TMI Blog2018 (4) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the tribunal in assessee’s own case we direct the AO to allow the claim of the assessee for deduction. Provision for replacement guarantee allowable. Direct the AO to allow the lease rent paid as deduction. Short credit of tax deducted at source - action of the AO in not granting credit of tax deducted at source - Held that:- AO is permitted to waive the claim of the assessee and allow appropriate credit for TDS. - I.T.A No. 857/Kol/2011, I.T.A No. 1894/Kol/2012 - - - Dated:- 2-2-2018 - Sri N.V.Vasudevan, JM Shri Waseem Ahmed, AM For the Appellant : Shri Arvind Sonde, Advocate For the Respondent : Shri G.Mallikarjuna, CIT(DR) ORDER Per N.V.Vasudevan, JM I.T.A. No.857/Kol/2011 is an appeal by the Assessee against the order 07.04.2011 of D.C.I.T-Circle-11, Kolkata passed u/s 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (Act) in relation to A.Y.2007-08. I.T.A. No.1894/Kol/2012 is an appeal by the Assessee against the order 30.10.2012 of D.C.I.T-Circle-11, Kolkata passed u/s 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (Act) in relation to A.Y.2008-09. Both the appeals were heard together and involve a common issue. We de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... companies chosen by the Assessee in its TP study. The TPO on his own selected some comparable companies and arrived at a total set of nine comparable companies and the arithmetic mean of the profit margin of these comparable companies was arrived at by the TPO at 18.61%. The TPO by his order 28.10.2010 passed u/s 92CA(3) of the Act, suggested an adjustment on account of arms length price at ₹ 25.08 crores for the following reasons :- 12. Based on the above, the comparables mentioned in notice u/s 92CA(2) of the Act dated 22.09.2010 are found to be appropriate. Based on the availability of Annual Reports, the three companies suggested by the assessee are also being included in the comparability analysis and figures are taken from consolidated financials. This presents the following picture : Sl.No. Name of the Company FY 2006- 07 OP/TC(%) 1. Aftek Ltd. 32.27 2. Aztec Software Ltd. 17.06 3. KPIT Cummins Infosystems Ltd. 12.92 4. Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olding that the order of the Transfer Pricing Officer ('TPO'), and the draft order of the Deputy Commissioner of Income-tax ('DCIT') (in so far as it relates to transfer pricing proceedings), are invalid and void ab initio as the conditions of section 92C(3) have not been satisfied. 2. Determination of arm's length price by the DCIT, TPO and DRP for Management Support services received by the Appellant 21. The DRP and the TPO erred in law and on facts in not granting the adjustment on account of the differences in the working capital position. 2.2 The DRP erred in not taking cognizance of the submissions made on 11 March 2011 and in reaching a conclusion that the Appellant did not provide any specific computation of the working capital adjustment. 3 Variation of 5% from the arithmetic mean The TPO, DCIT and the DRP erred in law in not granting the benefit of +/- 5 per cent variance as per proviso to section 92C(2) of the Act. 4 Determination of arm's length price 4.1 The DRP and the DCIT erred in reaching a conclusion that a transfer pricing adjustment needs to be made in the hands of the Appellant. Without prejudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Infosys Ltd.). As far as 3i Infotech Ltd is concerned, the assesee in its TP study had chosen it as a comparable company. Even before DRP the limited contention of the assessee was with regard to the computation of the profit margin of his company. The contention of the assessee before DRP which was rejected by DRP in para 6.14.5 of its order was as follows:- 6.14.5 The assessee's next objection is that the PLI of the comparable named 3i Infotech Limited has been computed incorrectly by the TPO at 25.47% . According to the assessee, the correct PLI is n.25% as mentioned on page 22 of the application before the Panel. It is seen from the records that in computing the PLI the TPO has utilized the Annual Report of 3i Infotech Limited' for the year ended March, 2007. On page 35 of the Annual Report, the Management Discussion Analysis of Financial Conditions and Results of Consolidated Operations' have been highlighted. It is observed that the company has for the first time charged 'Software Development Cost' to its P L