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TMI Blog2020 (8) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... t this issue of determining resultant amount of goodwill on which depreciation is allowable in the hands of the assessee, consequent to the terms and conditions of the Business Transfer Agreement, back to the file of AO. AO is directed to verify the claim of the assessee after allowing reasonable opportunity of hearing. The assessee is also directed to produce all the facts before the Assessing Officer, who shall decide the same in accordance with law. Disallowance of Mark to Market foreign exchange loss - HELD THAT:- We reverse the orders of Assessing Officer and direct the Assessing Officer to delete the disallowance made on account of mark to market foreign exchange loss. Disallowance of subscription charges - HELD THAT:- Amount was treated as donation by Assessing Officer and disallowed u/s 37(1) of the Act and the final assessment order was passed. We find no merit in the plea of the assessee where the amount is paid as donation to society. The assessee has enclosed the receipt and at best the assessee is entitled to claim deduction u/s 80G of the Act. The Assessing Officer may verify the same and allow the claim in accordance with law. - ITA No. 1761/Del/2015 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of rendition of sales support services. 6. That on the facts and circumstances of the case and in law, the DRP/ Assessing Officer/ TPO erred in not providing appropriate economic adjustments, as required under Rule 108(1)(e)(iii) of the Rules, on account of differences in working capital and risk profile between the Appellant and the comparable companies. 7. That on the facts and circumstances of the case and in law, the DRP/Assessing Officer/TPO have erred by ignoring the provisions of Rule 108(4) of the Rules and judicial pronouncements, which advocate usage of multiple year data of comparable companies for the purpose of determination of the arm's length price as defined under section 92F of the Act. 8. That on the facts and circumstances of the case and in law, the DRP/Assessing Officer/TPO have erred in not restricting the adjustment to the value of international transactions . 9. That on the facts and circumstances of the case and in law, the DRP / AO / TPO erred in not providing the Appellant the benefit of (+ / -) 5% range as provided by the proviso to section 92C(2) of the Act. Corporate Tax 10. That on the facts and circumstances of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal. 6. The Ld.AR for the assessee points out that the alternate ground was that in subsequent years, the Advance Pricing Agreement (in short APA ) proceedings have been accepted and the FAR analysis was same in the year under appeal also and the benefit of APA proceedings may also be allowed to the year under appeal. 7. The Ld.DR for the Revenue on the other hand strongly opposed the admission of additional ground and pointed out that there was no roll back of the APA proceedings for earlier years. In case the year under consideration was to be taken as part of APA proceedings then the assessee should have included the same in the list and the Transfer Pricing Officer (in short TPO ) should have been examined the claim of the assessee. The Ld.AR for the assessee further pointed out that on merits of issue of adjustment on account of transfer pricing, the limited issue was selection of comparable, allowability of working capital and risk adjustments. 8. Briefly in the facts of the case, the assessee is a wholly owned subsidiary of Metal One Japan and is in operation since 01.06.2008. During the year under consideration, the assesse was engaged in the import of steel a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in the hands of the assessee. 11. We find that the additional ground of appeal raised by the assessee is to be admitted being a legal issue. Various Benches of the Tribunal have held that the conclusion reached in APA proceedings deserves to be applied in case facts and circumstances, FAR are similar to the subsequent years. Similar view has been applied in the case of Pune Bench of the Tribunal in M/S. Honeywell Automation India Ltd. vs ACIT, Circle-7, Pune in ITA No.359/Pune/2013 vide order dated 02.11.2018 and also in Ranbaxy Laboratories Ltd. Vs. ACIT in ITA No.196/Del/2013 vide order dated 25.04.2016. Applying the said parity of reasoning, we hold that once the APA has been concluded in the hands of the assessee then the same approach/basis is to be adopted for instant Assessment Year. Accordingly, the Assessing Officer/TPO is directed to follow the approach/basis of APA applied for the subsequent year to the instant Assessment Year. 12. The Ld.AR for the assessee pointed out that in case the same is so applied then no adjustment needs to be made in the hands of the assessee. Since we have allowed additional ground in the hands of the assessee, there is no need t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Business Transfer Agreement and pointed out that no depreciation was claimed in any of the assessment years i.e Assessment Year 2009-10 to 2011-12. He further pointed that payment of goodwill is not defined anywhere in the agreement. Further, no valuation report of any competent person was available; so, no depreciation is to be allowed on goodwill. 16. We have heard the rival contentions and perused the record. The first issue is whether the claim which has not been made in the Return of income, can the same be allowed in the hands of the assessee, if subsequently raised during the assessment proceedings. The Hon ble Delhi High Court in CIT vs Jai Parabolic Springs Ltd. 306 ITR 42 (Del.) and Hon ble Bombay High Court in CIT vs Pruthvi Brokers Shareholders Pvt.ltd. 349 ITR 336 (Bom.) has held that even if a claim made by assessee-company does not form part of original return or even revised return , the same is to be allowed in accordance with law. In such facts and circumstances, we are of the view that the claim of depreciation on goodwill needs to be considered in the hands of the assessee. The Business Transfer Agreement is dated 20.06.2008 and no depreciation on goodwil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saction was assessed to tax. 19. We have heard the rival contentions and perused the record. The issue is raised against the disallowance of Mark to Market foreign exchange loss of ₹ 28,14,307/-. The assessee has booked the said loss on account of reinstatement of forward contract. The Assessing Officer had treated it to be notional and also speculative in nature. The issue stands covered by the decision of Hon ble Delhi High Court in CIT vs Industrial Finance Corporation of India Ltd. (supra); further Revenue s SLP(C).CC No.10349 of 2020 against this decision was dismissed by Hon ble Supreme Court vide order dated 09.07.2020. The Hon ble Bombay High Court in Pr.CIT vs International Gold Company Ltd. Tax Appeal 1827 of 2016 allowed mark to market loss on revaluation of forward exchange contracts and also held that CBDT Instruction No.3 of 2010 dated 23.03.2010 cannot be applied. 20. Following the same parity of reasoning, we reverse the orders of Assessing Officer in this regard and direct the Assessing Officer to delete the disallowance made on account of mark to market foreign exchange loss. Ground of appeal No.12 raised by the assessee is thus allowed. 21. Now, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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