TMI Blog2021 (2) TMI 1327X X X X Extracts X X X X X X X X Extracts X X X X ..... Non-grant of depreciation on Plant Machinery - HELD THAT:- There is no denial of the fact that there is no change in facts and circumstances as well as law on this issue from the earlier assessment years and the facts and circumstances remain the same, rule of consistency demands that similar relief as has been allowed to the assessee in A. Y. 2010-11[ 2018 (8) TMI 2105 - ITAT DELHI] by the Tribunal has to be followed and relief has to be granted to the assessee. Insurance expenses - AO does not dispute the fact of assessee incurring the same and also the fact that in the earlier years it was neither disputed nor disallowed. Since the asset belongs to the assessee, the assessee was justified in claiming the insurance expenses because assets being Plant Machinery and Moulds and risks of losses, if any, against which insurances had been taken by the assessee is to the account of assessee. We are, therefore, of the considered opinion that the amount paid towards insurance expenses were legally and properly allowable to the assessee as having been incurred wholly and exclusively for the purpose of business of the assessee. Order of the Ld. CIT(A) is, accordingly, upheld a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but made adjustment of Rs.80,60,718/- on account of outstanding receivables from AEs beyond alleged standard credit period of 60 days @ interest rate of 12.6% based on base rate of State Bank of India adding appropriate bases points towards credit worthiness and risk assessment. Learned Assessing Officer apart from making ALP addition based on Ld. TPO order also made disallowance of depreciation of Rs.10,03,84,485/- on account of plant machinery not used allegedly for the purpose of business of the assessee and insurance expenses on these plant machinery of Rs.8,80,972/-. 5. Aggrieved by the action of the Ld. AO/Ld. TPO assessee preferred appeal before the Ld. CIT(A), and the Ld. CIT(A) vide order dated 26.12.2017 gave partial relief on account of transfer pricing addition of Rs.80,60,718/-, however, allowed complete relief on the disallowance of depreciation of Rs.10,03,84,485/- and insurance expense of Rs.8,80,972/- and deleted the same. Though the Ld. CIT(A) sustained the credit period of 60 days per charging interest on overdue receivables, directed the Ld. TPO to apply interest rate of LIBOR plus 350 bps. By order dated 7/12/2018 passed under section 250/143(3) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zing the statistics over a period of time to discern a pattern which would indicate that vis-a-vis the receivables for the supplies made to an AE, the arrangement reflects an international transaction intended to benefit the AE in some way. The Court finds that the entire focus of the AO was on just one AY and the figure of receivables in relation to that AY can hardly reflect a pattern that would justify a Ld. TPO concluding that the figure of receivables beyond 180 days constitutes an international transaction by itself. With the Assessee having already factored in the impact of the receivables on the working capital and thereby on its pricing/profitability vis-a-vis that of its comparables, any further adjustment only on the basis of the outstanding receivables would have distorted the picture and recharactersied the transaction. This was clearly impermissible in law as explained by this Court in CIT Vs. EKL Appliances Ltd. (2012) 345 ITR 241 (Delhi) - 2012-TII-01 -HXC-Del- TP. 9. Ld. AR, however , submitted that this particular issue was raised before CIT(A) in this year; that it was demonstrated before Ld. CIT(A) that ALP margins of the assessee vs. comparable remai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars. 12. In the circumstances, where of the considered opinion that this issue needs to be considered by the learned Assessing Officer in the light of the submissions now made by the Ld. AR in consonance with the view that is to be taken on this aspect for the earlier assessment years also. With this direction, we set aside the issue to the file of the learned Assessing Officer. We accordingly, allowed the grounds of appeal of the assessee for statistical purpose. 13. Insofar as the departmental appeal is concerned, grounds No. 1 and 4 are in general and ground No. 2 and 3 are interrelated. Ground No. 2 is in respect of Non-grant of depreciation on Plant Machinery Rs.10,03,84,485/-; whereas ground No. 3 is relating to the disallowance of Rs. 8,80,972/- towards insurance premiumof machinery and moulds. 14. According to the learned Assessing Officer, Plant Machinery and Tools Moulds on which depreciation has been claimed by the assessee are being used by M/s. Rialto Enterprises (P) Ltd. who had manufactured the goods for the assessee company; and that depreciation on these two items is being disallowed year after year in the preceding previous years also. Assessees case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terprises (P) Ltd. for producing goods for the business of the assessee are eligible for depreciation and dismissed the appeal of the department filed on this issue. Ld. AR further submitted that the Revenue accepted the same without filing any appeal against the order of the Tribunal on this aspect, before the Hon ble High Court. 16. Insofar as the insurance expense is concerned, it is submitted that the Ld. AO for the first time in this assessment year not only disallowed depreciation on the assets owned by the assessee and given to M/s. Rialto Enterprises (P) Ltd. for assessee s business but also disallowed this amount of Rs. 8,80,972/- which the assessee has incurred towards insurance on the assets lying at the manufacturing unit of M/s. Rialto Enterprises (P) Ltd. there is no dispute that the assets are owned by the assessee and therefore assessee had insured these assets and paid the insurance premium. The reasoning given by the AO for making this disallowance is identical as given for disallowing depreciation. Ld. AR submitted that the insurance expense has never been disputed by the Ld. AO in the earlier years and consistently been allowed to the assessee as claimed in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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