account with the remark that We started writing off the Software Development costs, which till FY2006 used to be capitalized . Accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and rendering of software services; 1.4. During the year under consideration, 2 companies (viz., 'Elven Micro Circuits Private Limited' and 'C2Silicon Software Solutions Private Limited') merged with it. 2. Re.: The Appellant submits that, notwithstanding the fact that it had not challenged the inclusion of '3i Infotech Ltd.' as a comparable company before the lower authorities, considering the facts and circumstances of its case and the law prevailing on the subject, the said '3i Infotech Ltd.' cannot be considered as a comparable company while benchmarking the international transactions in relation to software development services rendered by the Appellant to its AE, for the following specific reasons amongst other reasons: 2.1. It has entered into transactions with related parties; 2.2. It is functionally not comparable with the Appellant as it offers wide range of software products, software development and consulting services, IT enabled service activities, IT infrastructure services and Business Process Outsourcing software services, software products and embedded solutions; 2.3. No segmental data is available vis-a-vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be permitted to be raised by the assessee. We therefore admit the additional ground for adjudication. 14. As far as exclusion of the company 3i Infotech Ltd is concerned the assessee seeks exclusion of this company on the following basis :- 3i Infotech Limited - Margin as per TPO = 25.47% (Corrected Margin by Assessee - 13.25% Page No. of Annual Report of 3 i Infotech Ltd. Summary of Assessee's Objections : - Has Significant Related Party Transactions - 56.14% : 3i Infotech was rejected in the Appellant own case of AY 2009-10 on the basis of related party transaction (RPT) . In AY 2007-08, 3i Infotech has RPT amounting to 56.14% on sales. Hence the company should be rejected [Page - 116 117) - Functionally not comparable - diversified activities : The company derives majority of its income from software products as compared to software services. This company offers wide range of software products, software development and consulting services, IT enabled service activities, IT infrastructure services and Business Process Outsourcing (BPO). Als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India Private 2010-11 [2016] 66 taxman.com 119 (Bangalore-Trib) Para 21, (Pg. No. 2,14/17) 5 3. FCG Software Services (India) Pvt. Ltd. 2006-07 [2016] 66 taxman.com 296 (Bangalore-Trib) Para 8, (Pg. No. 6/17) 6 4. Tesco Hindustan Service Centre Pvt. Ltd. 2007-08 [2017] 77 taxman.com 48 (Bangalore-Trib) Para 30, (Pg. No. 25/34) 7 5. Starent Networks (India) Pvt. Ltd. 2007-08 [2016] 66 taxman.com 238 (Pune-Trib) Para 13, (Pg. No.8/13) 8 6. Hewlett-Packard (India) Software Operation P. Ltd. 2006-07 TS-433-ITAT-2015 (Bang)-TP Para 14.4.1.(Pg no. 29/35) 9 7. Sun Gard Solutions (India) P. Ltd. 2008-09 [2015] 63 taxman.com 323 (Bangalore-Trib) Para 16.3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [2015] 54 taxman.com 296 (Delhi-Trib) Para 18 (Pg. No. 12 13/19) 30 3. Principal Global Services Limited AY 2007- 08 [2016] 69 taxman.com 210 (Pune-Trib) Para 21., (Pg. No. 14 15/16 ) 31 On account of Significant Intangibles 1. Tesco Hindustan Service Centre Pvt. Ltd. 2007-08 [2017] 77 taxman.com 48 (Bangalore-Trib) Para 12.4 (Pg. No.13/34) 7 2. Marlabs Software Pvt Ltd 2007-08 TS-922-ITAT- 2016 (Bang)-TP Para 14.3 (Pg no.17/36) 11 3. Global e-Business Operations Pvt. Ltd. 2007-08 TS-35-ITAT- 2017(Bang)-TP Para 3/7 (Pg no.7,13) 12 4. H S Software Development and Knowledge Management Centre Pvt. Ltd. 2007-08 TS-31-ITAT- 2017(DEL)-TP Para 34 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt intellectual property rights [2017] 37 taxmann.com 271 (Delhi-Trib.) Para - 34 35 (Pg no.14 of 25) 3. Alcatel- Lucent Technologies AY 2003-04 AY 2004-05 Functionally different [2015] 62 taxmann.com 303 (Delhi-Trib.) Pra 5 (Pg No. 3 10) 4. Mentor Graphics (Noida) P. Ltd. AY 2003-04 Holds intellectual property rights segmental not available TS-83-ITAT- 2015 (DEL)-TP Para 7.4 (Pg no.6 7) Sl. No. Relevant Case Law Assessment Year Citation Para Page No. Sr. No. On account of Significant Intangibles 1. Tesco Hindustan Service Centre Pvt. Ltd. 2007-08 [2017] 77 taxman.com 48 (Bangalore-Trib) Para 