9911796707
TMI Blog2025 (5) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the assessee company. Based on the reference made by the Assessing Officer to the Transfer Pricing Officer for computation of Arm's Length Price (ALP) in relation to the international transaction with its Associate Enterprises, the Transfer pricing Officer (TPO) vide order dated 28.01.2021 passed u/s. 92CA(3) made an adjustment of Rs. 1,74,45,091/- to the international transaction relating to the export of traded spares to the AE. Thereafter, NFAC Delhi passed the Assessment Order u/s. 143 r.w.s.144C(3) of the Act on 24.06.2021 making additions/disallowances assessed the income at Rs. 2,29,81,09,549/-. Details of additions are given below : Sr. No. Particulars Amount (Rs.) 1 T.P. Adjustment as per order u/s. 92CA(3) 1,74,45,091 2 Disallowance of project provision costs 3,97,50,388 3 Disallowance of claim of deduction on account of Ind AS 37,89,868 4 Disallowance of Information Technology expenses 6,15,83,672 Total 12,25,69,019 3. Being aggrieved by the assessment order passed by the AO, assessee preferred appeal before the ld.CIT(A) and partly succeeded. Against the part relief granted by the ld.CIT(A), Revenue is now in appeal before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance of Rs. 28,24,761/- made on account of gain on actuarial valuation, accepting that the assessee has inadvertently claimed double deduction. Therefore, disallowance of Rs. 28,24,761/- is sustained and ground of appeal No.3 raised by the Revenue is allowed. 5. Apropos to grounds of appeal No.1(a), (b), and (c) wherein Revenue has raised the issue that ld.CIT(A) erred in rejecting Cost Plus method (CPM) adopted by the TPO for calculating the ALP of the international transaction relating to export of traded spares to the Associated Enterprises, at the outset, Ld. Counsel for the assessee submitted that this issue is squarely covered in favour of the assessee by the decision of this Hon'ble Tribunal in assessee's own case for A.Y. 2013-14 in ITA No.1945/PUN/2017 order dated 20.06.2019. 6. On the other hand, ld. Departmental Representative failed to controvert the contentions made by ld. Counsel for the assessee by placing any other binding precedent in its favour. 7. We have heard the rival contentions and perused the record placed before us. The assessee which is a subsidiary of Alfa Laval AB, Sweden holds 98.20% equity stake in the assessee company during the year. Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowed provision for project cost at Rs. 4,53,04,267/- and has also added the reversal of provision of Rs. 3,97,50,388/-. Ld. AO has accepted the disallowance of provision of project cost has denied the deduction of the reversal of provision of project cost. Reference was further made to the preceding assessment and subsequent assessment years computation of income where also this methodology has been adopted. 10. We have considered the rival contentions and perused the record placed before us. Revenue is aggrieved with the finding of ld.CIT(A) who has deleted the disallowance made by the TPO for the claim of reversal of provision of project cost of Rs. 3,97,50,388/-. We observe that the assessee has been consistently following this method and gave the following written submissions before ld.CIT(A) : "2.1 "It is respectfully submitted that our company accounts for various provisions such as Liquidated Damages, Warranty, Project Cost, Trade Receivables Doubtful of recovery, etc. At each Balance Sheet date these provisions get reversed, actual expenditure gets booked against these provisions based on invoices received and actual outlay, and new provisions are made based on new ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rotork Controls India (P.) Ltd. Vs CIT [2009] 314 ITR 62 (SC) wherein it was held: Section 37(1) of the Income-tax Act, 1961 Business expenditure- Allowability of Assessment years 1991-92 to 1994-95 Whether for a provision to qualify for recognition, there must be a present obligation arising from past events, settlement of which is expected to result in an outflow of resources and in respect of which a reliable estimate of amount of obligation is possible Held, yes Whether if historical trend indicates that in past large number of sophisticated goods were being manufactured and defects existed in some of items manufactured and sold, then provision made for warranty in respect of army of such sophisticated goods would be entitled to deduction from gross receipts under section 37(1), provided data is systematically maintained by assessee - Held, yes. Without prejudice to above, if Your Honour considers to disallow the deduction claimed on account of Estimated project cost Rs. 3,97,50,388/then it is humbly submitted that the voluntary disallowance made on account of same should also be ignored and taxable profit to that extent should be reduced Le. by Rs. 4,53,04,267/- as it w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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