact that the respondent-assessee has debited the provision of doubtful debt to the profit and loss account and correspondingly reduced the assets by reducing the amount of unsecured loans. On the aforesaid facts, the Tribunal held that this would amount to writing off of the debt. Thus, on examination of facts it concluded that the respondent-assessee has written off the loan and would be entitled to the claim of bad debts. The Tribunal by the impugned order also recorded a finding of fact that once the respondent-assessee has lent surplus money and offered the interest to tax as business income, then the activity of the respondent-assessee of lending money is a business activity. Therefore, the debt q....
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.... if this was not a mere provision made by the assessee by merely debiting the Profit and Loss Account and crediting the provision for bad and doubtful debt, but by simultaneously obliterating such provision from its accounts by reducing the corresponding amount from the loans and advances on the asset side of the balance sheet and consequently, at the end of the year showing the loans and advances on the asset aside of the balance sheet as net of the provision for bad debt, it would amount to a write off and such actual write off would not be hit by clause (i) of the explanation to section 115JB. The judgment in case of Deepak Nitrite Ltd. (supra) fell in the former category whereas from the brief discussion available in the judgment it appears that case of Indian Petrochemicals Corp. Ltd. (supra), fell in the later category" 15. In the instant case, during the course of hearing, the Ld. AR has taken us through the audited financial statements of the assessee company for the year ended 31.03.2013 wherein in Schedule 20 (other expenses), the assessee has debited a sum of Rs. 1,09,72,163/- towards provision for doubtful debts and advances in the profit and loss account. Further, o....
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....T credit u/s. 115JAA of the Act amounting to Rs. 1,87,30,304/- claimed by the assessee in its return of income. The Ld. CIT/DR did not raise any specific objection. Hence, the matter is set aside to the file of the AO to allow the necessary credit as per law, after carrying out necessary verification. The ground is allowed for statistical purposes. 21. Grounds No. 7 and 8 relate to interest u/s. 234B and 234C of the Act. The same are consequential in nature and does not require any separate adjudication. 22. Ground No. 9 relates to initiation of penalty proceeding u/s. 271(1)(c) of the Act. The same is premature in nature and, therefore, the same is dismissed. ITA No. 7311/Mum/2018 (AY. 2014-15): 23. In this appeal, the assessee has taken the following grounds of appeal: Ground No. 1: On the facts and in the circumstances of the case and in law, the Transfer Pricing Officer (TPO)/Dispute Resolution Panel ('DRP") erred in determining the Arm's Length Price (ALP) of transaction pertaining to payment of royalty to Inventio AG as Nil instead of INR 29,78,53.300 by: a. ignoring the transfer pricing documentation prepared by the Appellant; ....
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....agement charges are towards shareholder activities. The Appellant prays that the addition of INR 8,29,33,988 be deleted. Ground No. 3: On the facts and circumstance of the case and in law, the Ld. AO/ DRP erred in levying interest under Section 234A of the Act even though the Appellant had filed its return of income within the prescribed due date. The Appellant prays that the addition of INR 37,77,060 on account of interest under Section 234A of the Act be deleted. Ground No. 4: On the facts and circumstances of the case and in law, the Ld. AO/ DRP has computed interest (consequential) of Rs. 7,70,14,1770 under section 234B of the Act. The Appellant prays that the Ld. AO be directed to re-compute interest under section 234B of the Act. Ground No. 5: On the facts and in the circumstances of the case and in law, the Ld. AO/ DRP erred in initiating penalty proceeding under section 271(1)(c) of the Act. The Appellant prays that the Ld. AO be directed that to drop the penalty proceedings initiated under section 271(1)(c) of the Act." 24. In Ground No. 1, the assessee has challenged the Transfer ....