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TMI Blog2023 (4) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... tween the Assessee and its AEs were the provision of software development services and ITES and therefore a reference was made to the Transfer Pricing Officer for determination of the Arm's Length Price (ALP). The TPO passed an order dated 14.01.2016 u/s. 92CA of the Act, determining a TP adjustment of Rs. 210,53,06,218 i.e., Rs. 70,93,30,168/- in the SWD segment and Rs. 139,59,76,050/- in the ITES segment. Incorporating the aforesaid TP adjustment, the AO passed the final assessment order vide order dated 16.05.2016. A rectification application was filed by the Assessee on 18.5.2016 on account of a mistake apparent from the record as the TPO had considered the operating cost for the ITES segment. Subsequently, the TPO passed a rectification order reducing the ITES adjustment to Rs. 138,79,80,037. Therefore, the total TP adjustment stood at Rs. 209,73,10,205. Aggrieved by the assessment order, the Assessee preferred an appeal before the CIT(Appeals), who vide order dated 31.01.2017 granted partial relief. Aggrieved by the order passed by the CIT(Appeals), both the assessee (IT(TP)A No.932/Bang/2017) and revenue (IT(TP)A No.844/Bang/2017) are in appeals before the Tribunal. SOFTWAR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25/- Price Received Rs. 1386,37,92,854/- Shortfall being adjustment u/s. 92CA Rs. 709,330,168/- 7. On appeal, the CIT(A) accepted the contentions of the Assessee and directed exclusion of Genesys International Corpn. Ltd., ICRA Techno Analytics Ltd., Infosys Ltd., and Spry Resources India Pvt. Ltd. The CIT(A) upheld the exclusion of the remaining comparables selected by the Assessee. IT(TP)A No.844/Bang/2017 (Revenue's appeal) 8. The revenue is in appeal before us contending the exclusion of Genesys International Corpn. Ltd., ICRA Techno Analytics Ltd., Infosys Ltd. and Spry Resources India Pvt. Ltd. by the CIT(Appeals) with regard to the Software development segment. Ground No. 1 to 4 of revenue appeal relate to the same which we will take up for adjudication first. 9. The ld AR made the following submissions with regard to the exclusion of Genesys International Corpn. Ltd and Infosys Ltd - Genesys International Corporation Ltd. ("Genesys"): It is submitted that Genesys provides geographical information services comprising of photogrammetry, remote sensing, cartography, data conversion and state of the art terrestrial and 3D geo-contentincluding location based and ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 81 and 567 of the paperbook 10. The ld AR placed reliance in this regard on the decision of this Tribunal in the case of Microfocus Software India Pvt. Ltd. v. ACIT (Order dated 17.03.2020 passed in IT(TP)A No. 368/Bang/2017) wherein this Tribunal directed exclusion of above four companies from the list of comparables to a SWD service provider for the same assessment year. 11. We heard the parties. We notice that the coordinate bench in the case of Microfocus Software India Pvt. Ltd.(supra) has considered the inclusion of the above four companies and held that - 6. We heard Ld D.R and perused the record. In the case of CGI Information systems & management Consultants P Ltd (supra), following four companies were excluded with the following observations - "29. We have considered the rival submissions. In the case of Agilis Information Technologies India (P.) Ltd. (supra), this Tribunal considered the comparability of the 3 companies which the Assessee seeks to exclude from the final list of comparable companies chosen by the TPO. The functional profile of me Assessee and that of the Assessee in the case of Agilis Information Technologies India (P.) Ltd. (supra), is identical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal Information Services comprising of Photogrammetry, Remote Sensing, Cartography, Data Conversion, state of the art terrestrial and 3D geocontent including location based and other computer based related services. Pagc-38 of the Annual report 2012 containing the above description was brought to the notice of the TPO, Attention of the TPO was invited to the directors report to the shareholders at page ii of the annual report 2012, wherein the Directors have informed the shareholders that the company continued in its journey, to be innovators and leaders in the fields of location based services related geoplatforms and advanced survey techniques. There is no segmental reporting because it is stated in the annual report that this company is only in one segment viz., GIS based services and therefore there is no requirement of segmental reporting. It was also submitted that this company owns substantial intangibles equivalent to 10.42% of its total turnover. 