12.4 (Pg. No. 13/34) 7 2. Marlabs Software Pvt Ltd 2007-08 TS-922-ITAT- 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 340 (Bangaluru-Trib) Para 17.3, (Pg. No. 17/23) 27 9. CSR India (P) Ltd. 2007-08 [2013] 31 taxman.com 265 (Bangaluru-Trib) Para 3.4.2., (Pg. No. 3 11) 28 On account of Mergers 1. M/s Cashedge India Pvt. Ltd. 2010-11 TS-262-HC-2016 (DEL) - TP Para 6, (Pg no. 3/4) 15 2. Xchanging Technology Services India Pvt. Ltd. 2009-10 TS-555-HC-2015(DEL) - TP Para - 3,(Pgno.2/2) 16 3. CES Pvt. Ltd. 2006-07 TS-338-HC-2014 (AP)-TP Para-4, (Pg no. 2/5) 17 4. M/s ISG Novasoft Technologies Ltd. 2007-08 TS-485-ITAT - 2015 (Bang)-TP Par 5, (Pg no. 5/10) 18 5. Tesco Hindustan Service Centre (P) Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be excluded from the list of comparable companies. 19. The next grievance of the assessee is with regard to the action of the TPO and DRP in not giving appropriate adjustments to the profit margin of the comparable companies and of the Assessee on account of working capital adjustment. On the question of working capital adjustment the DRP in its order has made the following observations :- The assesee also had with it the data required for computation of working capital adjustment but it did not make any such computation. The OECD Guidelines of May 2006, have been cited profusely by the assessee in respect of its arguments pertaining to use of data and various aspects of comparability but the assessee has neither furnished any details in this regard nor used this guidelines for computing the working capital adjustment and therefore it is not allowable. 20. The ld. Counsel pointed out that the observations of the DRP that the assessee does not give the required data for computation of working capital adjustment was incorrect. In this regard, our attention was drawn to the assessee s letter dated 08.10.2010 addressed to the TPO in which the assessee has made the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the learned counsel for the Assessee, we are of the view that similar adjustments should also be allowed in the present assessment year. We hold and direct accordingly. We also observe that the principle reasons assigned by the DRP in the present assessment year was lack of details furnished by the assessee. In this regard we find that all the details have been given by the assessee in its transfer pricing study and we find that the observations of the DRP in this regard cannot be sustained. We accordingly direct that adjustment of 2% towards working capital adjustment and risk adjustment should be allowed to the assessee as was done in A.Y.2004-05. We hold and direct accordingly. 23. The ld. DR submitted that the working capital adjustment should be based on the formula usually employed in computing the working capital adjustment. His submissions was that the working capital adjustment may be directed to compute by the assessee based on the formula and the TPO should be directed to consider the same. 24. We have considered the rival submissions and are of the view that the submission made by the ld. DR is acceptable. We accordingly direct the assessee to give computati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on facts in disallowing ₹ 1,45,98,000 being the excess of provision for replacement Guarantee over actual payment. 30. The facts with regard to ground no.7 are that during the relevant assessment year the assessee has made provision for replacement guarantee amounting to ₹ 29,12,44,000/- and actually paid amounting to ₹ 27,66,46,000/-. The Assessee is mainly engaged in the manufacture and sale of durable consumer electronics goods like television sets, domestic appliances etc. These products carry a warranty period. The warranty period varies from product to product. During the warranty period, the cost of repairs is to be borne by the Assessee including the cost of spare parts to be replaced. The methodology for computation of warranty provision in the case of consumer electronics was furnished by the Assessee. The same is given as Annexure-B to this order. 31. The AO has disallowed the excess of Provision for Replacement Guarantee over actual payment amounting to ₹ 1,45,98,000/- treating the same as excess provision. The assessee has contested the view of the AO relying on the decision of the Apex Court in case of Rotork Controls India (P) LLd re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee chose nine comparable companies whose arithmetic mean of operating margin was 3.1%. The assesse s PLI was 13.76% computed in the following manner :- Philips Electronics India Ltd Assessment year 2008-2009 P/L details for Software Division Rs. in Min Particulars Amount Turnover 2,512 Less: Expenses Depreciation 166 Salaries, Wages, Bonus, Comtn. 