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2015 (4) TMI 369 - ITAT DELHITransfer pricing adjustment - CIT(A) deleted the addition - revenue arguing against the inclusion of ITDC and non-inclusion of National Research Development Corporation Ltd., Panacea Biotech and Suven Life Science, which were initially chosen by the TPO as comparable - Held that:- As regards the reliance of the ld. CIT(A) on the DRP’s inclusion of ITDC in the list of comparables for the AY 2007-08, we find that the same does not merit acceptance for two reasons. First, the direction given by the DRP for a later year can have no binding force in the context of an earlier year. The second reason is that the Department, even if aggrieved by the direction given by the DRP on 12.7.2011 for the assessment year 2007-08 could not have filed appeal against the order passed by the AO giving effect to such direction. Sub-section (2A) to section 253 empowering the Revenue to file appeal against the order passed by the AO pursuant to the direction given by the DRP u/s 144C(5), has been inserted by the Finance Act, 2012 w.e.f. 1.7.2012. It is, therefore, abundantly clear that the direction given by the DRP for the AY 2007-08 could not have been challenged by the Revenue before the Tribunal and was binding. Thus ITDC cannot be considered as a comparable company to qualify for inclusion in the final set of comparables for determining the ALP of the assessee’s international transaction. The impugned order on this issue is set aside. - Decided against assessee. National Research Development Corporation Ltd., Panacea Biotech and Suven Life Science - Once the TPO selected the three companies in his original order, which were not adversely commented in the remand report, it implied that they survived for the consideration of the ld. first appellate authority. In such a situation, it became the duty of the ld. CIT(A) to either include the same in the final set of comparables or give reasons for their exclusion. Since there is no whisper in the impugned order about the comparability or otherwise of these three companies, we consider it appropriate to remit this matter to the file of the ld. first appellate authority for deciding it afresh as per law, after allowing a reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. Depreciation - CIT(A) allowing depreciation for full year as against half year allowed in respect of assets shown to have been purchased on 30.9.2004 - Held that:- The assessee contended before the ld. CIT(A) that no physical movement of assets was required since the assessee company was operating from the same premises as that of the L.O., whose assets were purchased and put to use on 30.09.2004. After recording this submission, the ld. CIT(A) returned a finding that the assessee produced invoices raised by Writer Relocations which had transported the assets from New Delhi to Gurgaon. It is beyond our comprehension as to how the assets could have required transfer from New Delhi to Gurgaon, when no physical movement of assets was required as per the assessee’s version since the assessee and LO were operating from the same premises. It is further worth noting that though the ld. CIT(A) called for a remand report from the AO on the question of comparables, but he did not consider it expedient to admit the additional evidence on this issue without seeking the comments of the AO. In our considered opinion, the Department has also rightly challenged the admission of additional evidence by the ld. CIT(A) in contravention of the provisions of Rule 46A of IT Rules. As the fact about the date of putting to use of such assets is not borne out from the material on record, we consider it necessary to set aside the impugned order on this issue and remit the matter to the file of ld. CIT(A) for rendering a fresh decision, - Decided in favour of revenue for statistical purposes. Disallowance of Repairs and maintenance of residential apartment and international travel holiday trip of the expatriate employees - CIT(A) deleted the disallowance - Held that:- it is patent from the assessment order that the repair expenses amounting to ₹ 11.61 lac were incurred in respect of rented accommodation provided by the assessee to its employees. We fail to appreciate as to how this expenditure cannot be allowed as deduction when the employees to whom such rented premises were allotted, on which the repair work was carried out, were discharging duties for the assessee company. This is an expenditure incurred for the welfare of its employees and deserves to be allowed. As regards the other expenses amounting to ₹ 23.56 lac, we again find that the assessee allowed international travel holiday trip to its employees. This is nothing but a part of package to the employees. By no standard, these two expenses can be considered as not allowable. - Decided in favour of assessee.
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