32. The TPO however has regarded this company as a comparable company by observing that this company develops software for mapping and geospatial services and operates a few development centres in India. The company is predomin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1962 (Rules) specifically provides that for the purposes of subrule (1) of Rule 10B, the comparability of an international transaction with an uncontrolled transaction shall be judged with reference to the following, namely:- (a) the specific characteristics of the property transferred or services provided in either transaction; (b) the functions performed, taking into account assets employed or to be employed and the risks assumed, by the respective parties to the transactions; In the given facts and circumstances, we are of the view that Genesys International Corporation Ltd., cannot be considered as a comparable company and the said company should be excluded from the final list of comparable companies. We hold accordingly." "Accordingly, following the decision rendered by the co- ordinate bench in the case of CGI Information Systems & Management Consultants P Ltd (supra), we direct exclusion of M/s Genesys International Corporation Ltd, M/s Infosys Ltd, M/s Larsen & Toubro Infotech Ltd and Persistent Systems Ltd.". 12. Respectfully following the above decision of the coordinate bench we direct the exclusion of M/s Genesys International Corporation Ltd, M/s Infos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that a. the revenue from services consists of revenue earned from services performed for software development & consultancy, licensing & sub- licensing fee, annual maintenance charges for software support, web development and hosting which is recognized to the extent services are performed. b. Revenue from sales is recognized as and when the delivery of branded software is made is booked net of trade discount..... Page no.2 of Annual Report (Running page 2379 of paper book) contains Profit and Loss account. The Revenue from sale of services is mentioned therein, but break-up details is not given. Thus, we notice that this company is engaged in various types of services and break-up details of each of the services are not available. The Ld A.R also mentioned that a company named M/s Axiom Technologies Ltd has merged with this company during this year. However, the Director's report states that the Hon'ble High Court of Calcutta has passed the order confirming the merger of above said company. The effective date of merger is not given. Hence it is not clear as to whether the effective date of merger falls during the year under consideration or in any of the earlier years. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual Report of this company. The Revenue recognition policy given under Significant Accounting policies (Page 2790 of paper book) states that the assessee is recognizing revenue from software consultancy and also from sale of products. This company is possessing inventories also, which is shown in Note no. 18 (page 2787 of paper book). The revenue from operations, however, consists of Income from software development. Hence it is not clear as to whether this company has sold any of its inventories or not during the year under consideration. We notice that the TPO has not examined the aspects relating to software products. We notice that in the case of CGI information systems & Management Consultants (P) Ltd (supra), M/s Spry Resources India P Ltd has been taken as a comparable company. All these aspects show that there is no clarity on the factual aspects relating to this company. Accordingly, we are of the view that this company also requires fresh examination at the end of AO/TPO. Accordingly we restore this company to the file of the AO/TPO for examining it afresh. 19. Respectfully following the above decision and the fact that in assessee's case also the TPO and the CIT(A) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gies India Ltd. 6.08 6.42 4 Infosys BPO Ltd. 36.30 32.96 5 Jindal Intellicom Ltd. -0.05 0.46 6 Microgenetic Systems Ltd. 19.61 19.99 7 TCS E-Serve Ltd. 63.69 62.10 8 BNR Udyog Ltd. (Seg) (Medical Transcription) 41.58 47.19 9 Excel Infoways Ltd. (Seg) (IT/BVPO) 29.79 35.02 10 e4e Healthcare Business Services Pvt. Ltd. 19.85 18.99 AVERAGE MARK-UP 28.11 28.68 24. The TPO re-computed the arm's length price (ALP) to arrive at the TP adjustment as under:- Arm's Length Mean Mark-up 28.11% Less: Working Capital Adjustment -0.57% Adjusted mean mark-up of the comparables 28.68% Operating Cost Rs. 990,84,77,671/- Arm's Length Price - 120.33% of Operating Cost Rs. 1275,02,29,067/- Price Received Rs. 1135,42,53,017/- Shortfall being adjustment u/s. 92CA Rs. 139,59,76,050/- The TPO inadvertently considered the wrong operating cost of INR 990,84,77,671/- in the above computation of the adjustment instead of the correct operating cost of INR 990,22,63,797/-. A rectification application was filed in this regard and subsequently, the TPO issued a rectified TP order with the rectification adjustment of Rs.138,79,80,037/-. 