999 Contrb to Pension Prov Fund 53 Staff Welfare 66 Rent 72 Power Fuel 37 Insurance 14 Repairs/Maint: Buildings 24 Travelling Conveyance 209 Reimbur, of Motor Car Exps 8 Postage/Stationery/Office Exps ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating profit on operating cost percentage as 23.18% as the benchmark, the arm's length price of international transactions representing provision of software development services by the assessee company to its AEs during the assessment year 2008-09 is re-determined as under: - . Operating margin declared by the assessee at 13.76% operating martin percentage ₹ 30.40 crores Operating profit margin taking the operating Margin percentage at 23.18% ₹ 51.20 crores Arm's Length Price Adjustment ₹ 20.80 crores Hence, an upward adjustment of ₹ 20.80 crores is to be made to the total income of the assessee company. 37. In respect of the objections of the assessee before DRP, the DRP confirmed the order of the TPO. The AO incorporated the adjustment suggested by the TPO and made an addition of ₹ 20.80 crores to the total income of the assessee in the fair assessment order as addition on account of adjustment to arms length price. The assessee has raised ground nos. 1 to 7 against the fair ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct the price of such transactions. 4.2. Without prejudice to the generality of the above, the Learned TPO, AO and the DRP have erred on facts in comparing the transactions of the captive software services of the Appellant with companies operating as full-fledged risk-bearing companies without considering the differences in the risks undertaken by the comparable companies vis. a vis the Appellant, the adjustments of which, in any case ought to have been allowed. Similarly, there has been failure to allow economic adjustments on account of differences in working capital between the Appellant and the companies selected as comparables. 5. Use of contemporaneous data The Learned AO, DRP and the TPO erred in facts and in law in using data, which was not contemporaneous and which was not available in the public domain at the time of conducting the transfer pricing study by the Appellant. 6. Disregard of Rule 10B(4) of the Income Tax Rules, 1962 ( the rules ) The Learned AO, DRP and the TPO erred in law and on facts in not considering the application of multiple-year data while computing the margins of the comparable companies, having regard to the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 93.84% of the gross block of fixed assets and 95.56% of net block of fixed assets in the current year. Hence the company should be rejected. [Page - iv,vi,39,49] - Functionally not comparable : Aftek Limited is not functionally similar to the Appellant as according to the information available in the annual report, the company is engaged in software services, software products and SDP. Further, the Company's SDP group has expanded its business during the year. The services provided by the company includes engineering services which are different from the services provided by the appellant. i., i,43,47,55] - No Segment data available : The company is involved in both sale of products and services. However, there is no segmental information available for the same [Page- 57] Sl.No. Relevant case law Assessment Year Broad Reason for Rejection Citation Para Page No. of Case Law 1. M/s Philips India Limited AY 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Para 14.3 (Pg no. 17/36) 11 7. Global e-Business Operations Pvt. Ltd. 2007-08 TS-35-ITAT-2017 (Bang)-TP no. 7,13) Para3/7 (Pg 12 8. H S Software Development and Knowledge Management Centre Pvt. Ltd. 2007-08 TS-31-ITAT-2017(DEL)-TP Para 34 40 Page 17/21 13 On account of Segmental Information not available 1. Avaya India Pvt. Ltd. 2008-09 TS-452-HC-2017(DEL)-TP Para 2,3, (Pg. No.1,2/2) 28 2. Adidas Technical Services P. Ltd. 2010-11 [2016] 69 taxman.com 401 (Delhi-Trib) Para 12.8, (Pg. No.11/13) 29 3. Open Solutions Software Services 2010-11 [2017] 81 taxmann.com 177 (Delhi-Trib.) Para 11, (Pg. No.8/9 5 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No segment data available : The company derives income from Software Development Consultancy, software products and software services. However no disclosure on segmental information is available in the standalone financial statements of the company. Hence in view of the same, 3i Infotech cannot be considered as a comparable. [Page 121] Has Significant Related Party Transactions - 15% : In the AY 2008-09, 3i Infotech has RPT amounting to 15% on Sales. [Page- 119] Rejected by the Hon'ble ITAT in the Appellant's own case for AY 09-10 : 3i Infotech was rejected in the Appellant's own case of AY 2009-10 on the basis of related party transaction (RPT) Significant Research Development activity - 8.76% : The company is also involved in significant R D activities. During the FY 2007-08 the R D expenditure amounted to 8.76% of the total revenue of the company. [Page 11] -Significant Intangibles - 45.29% : The company has intangible assets in the form of goodwill and Business Commercial rights. The total amount of inta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia Private Limited 2008-09 [2015] 59 taxmann.com 474 (Banglore-Trib) Para -17.3, (Pg No.21/25) 32 8. FCG Software Services (India) Pvt. Ltd. 2008-09 [2014] 51 taxman.com 75 (Bangaluru-Trib) Para 15.3, (Pg. No.23/27) 33 9. 3DPLM Software Solutions Ltd. 2008-09 [2014] 42 taxman.com 333 (Bangaluru-Trib) Para 17.4, (Pg. No.25/28 2 10. AMD India(P) Limited 2008-09 61 taxmann.com (Bangalore - Trib) Para 17.4, Pge 29/30) 21 On Account of Related Party Transactions 1. Sun Gard Solutions (India) (P) Ltd. 2008-09 [2015] 63 taxman.com 3233 (Bangalore-Trib) Para 16.3.1, 16.3.2 (Pg no. 21/25) 10 2. Cypress Semiconductors Technology Pvt. Ltd. 2008-09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31 On account of Significant Intangibles 1 BA Continuum India Private Limited 2008-09 [2017] 79 taxman.com 85 (Hyderabad-Trib) Para 14.2 (Pg. No.12/13) 20 2. Tektronix Engineering Development India Pvt. Ltd. 2008-09 [2016] 75 taxman.com 276 (Hyderabad-Trib) Para 9.4.1, (Pg no.11/20) 21 3. Corporate Executive Board India Pvt. Ltd. 2008-09 TS-220-ITAT- 2017 (Delhi)-TP Para 31.2,31.3(Pg no.55,56/64) 22 4. MSC Software Corporation India Pvt. Ltd. 2008-09 TS-226-ITAT- 2017 (PUN)-TP Para 28, (Pg no.16/18) 23 5. Tesco Hindustan Service Centre Pvt. Ltd. 2007-08 [2017] 77 taxmann.com 48 (Bangalore-Trib.) Para 12.4, (Pg.no.13/34) 7 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [2017] 77 taxmann.com 48 (Bangalore-Trib.) Para 23, (Pg no. 24/34) 7 10. TNS India Private Limited 2007-08 [2017] 77 taxmann.com 356 (Hyderabad Trib.) Para 10.3, (Pg no. 7/17) 19 11. Global e-Business Operations P. Ltd. 2007-08 TS-35-ITAT- 2017 (Bang)-TP Par:7; Page:13/17 12 41. As far as exclusion of Persistent System Ltd is concerned the assessee has for the first time before the Tribunal sought exclusion of this company. In this regard the assessee has filed the following additional grounds of appeal : 1. Re.: The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject, Aftek Infosys Ltd. cannot be considered as a comparable company while bench marking the international transactions in relation to software development services rendered by the Appellant to its Associated Enterprise ( AE ) for the following specific reasons amongst other reasons: 1.1. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven for admitting given in A.Y.2007-08, we admit the additional grounds for adjudication as the reasons for seeking to raise the additional ground are same as given in AY 2007-08. 43. The reasons given by the assessee for considering Persistent System Ltd as not comparable was as follows : Persistent System Limited - Margin as per TPO Assessee = 23.18% Page No. of Annual Report Summary of Assessee's Objections : - Functionally not comparable - Persistent System Limited is not functionally similar to the Appellant as it is engaged in provision f outsourced product development services for independent software vendors and enterprises, wherein the company offers complete product life-cycle services. The company derives income from both software services and software products. It develops products and application for wide variety of customers. [Page - 7,17,53,57,79,81] - No segment data available : The company derives income from both software development and products. However segmental information in relation to software products software services is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Para-16,(Pg No.11/12) 