TMI Blog2020 (4) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... ang/2016, 614/Bang/2016, 615/Bang/2016, 650/Bang/2016 - - - Dated:- 18-2-2020 - SHRI. CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER Assessee by: Sri. K. R. Vasudevan, Advocate Revenue by: Mr. Muzaffar Hussain, CIT DR ORDER PER BEENA PILLAI, JUDICIAL MEMBER These are cross appeals and cross objection filed by assessee and revenue in respective assessee against separate order passed by Ld. ACIT Circle 3(1) (1), Bangalore, for assessment year 2011 12 on following grounds of appeal: IT(TP)A 442/Bang/2016 (A s Appeal) Disallowance of Provision for bad and doubtful debts 1. The learned Assessing Officer ( learned AO ) has erred in disallowing the provision for doubtful debts amounting to ₹ 11,98,944. 2. The learned AO has erred in not appreciating the fact that provision for doubtful debts written back amounting to ₹ 11,98,944 are to be allowed as deduction while computing profits or gains from business or profession, as the same pertains to reversal of provision of prior years. 3. The learned AO failed to appreciate that such amount was already disallowed at the time of making provision in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... V. Interest under section 234D of the Act 15. The learned AO has erred in contending that refund of ₹ 1,56,31,750 as claimed in the revised return of income filed on 27 March 2013 has been issued to the Appellant. 16. The learned AO has erred in levying interest under section 234D of the Act amounting to ₹ 21,88,445 without appreciating the fact that the Appellant has not received any refund for AY 2011-12. VI. Dividend Distribution Tax ( DDT ) 17. The learned AO has erred in computing the DDT payable by the Appellant as ₹ 3,63,34,323 as against ₹ 3,14,58,302 computed by the Appellant at the rate of 16.608%. 18. The learned AO has erred in including the shortfall in DDT as computed by him as a part of final assessment order, which is not disputed or mentioned in the draft assessment order. 19. The learned AO has failed to provide an opportunity to be heard to the Appellant before adding back the erred shortfall to the total tax liability. IT(TP)A 614/Bang/2016 (Dept. Appeal) GROUNDS OF APPEAL (i) The directions of the Dispute Resolution Panel are opposed to law and facts of the case (ii) In the facts and circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t irrespective of whether onsite or offshore. (iv) Whether the Hon'ble DRP in correct in excluding M/s Acropetal Technologies on the ground that they have significant onsite revenue without appreciating the fact that onsite development of software entails more cost and thereby results in lower profit margins. (v) Whether the Hon'ble DRP was right in seeking exact comparability while searching for comparable companies of the assessee under TNMM method whereas requirement of law and international jurisprudence require seeking similar comparable companies. (vi) For these and other grounds that may be urged at the time of hearing, it is prayed that the directions of the Dispute Resolution Panel in so far as it relates to the above grounds may be reversed. (vii) The appellant craves leave to add, alter, amend and or dc'ctc any of the grounds mentioned above. IT(TP)A 650/Bang/2016 (A s Appeal) I. Disallowance of provision for warranty - ₹ 11,14,118 1. The Learned Assessing Officer ['learned AO'] and the Learned Dispute Resolution Panel [ learned DRP ] erred in disallowing provision for warranty amounting to ₹ 11,14,118 contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n on disallowance of Software expenditure for AY 2010-11 - ₹ 17,78,814 11. The learned AO has erred in not granting consequential depreciation of ₹ 17,78,814 (being 60% of ₹ 29,64,690) on the software expenses disallowed in AY 2010-11. 12. The learned AO has erred in not following the directions of the learned DRP which have provided for such depreciation allowance in the DRP directions. M/s. Ingersoll Rand International (I) Pvt Ltd., Brief facts of the case are as under: 2. Assessee is a company and filed its return of income declaring loss of ₹ 19,92,85,232/- on 13/11/11. The same was processed under section 143(1) of the Act. Subsequently, case was selected for scrutiny and notice under section 143(2) was served on assessee. In response to statutory notices, representative of assessee appeared before Ld.AO and filed requisite details as called for. 2.1. During assessment proceedings, it was observed that assessee had international transactions with its associated enterprises exceeding ₹ 15 crores and therefore reference to transfer pricing officer was made Ld. TPO upon receipt of reference determined arm s length adjustme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustment on account of risk. 5. At the outset, Ld. AR as well as Ld. CIT DR submitted that all the above issues need to be revisited by Ld. AO/TPO, as there are apparent irregularities in the orders of authorities below as under: * Ld. AR submitted that, Ld. AO failed to follow directions of DRP in respect of granting depreciation allowance on software expenses disallowed in A. Y : 2010 11. * Ld. CIT DR submitted that DRP has applied on-site revenue filter only in respect of Acropetal Technologies, for excluding it from finalist. He submitted that DRP cannot pick and choose filters and apply it on certain comparables. Further he also submitted that this filter was not applied by Ld. TPO at all. * Ld. AR submitted that DRP upheld inclusion of certain comparables that were having different business model as compared to that of assessee and were also functionally different. 6. We have perused submissions advanced by both sides in light of records placed before us. On transfer pricing issues, raised by revenue and assessee in cross appeals, it is observed that authorities below have cherry picked on using filters without understanding business model of assessee. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee stands partly allowed for statistical purposes. Ground No. 7 to 12 are in respect of software expenses disallowed contending it to be capital in nature and depreciation not granted by Ld. AO despite directions by DRP. 12. Both sides submitted that these issues have been addressed by authorities below in a cryptic manner without considering method of accounting followed by assessee. Under such circumstances, we are of opinion that, this issue needs to be reviewed by Ld. AO/TPO on the basis of consistent approach followed by assessee. Accordingly, these grounds raised by assessee stands allowed for statistical purposes. In the result appeal filed by revenue appeal and cross objection filed by assessee stands allowed for statistical purposes. M/s. Ingersoll Rand (India) Ltd ., Brief facts of the case are as under: 13. Assessee filed its return of income on 28/09/09 which was revised on 27/03/13 declaring total income of ₹ 102,29,34,666/-. Return was processed under section 143 (1) and subsequently selected for scrutiny. Accordingly, notice under section 143 (2) along with questionnaire was issued to assessee. In response to statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted by Ld. AR that Ld. TPO considered these to be international transactions on which arm s length price has been determined. Under such circumstances, Ld.AR argued that, again the same expenses cannot be subjected to tax under normal provisions of the Act, as it amounts to double taxation. 20. Ld. CIT DR supported the argument advanced by Ld. AO and suggested the issue to be sent back to Ld. AO/TPO for reconsideration. We have perused submissions advanced by both sides in light of records placed before us. 21. It is observed that in transfer pricing additions, Ld. TPO considered these expenses to be international transaction, and computed arm s length price of these transactions. Under such circumstances, we do not find any reason why Ld.AO again disallowed these expenses. However, we set aside this issue too Ld. AO/TPO to verify the same, and consider the issue in hand in accordance with law. Accordingly, these grounds raised by assessee stands allowed for statistical purposes. Ground No. 14-19 needs to be verified by Ld. AO on the basis of records and any other document at as he may deem fit and proper. Accordingly, these grounds raised by assessee stands ..... X X X X Extracts X X X X X X X X Extracts X X X X
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