25. The CIT(A) rejected the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices unlike the Assessee. (v) It is disclosed in its annual report that Excel considered closing down its IT and BPO segments of the company and to diversify into construction, development and real-estate. (vi) During FY 2014-15, the company changed its name from "Excel Infoways Ltd." to "Excel Realty Infra Ltd." which suggests an altogether different nature of services being provided by the company. (vii) Excel fails the employee cost filter applied by the TPO as its ratio of employee costs to sales is only 13.05%. (viii) Excel fails the ITE service revenue filter applied by the TPO as the income from ITE services is only 51.06% of the total revenue. (ix) From the annual report of the company, it is also evident that the company has had an exceptional year of operations, recording a steep decrease of 85.45% in year on year profits after taxes for FY 2011- 12, without there being any reason forthcoming for the same. 30. We heard the DR. We notice that the coordinate bench of the Tribunal in the case of Micro Focus Software India Private Limited(Supra) has considered the issue and held that Excel be excluded. The relevant part of the decision of the Tribunal is ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficant investments in creating intangibles and owns several intellectual properties. In view of its substantial brand value, the company enjoys an advantage in the market and has high bargaining power. As a result of the brand value, the company receives a premium in the market. The company owns significant intangibles. Further the company has had an exceptional year of operation where in Infosys BPO has acquired 100% voting interest in Portland Group Pty Ltd. It is, therefore, submitted that Infosys BPO is not comparable to the Assessee. Detailed submissions in this regard are made at pages 445-449 of the paperbook. It is also submitted that Infosys BPO is engaged in the provision of integrated IT and business process outsourcing solutions across a variety of verticals including Banking and Capital Markets, Communication Media and Entertainment, Manufacturing, Emerging Market Solutions, Insurance and Healthcare, Retail, Energy, Utilities and Resources, Automotive and Aerospace, Transportation and Services. The services rendered consist of Sourcing and procurement, customer service, financing and accounting, knowledge services and human resources. Further, the company is engaged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filter applied by the TPO. As per the disclosures in its Annual Report, its income from ITE services constitutes only 42.92% of its total revenue and thus fails the said filter applied by the TPO and, therefore, BNR is liable to be excluded on this ground as well. Detailed submissions in this regard are made at pages 452-455 of the paperbook. 34. We notice that the exclusion of all these companies have been considered by the coordinate bench of the Tribunal in the case of Micro Focus Software India Private Limited (supra) where it is held that - 12. We heard the parties and perused the record. M/s Universal Print Systems Ltd (seg.)(BPO) was restored back to the file of AO/TPO in the case of CGI Information Systems & Management Consultants P Ltd (2018)(94 taaxmann.com 97) at paragraph 47 to 52 of the order of Tribunal. The relevant paragraphs are extracted below:- "47. The next submission of the learned counsel for the Assessee was with regard to exclusion of 2 comparable companies from the list of 7 comparable companies that remain after the order of the DRP. The first comparable company sought to be excluded is Universal Print Systems Ltd. This company was chosen as a compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be argued that when the TPO himself applied the filters at the entity level he was not entitled to apply the filters at segmental level. As we have already stated if clear segmental information is available the filters can be applied at the segmental level in TNMM. Therefore the objection with regard to this company failing the employee cost filter and service revenue filter in our view was rightly rejected by the TPO and DRP. It is however seen that this company has four segments viz., Repro. Label Printing, Offset Printing and Pre-press BPO. Whether the label printing and offset printing segments supplement the functions performed in the Prepress BPO segment has to be seen. We therefore set aside the order of the DRP in this regard and remand for fresh consideration by the TPO the comparability of this company. In terms of Rule 10B(3) of the rules the profit margins of Pre-Press BPO have to be adjusted taking into account the fact that two other segments supplement the pre-press BPO segment. If such adjustment cannot be reasonably or accurately made then this company has to be excluded from the list of comparable companies. The TPO for this purpose can use his powers u/s. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sen as comparable in the case of Baxter (I) (P.) Ltd. (supra). The Tribunal held on the comparability of the three companies Infosys BPO Ltd., TCS E-service Ltd. and Excel Infoway Ltd., as follows: (i) In paragraph 23 of its order the Tribunal held that Infosys BPO Ltd., is not comparable with a company providing ITES because of brand value and extraordinary events in the previous year relevant to AY 2012-13 viz., acquisition of an Australia based company which had effect on its profits. (ii) In paragraphs 24 & 25 of its order the Tribunal held Excel Infoway Ltd., as not comparable because of consistent diminishing revenue. The figures of diminution revenue are given in paragraph 24 of its order. (iii) In paragraphs 21 & 22 of its order the Tribunal held that Excel Infoway Ltd., was liable to be excluded because it was also engaged in the business of software testing, Verification and validation of software at the time of implementation and data centre management activities. 