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2022 (10) TMI 413 - AT - Income TaxTransfer pricing - Validity of the final assessment order passed u/s 144C(13) - Period of limitation - HELD THAT:- The date in CPC’s records is the date on which the computation is fed onto it. In the present case, the screenshot of order processing on AST dated 13.03.2017 is in the assessment records. The screenshot of rectification to the online order processing on AST dated 30.03.2017 is also in the assessment records. The system automatically calculates section 234A, 234B and 244A interest. The reference point of calculation of interest is 5th March, 2017. As a result, the computation will be different from the computation in the manual order. In most of the cases, the date of order as per the manual order is different from the date of order as per CPC till 2018. Only since initiation of e-assessment in the year 2018, the full order is uploaded in the new system with ITBA (ITBA replaced the earlier AST). In the instant case, the manual final assessment order is dated 24.01.2017. The final assessment order has dispatch seal also. There is nothing on record to show that the final assessment order has not been dispatched on the said date. The demand was uploaded to CPC portal on 13.03.2017, so the CPC shows the date as the date of order. The CPC will always show the date on which the demand is fed into. The entire order is not uploaded, but only the demand was uploaded in the CPC. For the aforesaid reasons, we reject grounds 1 to 3 raised by the assessee. DRP directed the TPO to recompute the margins of the assessee as well as the comparables to its SWD and ITE service segments after treating such foreign exchange gain / loss as operating in nature - A bare perusal of the adjustment proposed in the draft assessment order, and the adjustment that has ultimately been incorporated in the final assessment order are one and the same. Thus, it is wholly apparent that the final assessment order is, to the extent, not in conformity with the DRP’s directions and is, therefore, illegal. As per section 144C(10) of the I.T.Act, every directions issued by the DRP is binding on the A.O. Further, section 144C(13) of the I.T.Act mandates that the A.O. shall complete the assessment in conformity with the directions issued by the DRP. Since the TP adjustment made in the final assessment order is not in conformity with the DRP’s directions, the final assessment order is, to this extent, bad in law and thus unsustainable. Therefore, we delete the TP adjustment made in the final assessment order, which is not in conformity with the DRP’s directions. In taking the above view, we are fortified by the judicial pronouncements referred supra at para 10. Since we have deleted the TP adjustment incorporated in the final assessment order, the specific grounds with regard to TP adjustment on merits is not adjudicated. Addition of suppressed income relatable to the difference in the assessee’s revenues as per the invoices raised by it vis-àvis its financial statements - action of the AO in making an addition which was enhanced pursuant to the DRP’s directions - HELD THAT:- As per reconciliation, it is only on account where the audit adjustments were made, i.e., in order to reverse the excess revenue to the extent overstated. A similar issue was examined by the A.O. during the course of assessment proceedings, for the immediately succeeding assessment year, i.e., A.Y. 2013-2014. AO accepted the assessee’s aforesaid submissions on the issue and accordingly made no addition to its returned income in the final assessment order for assessment year 2013-2014. Therefore, we direct the AO to take into account the reconciliation of revenue as per the invoices vis-à-vis the financial statement and take a decision after affording a reasonable opportunity of hearing to the assessee. Therefore, grounds 4 and 5 are allowed for statistical purposes. Nature of expenditure - expenses incurred for purchase of monitors and desktops, software, computer accessories and spare parts - revenue v/s capital expenditure - HELD THAT:- After hearing the rival submissions, we direct the A.O. to examine whether the assessee is entitled to depreciation on the expenditure disallowed in past years as capital expenditure. It is ordered accordingly.
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