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TMI Blog2017 (11) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... , vide para no. 30. Once depreciation has been allowed on the same asset in the earlier years, then in this year depreciation cannot be disallowed on WDV and accordingly, the order of the Learned CIT (Appeals) is confirmed. Disallowance of deduction u/s 10A - assessee not filed approval/extension of approval of the 3 units and so far as the STPI unit of Bangalore is concerned, he held approval has to be provided by the Inter-Ministerial Standing Committee - Held that:- As following the judicial precedent of the earlier year and also taking into account the categorical finding given by the Learned CIT (Appeals) that already Green Card has been issued by Inter Ministerial Standing Committee on Software Technology Parks of India scheme and assessee has filed letter confirming the extension of the STPI facilities, hold that the deduction u/s 10A cannot be denied to the assessee on the grounds raised by the Assessing Officer. Accordingly, the order of the Learned CIT (Appeals) is confirmed. Disallowance of payment made to approved gratuity fund - Held that:- Tribunal in assessee’s own case for the A.Y. 2002-03 has deleted the similar disallowance on the ground that the said gratui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ₹ 16,348,728/- on account of the said services is not taxable in India under the DTAA and thus, no withholding of tax on the same is warranted under Chapter XVII of the Act and consequently there could not be any disallowance u/s 40(a)(i). So far as the assessee suo-moto offering such disallowance cannot be a estoppel upon the assessee for challenging this issue in the appellate proceedings, because if any payment or receipt is not taxable in India or cannot be reckoned to be income of the payee under the provisions of the DTAA, then the Assessing Officer cannot make the addition on mere acquiescence made by the assessee under misconception of law or treaty provision. The addition/disallowance has to be made strictly in accordance with law. Accordingly we hold that even though the assessee had suo-moto offered for disallowance, but once this issue has been challenged before the appellate proceedings and same has been decided in accordance with the law, then relief cannot be denied to the assessee solely on the ground that assessee had offered for disallowance. - ITA No. 6718/Del/2014 - - - Dated:- 31-10-2017 - SHRI P.K. BANSAL, VICE PRESIDENT AND SHRI AMIT SHUKLA, JU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee by the orders of the Tribunal in assessee s own case for the A.Y. 2003-04. 4. The brief facts are that the assessee is a wholly owned subsidiary of Delphi Automotive Systems Inc. and is engaged in the business of manufacture and sale of automotive components, viz., drive shafts (constant velocity joint), integrated wiring harnesses, catalytic converters, heating, cooling and ventilating systems and suspension systems. The assessee has various manufacturing divisions located at Gurgaon, Noida and Bangalore and a software division located at Bangalore. The AO has disallowed the loss on account of foreign exchange fluctuation amounting to ₹ 1,40,59,212/- on the ground that the assessee has failed to explain/provide documentary evidence and for the reasons that firstly, whether the exchange loss was of revenue or capital in nature; secondly, whether the same has been actually incurred by the assessee; and lastly, in the earlier years these expenses have been disallowed by the Assessing Officer. The Learned CIT(Appeals) relying upon the decision of his predecessor for the earlier years held that the foreign exchange loss was of revenue in nature and capital in natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue expenditure and not on account of capital expenditure. Hence we do not Find any infirmity in the order of the Ld CIT(A)in deleting the disallowance of foreign exchange fluctuation loss of ₹ 1,85,84,388/-. In the result the ground No.2 of the appeal is dismissed. Thus, respectfully following the earlier year s precedence, we also hold that disallowance made on account of foreign exchange loss by the Assessing Officer cannot be sustained and same is directed to the deleted. 7. As regards the second issue relating to disallowance of depreciation on unutilized assets of ₹ 5,58,565/-, the Assessing Officer has disallowed the same on the ground that the asset in questions were not used by the assessee and while coming to the conclusion he relied upon the earlier assessment order. The assessee before the Learned CIT (Appeals) pointed out that in the earlier years the said disallowance has been deleted by the Learned CIT(Appeals) and also explained that the Assessing Officer did not examine the fact that the said assets were actually used for the business purpose of the assessee and therefore, no disallowance on depreciation should have been made. The Learned CIT( Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his issue has been decided by the Tribunal in favour of the assessee vide order s para no. 20 relying upon the same CBDT circular no. 1. 