46. Respectfully, following the decision of the Tribunal we hold that the aforesaid 3 companies be excluded from the final list of comparable companies for the purpose of arriving at the arithmetic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngaged only in the business of call centre services and therefore, the company has only one reportable segment. The company passes all the filters applied by the TPO and therefore, ought to be included in the final list of comparables. 38. We notice that the coordinate bench of the Tribunal in the case of CGIInformationSystems & Management Consultants (P.) Ltd vs ACIT ([2018] 94 taxmann.com 97 (Bangalore - Trib.)) has considered the issue of suomoto exclusion of Jindal Intellicom Ltd and has held that - 56. The same reasoning given for including Informed Technologies India Ltd., would apply for including Jindal Intellicom Ltd., also. This company was selected by the Assessee in its TP study and accepted by the TPO as being comparable to it (pages 16-17 of the TP order). Since it passed all the filters applied by the TPO, as subsequently upheld by the DRP, it was rightly included in the list of comparables. In the proceedings before the DRP, the Assessee did not object to its inclusion in the list of comparables. However, despite the above, the DRP on its own directed its exclusion on the premise that since it catered only to customers in USA, where there was allegedly an adverse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by its AEs. Working capital adjustment is made for the time value of money lost when credit time is given to the customers. The Assessee however is not an entrepreneur but a captive service provider which is entirely funded by the AEs. This being so, the Assessee does not stand to lose anything as it is compensated on a total cost plus basis. The Appellant is running the business without any working capital risk as compared to the comparables. Therefore, requirement for adjustment of negative working capital does not arise. 42. We heard the DR. We notice that the issue is covered by the decision of this Hon'ble Tribunal in Tivo Tech Private Limited v. DCIT (order dated 12.06.2020 in IT(TP)A No. 1619/Bang/2017), where it has been held that negative working capital adjustment shall not be made in case of a captive service provider as there is no risk and it is compensated on a total cost plus basis. The relevant extract of the decision is as given below - 15. As far as Gr.No.2.6 is concerned, the Assessee has contended that the TPO and the DRP erred in adding to the average arithmetic profit margin of the comparable companies chosen by the TPO, negative working capital adjustmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stems Worldwide India P. Ltd., assessee placed on record copies of orders of DRP. In that DRP considered the issue and directed the TPO as under : 14. Ground No. 11 : Negative Working Capital adjustment - Making a negative working capital adjustment without appreciating the fact that the company does not bear any working capital risks. On this issue, the assessee submitted as under : "The learned TPO determined the ALP for the international transactions with A.Es by making a negative working capital adjustment for the differences in working capital between the assessee and the companies considered as comparables. The assessee does not agree with the learned TPO as the company does not bear any working capital risk since it is been fully funded by it's A.E. from its inception and has no working capital contingencies. The company has never taken any loans till date from the date of incorporation nor has incurred any expense for meeting the working capital requirement." We have gone through the submissions and the order of the TPO. The assessee pleaded that the DRP has acceded such a plea in some other case. On examination, we find that the DRP, Hyderabad in the case of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction under Section 10AA of the Act: 44. The Assessee had claimed a sum of Rs. 12,83,55,202/- as deduction under Section 10AA of the Act in respect of its SEZ unit at Chennai. The claim for deduction under Section 10AA of the Act commenced in the year 2010-11 when the Chennai unit was part of the erstwhile company i.e., Perot Systems Business Process Solutions India Pvt. Ltd. which was subsequently merged with the Assessee company. The Assessee is engaged in the business of process outsourcing services in the nature of data processing and software development since 1998. The Asseessee set up a third unit in Chennai which commenced business on 29.04.2009 in a Special Economic Zone ("SEZ") and the assessment year 2010-11 was the first year of claim of deduction under Section 10AA of the Act for the Chennai SEZ unit. 45. In the year AY 2010-11 the claim of the Assessee came to be disallowed by the Assessing Officer on the ground that (i) the softex forms were not certified by the SEZ/STPI authorities; (ii) the Chennai unit was formed by splitting up or reconstruction of a business already in existence and; (iii) the unit did not export any computer software. 