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2017 (9) TMI 1648 - AT - Income TaxTPA - services provided by the AE under the head of management services are not in the nature of stewardship activities - Held that:- Determination of ALP for Management Support Services at Rs. NIL is unwarranted and accordingly reject the adjustment made to the income of the assessee by the ld TPO and hence addition to be deleted TPA - determination of ALP for payment of royalty at Rs. NIL is unwarranted and accordingly reject the adjustment made to the income of the assessee by the ld TPO and hence addition to be deleted Allowability of employees' contribution to PF - sum deposited before the due date of filing the return of income u/s. 139(1) - Held that:- The date of deposit of employees contribution to PF before the due date of filing the return u/s. 139(1) of the Act is not in dispute. This issue is settled in favour of the assessee by the decision of the Hon'ble Jurisdictional High Court in the case of CIT v. Vijay Shree Ltd. (2011 (9) TMI 30 - CALCUTTA HIGH COURT). Respectfully following the same, the Ground No. 12 raised by the assessee for the Asst Year 2011-12 is allowed. Short TDS credit - tds credit denied - Held that:- AO while framing the final assessment order had not carried out the directions of the ld DRP. Once the assessee produces the TDS certificates before the ld AO in support of its claim for credit of TDS, the duty of the ld AO is to grant the same on getting satisfied whether the relatable income thereon has been duly offered to tax by the assessee in accordance with the provisions of the Act. Hence we direct the ld AO to grant the credit of TDS after verification of the fact whether the relatable income thereon is offered to tax Provision for warranty allowability - Held that:- Provision for warrant is an ascertained liability based on the claims made by WBSEDCL during the year under appeal for which the liability to incur the same had definitely arisen during the year under appeal and accordingly eligible for deduction in the year of arising of liability. Entire provision for warranty in the sum of ₹ 206.68 lakhs would be squarely allowed as deduction in the year under appeal under the normal provisions of the Act. Whether said provision for warranty would have to be construed as ascertained liability or unascertained liability for computing the book profits u/s. 115JB? - Held that:- The assessee herein had made provision for warranty based on a systematic and scientific working and method by taking into account the past history of incurrence product warranties and the said workings were also filed before the lower authorities. Hence it could be safely concluded that the said provision for warranty is not made based on ad hoc provision. We hold that the provision for warranty in the sum of ₹ 206.68 lakhs would be allowed as deduction under normal provisions of the Act as well as while computing book profits u/s. 115JB of the Act. Accordingly, the Grounds 11 & 16 raised by the assessee for the Asst Year 2011-12 are allowed. Disallowance made on account of provision for obsolescence of inventory - Held that:- We hold that the provision made for obsolete stocks in the sum is squarely allowable as deduction as a business loss under normal provisions of the Act. Accordingly, the Ground No. 10 raised by the assessee for the Asst Year 2011-12 is allowed. With regard to the allowability of the provision for obsolete stock while computing the book profits u/s. 115JB of the Act, the ld AO had correctly disallowed the same on the ground that it is an unascertained liability and accordingly to be added back while computing book profits u/s. 115JB of the Act. As pursuant to the amendment brought in by the Finance (No. 2) Act, 2009 with retrospective effect from 1.4.2001, the said provision for obsolete stock represents provision made for diminution in value of asset and hence the same requires to be added back while computing the book profits u/s. 115JB of the Act. When this was put to the ld AR, he fairly conceded for the addition u/s. 115JB of the Act. Net profits while computing book profits u/s. 115JB - whether the provision for interest would be ascertained or unascertained liability? - addition made on account of provision for interest on MSMED - Held that:- While computing the income under normal provisions under various heads alone, the provisions of section 23 of MSMED Act, 2006 would assume relevance and significance. Hence we hold that the interest payable under MSMED Act, 2006 need not be added back to the net profits while computing book profits u/s. 115JB of the Act. Moreover, the ld AR also placed the scrutiny assessment orders of the assessee on record for the Asst Year 2014-15 u/s. 143(3) of the Act dated 26.12.2016, wherein this aspect has been duly examined by the ld AO in the assessment and deduction was duly granted by him in the assessment. In view of these facts and findings, we hold that the provision for interest payable to suppliers registered under MSMED Act, 2006 in the sum of ₹ 29,21,911/- is only an ascertained liability and need not be added back to the book profits computed u/s. 115JB
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