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2023 (7) TMI 848 - AT - Income TaxTP adjustment - transaction support services - intragroup services paid to AE - whether there was actual rendition of services or not? - HELD THAT - The Hon'ble Tribunal (A Y 2015-16 and 2016-17) 2020 (2) TMI 156 - ITAT DELHI and 2022 (1) TMI 1386 - ITAT DELHI deleted the entire adjustment made by the Ld. TPO on account of intra group services by giving detailed reasons and finding that documentary evidences clearly show the rendition of services by the AE to the appellant company. Moreover, the TPO himself has accepted the fees received by the assessee from rendering these services. We fail to understand why the payments have been subjected to different treatments. No merit in the TP adjustment. Disallowance of depreciation on goodwill - HELD THAT - As decided in assessee own case this issue is by now well settled by the decision of Smifs Securities Ltd 2012 (8) TMI 713 - SUPREME COURT wherein held that good will acquired on amalgamation being the difference between cost of assets and consideration paid is a capital right and thus eligible for depreciation u/s 32. Disallowance of bad debts written off - HELD THAT - As decided in assessee own case assessee has successfully discharged its onus and has fulfilled the conditions laid down U/S 36 of the Act. We, therefore, do not find any reason why the write off of bad debts should not be allowed. Appeal decided in favour of the assessee.
Issues Involved:
1. Transfer pricing adjustment on transaction support services. 2. Disallowance of depreciation on goodwill. 3. Disallowance of bad debts written off. Summary: 1. Transfer Pricing Adjustment on Transaction Support Services: The issue pertains to a transfer pricing adjustment of Rs. 8,92,28,190/- made by the Assessing Officer (AO) in respect of international transactions entered by the appellant, alleging the same to be not at arm's length as per Section 92C of the Income Tax Act. The appellant argued that this issue is covered in their favor by the ITAT's decisions for AYs 2015-16 and 2016-17, where the tribunal deleted similar adjustments made by the Transfer Pricing Officer (TPO). The tribunal had concluded that the lower authorities erred in questioning the need and benefit derived by the appellant from the services received from its associated enterprise (AE) and confirmed the actual rendition of services. The Revenue did not dispute this proposition, and the tribunal followed the precedents to decide in favor of the appellant. 2. Disallowance of Depreciation on Goodwill: The AO disallowed depreciation of Rs. 6,15,36,299/- claimed by the appellant on goodwill arising from the acquisition of the Corporate Travel division of American Express India Pvt Ltd (AEIPL). The appellant contended that this issue is also covered in their favor by the ITAT's decisions for AYs 2015-16 and 2016-17. The tribunal had directed the AO to allow the claim of depreciation on goodwill, relying on the Supreme Court's decision in CIT v. Smifs Securities Ltd, which held that goodwill acquired on amalgamation is a capital right eligible for depreciation under Section 32 of the Act. The tribunal followed the precedents to decide in favor of the appellant. 3. Disallowance of Bad Debts Written Off: The AO disallowed the expenditure of Rs. 2,10,43,511/- claimed by the appellant on account of bad debts written off. The appellant argued that this issue is similarly covered by the ITAT's decisions for AYs 2015-16 and 2016-17, where the tribunal directed the AO to allow the claim of bad debts, noting that the appellant had successfully discharged its onus and fulfilled the conditions laid down under Section 36 of the Act. The tribunal followed the precedents to decide in favor of the appellant. Conclusion: In light of the undisputed fact that no difference in facts was pointed out for the earlier two years, and the issues being covered by the ITAT's orders, the tribunal directed that the issues be decided in favor of the appellant, as in the earlier two assessment years. The appeal of the appellant was partly allowed.
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