46. For the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... semi India (P.) Ltd v. DCIT ([2016] 65 taxmann.com 318 (Hyderabad - Trib.)). 50. Chennai unit was formed by splitting up of the existing units, The ld AR submitted that the Chennai unit was set up and commenced its activities in the year 2009. The turnover of the three units demonstrates that the units have not been impacted by each other and the Chennai SEZ unit has been established as a part of its expansion program and not through splitting of its existing business. Further, the unit wise additions to fixed assets shows substantial investments have been made in the SEZ unit. Also, the entire investment made to the fixed assets by the SEZ unit is towards acquisition of new asset and no machinery previously used has been transferred to the unit. With regard to the contention that the assessee has not furnished project wise payroll of its employees to verify the new unit the ld AR submitted that the Assessee had filed the unit-wise payroll details for AY 2010-11 substantiating that the transfer of manpower from the existing units to the SEZ was less than the threshold of 50% as provided by the CBDT circular No. 14/2014 dated 08.10.2014. Reliance in this regard is placed on the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on u/s.10A has been accepted by the assessee. 54. The ld AR submitted counter argument stating that the Hon'ble Tribunal in assessee's own case for AY 2010-11 had dismissed the appeal on the ground that the order was passed in the name of erstwhile company i.e., Perot Systems Business Process Solutions India Pvt. Ltd. which was subsequently merged with the Assessee. The ld AR submitted that the contention of the ld DR that the issue has reached finality is not factually correct. The ld AR in this regard drew our attention to the relevant orders of the AO, CIT(A) and the Tribunal for AY 2010-11. 55. We heard the rival submissions and perused the material on record. According to the provisions of section 10AA the benefit in respect of newly established Industrial Undertaking in SEZ is available to all Assessees on export of certain articles or things or software subject to certain conditions. The term export turnover is defined to mean the consideration in respect of export by the undertaking, being the Unit of articles or things or services received in, or brought into, India by the assessee but does not include freight, telecommunication charges or insurance attributable to the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived stating that the aforesaid limit of 20% is inadequate and restrictive since it impacts the competitiveness of Indian Software Industry in global market in terms of quality of product and delivery time-lines. Global competitiveness can be ensured only when highly skilled and experienced manpower is deployed for software development. Requests have, therefore, been made seeking enhancement of the limit of 20% in line with the recommendation of Rangachary Committee, which was set up to review the taxation of IT Sector and Development Centers. 3. The matter has been re-examined by the Board. In supersession of the Circular No. 12/2014 dated 18th July, 2014, it has now been decided that the transfer or re-deployment of technical manpower from existing unit(s) to a new unit located in SEZ, in the first year of commencement of business, shall not be construed as splitting up or reconstruction of an existing business, provided the number of technical manpower so transferred as at the end of the financial year does not exceed 50 per cent of the total technical manpower actually engaged in development of software or IT enabled products in the new unit." (emphasis supplied) 58. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges in foreign currency from the export turnover and the total turnover in the remanded proceedings. GROUND NO. 8: Disallowance of Marked to Market losses: 63. The Assessee is primarily engaged in the business of outsourcing services to group companies located outside India and as a result, the Assessee has huge receivables in foreign currency and is exposed to risk on account of foreign currency fluctuations. In order to mitigate such risk, the company has entered into contracts with Banks to hedge its foreign currency exposure. 64. The Assessing Officer has disallowed the same holding it to be a notional and contingent and treated the same as a speculative loss in terms of Section 43(5) of the Act. The Assessing Officer having noted that the forward contracts are in respect of debtors, relying on Instruction No. 3/2010 issued by the Central Board of Direct Taxes concluded that it is a notional loss and has to be treated the same as a speculative loss in terms of Section 43(5) of the Act. 65. In this regard, the ld AR submitted that the MTM losses has arisen due to hedging in revenue transactions and the same is not capital in nature. The ld AR further submitted that MTM loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer disallowed the same on the ground that no details were furnished regarding the effort made to recover the same and that it is not allowable under Section 36(1)(vii) of the Act. The said disallowance came to be upheld by the CIT(A). 