10. We also following the judicial precedent of the earlier year and also taking into account the categorical finding given by the Learned CIT (Appeals) that already Green Card has been issued by Inter Ministerial Standing Committee on Software Technology Parks of India scheme and assessee has filed letter confirming the extension of the STPI facilities, hold that the deduction u/s 10A cannot be denied to the assessee on the grounds raised by the Assessing Officer. Accordingly, the order of the Learned CIT (Appeals) is confirmed. 11. The ground no. 4, revenue has challenged the deletion of addition of ₹ 1,42,75,498/- on account of disallowance of payment made to approved gratuity fund. The relevant facts as discussed in the impugned order are that the Assessing Officer has disallowed the claim on the basis of disclosure in the auditor s report in the Form no. 3CD that the payments aggregating to ₹ 1,42,75,498/- are not allowable under the provisions of section 40A(7), which assessee has not added back. Before the Learned CIT (App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e books of accounts for payment of future gratuity liability, however clause (b) clearly provides exception where the provision was made by the assessee for the purpose of payment of a sum by way any contribution towards an approved gratuity fund which here in this case is not in dispute. Thus, the said disallowance has rightly been deleted by the Learned CIT (Appeals). 13. As regards the issue raised in the ground no. 5 that the Learned CIT (Appeals) has erred in deleting the addition of ₹ 94,14,147/- on account of advances written off; the brief facts are that the Assessing Officer required the assessee to file complete advances written off for which the assessee had asked for some reasonable amount of time to furnish the details as the key members of the organization had left the organisation and it was difficult to get the past records. However, the Assessing Officer rejected the assessee s contention and made the disallowance. The Ld. CIT (Appeals) has deleted the said disallowance / addition after observing and holding as under:- I have gone through the facts as stated above. The AO, as evident from the remand report has misconstrued the nature of the expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to deduct the same under section 37(1). In a result, the advances written off for ₹ 94,14,147, are allowed as business loss. 14. However, we find that in the assessment year 2003-04, this matter has been remanded back to the file of the Assessing Officer by the Tribunal, after making following observations:- 32. We have carefully considered the details submitted at Page 254 of the PB of the assessee. Based on this we could find that the amount of advance given to Maruti Udyog Ltd. of ₹ 5226437/- and also overdue receivable from Delphi USA of ₹ 5623770/- were written off. Further the details furnished did not show that whether these are debts arising out of sales and services and conditions of section 36(2) have been fulfilled by the assessee applicable bad debts written off by the assessee. Further some advances were also written off for which complete details were not available with the assessing officer and from the order of cit (A) the addition has been deleted without complete examination of the items. Therefore in the interest of justice we set aside this issue to the file of AO to verify the claim of such write off of whether it is bad d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods. The assessee had disallowed the said payment for the reason that TDS was not deducted. However before the Learned CIT (Appeals), the assessee claimed for its allowability on the ground that the said payment made to the US resident for inspection services has to be seen from the Treaty provisions of Article 12(4) of India-US DTAA which defines Fees for Included Services as consideration paid for rendering of any technical or consultancy services is such services make available technical knowledge, experience, skill, know-how, or process, or consists of the development and transfer of a technical plan or technical design. In the instant case, the assessee pointed out that the services rendered by Keystone Industries Ltd., USA to carry out inspection and rework of the products while the products were physically lying in US port can in no manner be reckoned as technical or consultancy services with make available clause and therefore, the same is not taxable under Article 24 and accordingly, the assessee was not required to deduct TDS. 17. The Ld. CIT (Appeals) following the judgment of Hon'ble Bombay High Court in case of Diamond Services International Ltd. vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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