9. GXS India Technology Centre Pvt. Ltd. 2008-09 Functionally different [2015] 62 taxmann.com 276 (Bangalore - Trib.) Para- 13.3,(Pg No.20/28) 10. PMC - Sierra India Pvt. Ltd. 2008-09 Segmental not available [2015] 74 taxmann.com 110 (Bangalore - Trib.) Para- 17.3,(Pg No.26/30) 11. Trilogy E-Business Software India Pvt. Ltd. 2008-09 Functionally different Signmental not available [2016] 70 taxmann.com 378 (Bangalore-Trib.) Para-17.3, (Pg No 23, 24/32) 12. Agnity India Technologies Pvt Ltd. 2009-10 Functionally different 16, 17 Para-13.3, (Pg No.7/10) On account of Research Development Activities 1. Caliberated Healthcare Systems India Pvt. Ltd. AY 2007- 08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the earlier part of this order. 47. The next grievance of the assessee is with regard to the action of the TPO and DRP in not giving appropriate adjustments to the profit margin of the comparable companies and of the Assessee on account of working capital adjustment. On the question of working capital adjustment the DRP in its order in para-13 rejected the request for adjustment on account of working capital by following its order in Assessee s case for AY 2007-08. 48. We have heard the rival submissions on this issue which is identical to the submissions made in AY 2007-08 which we have discussed in the earlier part of this order. As decided in AY 2007-08, we are of the view that the issue should be set aside to the AO for fresh consideration. The Assessee should file computation of working capital adjustment as per formula for calculating the working capital adjustment before the TPO. The TPO is directed to examine the working capital adjustment in accordance with law. 49. In view of the aforesaid conclusion we are of the view that other issues raised in ground nos. 1 to 5 does not require any consideration and are left open. This issue with regard to transfer pricing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout prejudice to the above contention, it was submitted that if the lease rentals are regarded as capital expenditure then the AO ought to have allowed depreciation on such lease rent payment. 54. The DRP rejected the plea of the Assessee on the ground that in AY 2003-04, on similar facts the disallowance of lease rentals claimed on vehicles was confirmed by the ITAT too. The ITAT then upheld that the disallowance on the logic that the payments were not revenue in nature. The AO has made the disallowance as facts are identical to facts in A Y 2003-04. Hence, the DRP rejected the objection relating to the allowance of lease rentals. In so far as the question of allowance of depreciation is concerned, the DRP held that since the claim of depreciation was not made before the A O, the same cannot be allowed. 55. Before us it was agreed by the parties that similar issue raised in assessee s own case was considered and decided by the tribunal in ITA No.1141/Kol/2016 for A.Y.2009-10 order dated 05.04.2017 and ITA No.505/Kol/20156 and ITA No.2408/Kol/2016 for A.Y.2009-10 order dated 27.06.2017. For A.Y.2009-10 the tribunal dealt with this issue in the following manner : Ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of rent paid by him and the benefit of the depreciation shall be available to owner of the asset. Further the Special Leave Petition (SLP) filed by the department against the said decision before the Hon ble Supreme Court has been dismissed . He further placed reliance on the co-ordinate bench decision of this tribunal in the case of The Royal Bank of Scotland N.V. vs DDIT in ITA No. 1738/Kol/2009, 1926/Kol/2010 , 519/Kol/2011 and 1805/Kol/2012) dated 13.4.2016 wherein on identical matter, the issue was decided in favour of the assessee. In response to this, the ld DR fairly conceded that the issue is covered by the decision of the Hon ble Supreme Court in the case of ICDS Ltd supra. 6.2. We have heard the rival submissions. We find that the issue under dispute is covered by the decision of the Hon ble Supreme Court in the case of ICDS Ltd supra in favour of the assessee. Hence respectfully following the same, we allow the Ground No. 6 raised by the assessee. 56. Respectfully following the decision of the Tribunal referred to above we direct the AO to allow the lease rent paid as deduction. In view of the aforesaid decision in ground no.10 ground no.11 does not requir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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