68. The ld AR submitted that giving advance to the employees were essential and wholly and exclusively linked to the business of the Assessee. The ld AR It is submitted that the advances written off should be allowed as a deduction under Section 28(i) of the Act. Reliance is placed on the decision of the Hon'ble High Court of Delhi in the case of CIT v. Triveni Engineering & Industries Ltd. 69. We heard the rival submissions and perused the material on record. The reason quoted by the AO and the CIT(A) for not allowing the deduction is that the efforts made by the assessee to recover the money from the employees is not clearly demonstrated. Further it was held that the amount could not be recovered from more than 1000 employees is not believable without proper evidence to substantiate the claim. We notice that a similar issue is considered by the coordinate bench of the Tribunal in the case of M/s.Xchanging Solutions Limited vs DCIT (IT(T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidences and supporting furnished by the assessee after giving a reasonable opportunity of being heard to the assessee. It is ordered accordingly. GROUND NO. 10: Disallowance of interest on delayed remittance of TDS: 72. The Assessing Officer disallowed the interest on delayed payments of TDS amounting to Rs. 2,56,390/- on the ground that it is not an allowable expenditure under the Act. 73. In this regard, the ld AR submitted as the interest paid on delayed remittance of TDS is compensatory in nature, the same is an allowable expenditure under Section 37 of the Act. Reliance in this regard is placed on the decision of this Hon'ble Tribunal in the case of Total Environment Building Systems Pvt. Ltd. v. DCIT (order dated 29.06.2022 passed by this Hon'ble Tribunal in ITA No. 45- 46/Bang/2017). Reliance is also placed on the decision of the Hon'ble Bombay Tribunal in the case of Resolve Salvage & Fire India Private Limited v. DCIT (order dated 18.04.2022 in ITA No. 841/Mum/2019). 74. We have considered the rival submissions and perused the material on record. The coordinate Bench of this Tribunal in Velankani Information Systems Ltd. v. DCIT [2018] 97 taxmann.com 599 dealt with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejected the argument advanced by the assessee that retention of money payable to the State as tax or income-tax would augment the capital of the assessee and the expenditure incurred, namely, interest paid for the period of such retention would assume character of business expenditure. The court held that an assessee could not possibly claim that it was borrowing from the State, the amounts payable by it as income-tax, and utilising the same as capital in its business, to contend that the interest paid for the period of delay in payment of tax amounted to a business expenditure". (emphasis supplied) 22. The decision cited by the ld. counsel for the assessee of Kolkata Bench of the Tribunal on the issue is contrary to the decision of the Hon'ble Madras High Court. Though the decision of the Tribunal is later in point of time, judicial discipline demands that the decision of the Hon'ble Madras High Court is to be followed. It is also worthwhile to mention that the Kolkata Bench of Tribunal in the case of Narayani Ispat (P.) Ltd. (supra), which was cited by the ld. counsel for the assessee, did not consider or did not have an occasion to consider the decision of the Hon&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is that the assessee has not submitted any evidence of payment. Therefore the ld DR supported the decision of the lower authorities. 79. We heard the rival submissions and perused the material on record. The ld AR during the course of hearing submitted additional evidence (pages 1-87 of the additional evidence compilation (Vol II)) with regard to details of the pay register extracts and the payslips evidencing payment of more than 90% of the gratuity. We admit the additional evidence and since the same goes to the root of the issue and remit the issue to the AO with a direction to examine the additional evidence and allow the claim accordingly. GROUND NO. 12: Credit of TDS and advance tax: 80. It is submitted that the Assessing Officer erred in granting TDS credit only to the extent of Rs. 7,66,56,411/- as against the actual credit claimed by the Assessee in its return amounting to Rs. 14,77,53,993/- without considering the tax paid under the PAN of the companies merged with the Assessee. Detailed submissions are placed at pages 798-799 of the paper book 81. In this regard we direct the AO to verify and allow the claim in accordance with law.. 82. In the result, the appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X
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