TMI Blog2018 (2) TMI 1525X X X X Extracts X X X X X X X X Extracts X X X X ..... failed to prove if any actual business losses have been suffered by assessee-company. Stock written-off - Held that:- The assessee-company did not file any evidence in support of its claim except filing copy of the ledger account. Assessee-company did not submit any report of Engineer or Production Head to verify that actually the inventory has become obsolete. Mere filing of the ledger account is not sufficient to support the claim of the assessee-company that the stock has become obsolete. Merely referring to Accounting Standard would not support the claim of the assessee-company that in fact the stock of the assessee-company has become obsolete. In the absence of any evidence in support of the claim of the assessee-company, no interference is called for in the matter. The DRP has given one more chance to the assessee-company to get the claim verified before A.O. However, the assessee-company did not avail the opportunity and did not produce any relevant or cogent evidence before A.O. to substantiate the claim of obsolete stock. Excess depreciation claim on fixed assets acquired by the appellant from NCR Corporation India Private Limited - Held that:- Direct the A.O. to ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee are decided as under. Part-I - Transfer Pricing Grounds 3. That on facts of the case and in law, the DRP/TPO/AO have erred in rejecting the economic analysis undertaken by the Appellant by conducting a fresh economic analysis for the impugned transactions. 4. That on facts and in law, the DRP/TPO/AO have grossly erred by charging interest on credit period granted by the company under normal trade practices by: ( i) Identifying outstanding receivables as a separate international transaction; ( ii) By re-characterizing the nature of outstanding receivables as loan advanced to Associated Entities ( AEs ) ( iii) By determining the Comparable Uncontrolled Price ( CUP ) method as the most appropriate method without providing any comparable uncontrolled transaction(s) thereby compromising the most fundamental rules and provisions laid down in the Act and the Rules to determine the arm s length price of the international transaction; ( iv) By applying an interest rate on outstanding receivables at LIBOR plus 400 basis points. ( v) By ignoring the fact that account receivables arising from an international transaction are closely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case from earlier years. The assessee has brought to the notice that ITAT has, in this matter, for A.Y. 2012-2013 held that a separate adjustment should not be made for interest on outstanding receivables, if the working capital adjustment has been undertaken. It is further noted that it is not known whether order of the ITAT dated 08th August, 2017, have been challenged in appeal before the Hon ble jurisdictional Delhi High Court on the issue. The DRP, therefore, directed that in case no appeal has been filed, the A.O./TPO shall follow order of the Tribunal. In case appeal has been filed/is being filed, the A.O./TPO is directed to apply rate of LIBOR plus 400bps as directed by the DRP in A.Y. 2012-2013. The objections of the assesseecompany was accordingly, disposed of. 6. Learned Counsel for the Assessee, at the very outset submitted that the identical issue has been decided by ITAT, Delhi Bench in the case of same assessee in A.Y. 2012-2013 in ITA.No.87/Del./2017 dated 08th August, 2017, in favour of the assessee in para-9 of the order. Copy of the order is placed on record. Para-9 of this order is reproduced as under: 9. We have heard both the parties and perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missions, we are of the view that the issue is covered in favour of the assessee by the order of the ITAT, Delhi Bench in the case of same assessee vide order dated 08th August, 2017, in which the Tribunal following the judgment of the Delhi High Court in the case of Kusum Healthcare Pvt. Ltd., decided the issue in favour of the assessee. The DRP has also issued direction in its order that this issue have been decided in favour of the assessee. But, it is not clear whether any appeal has been filed/being filed by the Department before the Hon ble jurisdictional Delhi High Court. Learned Counsel for the Assessee, however, made a statement that the Department has not filed any appeal before the Hon ble jurisdictional Delhi High Court. In this view of the matter, we are of the view that the issue is covered in favour of the assessee by the order of the ITAT, Delhi Bench in the case of the same assessee for the A.Y. 2012-2013 in ITA.No.87/Del./2017 dated 08th August, 2017. Even if an appeal would have been pending before the Hon ble jurisdictional Delhi High Court, is not a ground to take a contrary view against the assessee unless the order of the Tribunal have been set aside or staye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken by the assessee-company to recover the amounts. Foremost, as mentioned by the A.O, it has not been shown as to in which year it was taken into account for computation of income. The DRP did not interfere with the order of the A.O. The objection of the assessee was rejected. 10.1. Learned Counsel for the Assessee referred to pages 263 to 265 of the appeal paper which is objection filed before DRP in which it was highlighted that assessee-company suffered losses in ordinary course of business, which is an allowable deduction. Some case law are also filed in support of the contention. Learned Counsel for the Assessee, however, very fairly stated that no further details are available with the assessee-company, except audit report which was filed. 11. Ld. D.R. on the other hand relied upon the orders of the authorities below. 12. Considering the rival submissions, we are of the view that no interference is called for in the matter. The assesseecompany has initially stated that the amount in question represented debts have become bad during the year and were written off in the books of account. However, it was clarified before DRP that it was a wrong submission made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erification. Such amount relates to actual reduction in the value of spare parts held by the assessee-company for its business and loss incurred on such account is a trading/business loss of the assessee-company which is fully allowable under the Act. 14.1. The assessee-company regularly employed mercantile system of accounting and as per the mandate of AS- 2 so applicable, the deduction is allowable on commercial accounting. The claim of assessee-company has not been controverted by A.O. The A.O. merely stated that assesseecompany apart from furnishing ledger account could not furnish report of any Engineer, Production Head, Certificate of third party, to suggest that inventory has become obsolete. No show cause notice was issued to the assessee-company at the assessment stage. The DRP considering the issue noted that A.O. has not brought any evidence on record to show that the amount written off by the assessee-company, has been claimed wrongly or is bogus. The A.O. was, therefore, directed to verify submissions of the assessee-company and pass a speaking order. 14.2. Learned Counsel for the Assessee referred to page 12 of the appeal paper which is assessment order in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile determining PLI (Profit Level Indicator), same may be considered to give corresponding benefit in this year. The alternative claim is objected to by the Ld. D.R. because it is not arising out of the orders of the authorities below. 17.1. On consideration of the rival submissions, we are of the view that alternative claim of assessee-company, cannot be considered at this stage. The only issue of T.P. were raised in Ground Nos. 3 to 6 which have been allowed. Therefore, it would have no connection for determining the T.P. issue. Further, the alternative claim of assessee-company is not arising out of the orders of the authorities below. This alternative claim of assessee-company is, therefore, rejected. 18. Ground No.9 of appeal of assessee as under : 9. That on the facts and circumstances of the case and in law, the Ld. DRP/AO erred in disallowing a sum of ₹ 19,31,934 as excess depreciation claim on fixed assets acquired by the appellant from NCR Corporation India Private Limited. 19. Learned Counsel for the Assessee referred to page-41 of the appeal paper which is adjudication by the DRP on this issue. The DRP with regard to issue of disallowance of dep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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