2020 (12) TMI 1371 - AT - Income Tax

TP Adjustment - selection of comparable - HELD THAT - As observed that DRP/TPO for year under consideration did not consider objections raised by assessee against comparables selected by Ld.TPO and simply followed DRP directions issued for AY 2014-15. As AY 2014-15 has been set aside by this Tribunal, we deem it fit and proper to remit the issues to file of Ld.AO/TPO for taking necessary action of passing a speaking order by granting fair opportunity to assessee of being heard. It is also observed that all these are pending before lower authorities and we find no reason adjudicate these issues at this stage - we set aside all issues to Ld.AO for readjudication of issues in the light' of the findings given in earlier years. Disallowance of provision for onerous contract - HELD THAT - AR could not prove from the records that the same has been debited to profits Loss account. Accordingly we reject this ground. However, assessee may claim such amount in relevant year of Accrual. Accordingly Ground stands dismissed.

Summary

Issues Involved:

1. Jurisdiction and legality of the AO/TPO/DRP orders.
2. Computation of total income and tax.
3. Validity of DRP's findings and directions.
4. Consideration of relevant materials by DRP.
5. Violation of judicial discipline by AO/TPO/DRP.
6. Adequate opportunity and natural justice.
7. Transfer Pricing adjustments.
8. Disallowance of provision for onerous contract.
9. Disallowance under section 40(a)(ia) for non-deduction of tax.
10. Relief under section 90.
11. TDS credit.
12. Interest under sections 234B & 234C.

Detailed Analysis:

1. Jurisdiction and Legality of AO/TPO/DRP Orders:
The appellant contended that the orders of the AO, TPO, and DRP were against the law, facts, and principles of natural justice. The tribunal noted that these issues have been consistently raised in previous assessment years and have been set aside for re-adjudication by the TPO.

2. Computation of Total Income and Tax:
The appellant disputed the computation of total income and tax. The tribunal observed that similar issues in earlier years were remitted back to the TPO for reconsideration.

3. Validity of DRP's Findings and Directions:
The appellant argued that the DRP's findings and directions were unsustainable and required to be set aside. The tribunal noted that the DRP/TPO failed to consider the appellant's objections and followed directions from the previous year, which were already set aside.

4. Consideration of Relevant Materials by DRP:
The appellant claimed that the DRP did not consider relevant materials and evidence. The tribunal agreed, noting that the DRP/TPO did not properly address the appellant's objections.

5. Violation of Judicial Discipline by AO/TPO/DRP:
The appellant argued that the AO/TPO/DRP violated judicial discipline by ignoring higher appellate authorities' orders. The tribunal found merit in this claim, as the issues were similar to those in previous years, which were remitted back for re-adjudication.

6. Adequate Opportunity and Natural Justice:
The appellant contended that the AO/TPO/DRP did not provide adequate opportunity, violating natural justice. The tribunal noted that this issue was also raised in previous years and remitted back for reconsideration.

7. Transfer Pricing Adjustments:
The appellant disputed the transfer pricing adjustments made by the AO/TPO/DRP, including differences in royalty, distribution segment, software services segment, and support services. The tribunal observed that these issues were similar to those in earlier years and remitted them back to the TPO for a fresh decision.

8. Disallowance of Provision for Onerous Contract:
The appellant contested the disallowance of a provision for an onerous contract amounting to Rs. 60,00,000/-. The tribunal rejected this ground as the appellant could not prove that the amount was debited to the profit and loss account. However, the appellant may claim the amount in the relevant year of accrual.

9. Disallowance under Section 40(a)(ia) for Non-Deduction of Tax:
The appellant disputed the disallowance of Rs. 7,49,33,375/- under section 40(a)(ia) for non-deduction of tax on various expenses. The tribunal noted that these issues were also raised in previous years and remitted back for reconsideration.

10. Relief under Section 90:
The appellant argued that the AO/DRP erred in not granting relief under section 90 amounting to Rs. 11,72,448/-. The tribunal noted that this issue was similar to those in previous years and remitted it back for reconsideration.

11. TDS Credit:
The appellant contended that the AO/DRP did not grant TDS credit amounting to Rs. 1,14,36,741/-. The tribunal observed that this issue was also raised in previous years and remitted back for reconsideration.

12. Interest under Sections 234B & 234C:
The appellant denied liability for interest under sections 234B & 234C and argued that interest should only be levied on returned income. The tribunal noted that this issue was similar to those in previous years and remitted it back for reconsideration.

Conclusion:
The tribunal set aside all issues, except for the disallowance of the provision for the onerous contract, to the AO/TPO for re-adjudication in light of the findings given in earlier years. The appeal was partly allowed for statistical purposes.