2019 (9) TMI 386 - AT - Income Tax

TP Addition - HELD THAT - As perused all decisions passed by this Tribunal in assessee s own case for assessment years 2005-06 to 2013-14 and found that issues in present appeal are common with earlier years and have been set aside to TPO on the ground that TPO as well as DRP failed to consider objections raised by assessee. Transfer pricing addition made by Ld.AO. It is 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 2013-14. As AY 2013-14 has been set aside by this Tribunal, we deem it fit and proper to remit the issues to file of 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 issues are pending before lower authorities and we find no reason to adjudicate these issues at this stage. Accordingly, following earlier orders passed by this Tribunal in assessee s own case, we set aside all issues to Ld.AO for re-adjudication of issues in the light of the findings given in earlier years - Appeal filed by assessee stands allowed for statistical purposes.

Summary

Issues Involved:

1. Jurisdiction and legality of the orders by AO, TPO, and DRP.
2. Computation of total income and tax.
3. Transfer pricing adjustments.
4. Disallowance of various provisions and expenses.
5. Relief under section 90.
6. TDS credit.
7. Interest under sections 234A, 234B, and 234C.

Detailed Analysis:

1. Jurisdiction and Legality of Orders:
The appellant contended that the orders of the AO, TPO, and DRP were against the law, facts, and principles of natural justice. The DRP's directions and the TPO's order were claimed to be without jurisdiction and unsustainable in law, requiring cancellation. It was argued that the DRP did not consider relevant materials and violated judicial discipline by ignoring binding orders from higher appellate authorities.

2. Computation of Total Income and Tax:
The appellant disputed the total income and tax computed by the AO. It was argued that the computation was flawed and did not consider the objections raised by the appellant.

3. Transfer Pricing Adjustments:
The appellant challenged the transfer pricing adjustments made by the TPO, which included:
- Arm's Length Price (ALP) differences in royalty paid, distribution segment, software services segment, and support services.
- The TPO's rejection of multiple year data and companies with different financial year endings.
- Failure to consider working capital adjustments and binding decisions from earlier years.
- Incorrect selection of comparables and methods, and failure to apply Rule 10B(3) and Rule 10B(4)&(5).

The tribunal found that the issues raised were covered by decisions in the appellant's own case for earlier years (2005-06 to 2013-14) and had been set aside for re-adjudication by the TPO. The DRP/TPO did not consider the objections raised by the appellant and simply followed directions for AY 2013-14, which had been set aside. Therefore, the tribunal remitted the issues to the AO/TPO for re-adjudication, granting the appellant a fair opportunity to be heard.

4. Disallowance of Various Provisions and Expenses:
The appellant contested several disallowances made by the AO/DRP, including:
- Provision for obsolescence of inventory.
- Provision for contingent liability.
- Interest disallowance on investment in M/s Wipro GE Healthcare Bangladesh Ltd.
- Disallowance of dealer commission.
- Disallowances under section 40a(ia) for non-deduction of taxes on advertisement expenses, legal and professional expenses, miscellaneous expenses, and repairs and maintenance.

The tribunal noted that these issues were also covered by earlier decisions and remitted them to the AO for re-adjudication.

5. Relief Under Section 90:
The appellant argued that the AO/DRP erred in restricting relief under section 90 to ?14,31,191/- against the claim of ?55,64,950/-. The tribunal remitted this issue to the AO for reconsideration in light of earlier decisions.

6. TDS Credit:
The appellant contended that the AO/DRP erred in restricting TDS credit to ?7,78,41,810/- against the claim of ?8,66,48,067/-. The tribunal remitted this issue to the AO for reconsideration.

7. Interest Under Sections 234A, 234B, and 234C:
The appellant denied liability for interest under sections 234B and 234C, arguing that interest should only be levied on returned income. The tribunal remitted this issue to the AO for reconsideration.

Conclusion:
The tribunal found that all issues raised by the appellant were covered by earlier decisions and set aside for re-adjudication. Therefore, it remitted all issues to the AO/TPO for re-adjudication, granting the appellant a fair opportunity to be heard. The appeal was allowed for statistical purposes.