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2018 (2) TMI 1783 - AT - Income TaxDepreciation on computer peripherals, assessee claimed depreciation on the equipment like UPS, stabilizer, LAN/WAN, catalyst switches, network switches etc. at 60% - Held that:- We find that the equipment forms integral part of the computer systems and the assessee is entitled to the claim of depreciation at 60% by treating the peripherals as part of block of computers. Disallowance of TDS receivables written off - Held that:- In view of the above factual and legal position, it has become necessary to verify whether the assessee had recognized the income as and when the services are rendered or goods are dispatched and subsequently, whether the assessee written off the difference amount of deficit payment and the amount under the TDS certificate issued, in their books of accounts. It would be conveniently verified by the learned AO and if he finds that initially the assessee recognized the total invoice amount and subsequently, identified the bad debt with reference to the deficit payment by the party and the amount under TDS certificate issued. On verification of compliance with these two conditions, learned AO will allow this expense. Ground allowed for statistical purposes. Allocation of common expenses to the unit claiming benefit u/s 10A - Held that:- AO to verify whether the recomputation of the deductible amount is properly done, in the light of the submission that the deduction of the amount allocated to the STP unit’s net profit is incorrect and instead of the same the learned AO should have deducted the same from the assessee’s operating income. For this purpose, we remand issue to the learned AO for verification. Grounds allowed for statistical purposes. Disallowance u/s 40A(i) - assessee had incurred expenditure in foreign currency under the head ‘royalty’ - Held that:- We are satisfied that the disallowance under section 40(a)(i) of the Act is revenue neutral and the learned AO is directed to allow the corresponding deduction to the assessee u/s 10A of the Act. Expenditure represents the purchase of spares from foreign affiliates - TDS liability - PE in India - Held that:- Inasmuch as the payees are not identifiable, it would not be possible for the assessee to deposit any TDS even in case of its deduction. We are, therefore, deem it just and proper to direct the learned AO has to verify from the evidence to be produced by the assessee relating to the creation of provisions for project accruals and the year end reversal of such provisions, and accordingly to delete the disallowance. This ground is set aside to the file of learned AO for verification. TPA - ALP determination - comparable selection - Held that:- Assessee as a tested party has been characterized as provider of software development services to its AEs which had used Transactional Net Margin Method (TNMM) as the most appropriate method for its benchmarking of international transaction, thus companies functionally dissimilar need to be deselected from final list. Working capital adjustment to account for difference in working capital employed by the Assessee -Held that:- We consider it just and proper to direct the Ld. TPO to grant working capital adjustment to account for difference in working capital employed by the Assessee and the comparable companies.
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