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TMI Blog2021 (8) TMI 629X X X X Extracts X X X X X X X X Extracts X X X X ..... in its directions dated 06.09.2018. As far as the grant of foreign tax credit projected of the grounds of appeal raised by the assessee is concerned, we admit the withholding tax certificate evidencing payment of tax in foreign country and direct the AO to give credit to such taxes in accordance with law as mentioned in section 90 of the Act, after affording assessee opportunity of being heard. The AO is also directed to exclude communication and travelling expenses from the total turnover while computing eligible deduction under section 12AA of the Act. Thus, the relevant grounds of appeal of the assessee are treated as allowed for statistical purposes. Levy of interest under section 234A - assessee had filed the return of income within the due date prescribed - AO is directed to examine the claim of the assessee in this regard, after affording opportunity of being heard. Levy of interest under section 234B is purely consequential ground with regard to initiation of penalty proceedings u/s 271(1)(c) of the Act is not appealable. - IT (TP) A. No. 58/Bang/2019 - - - Dated:- 6-8-2021 - N.V. Vasudevan, Vice President And B.R. Baskaran, Member (A) For the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round of appeal No. 15 - Without prejudice to our ground of appeal No. 12 above, the teamed AO/DRP/TPO have erred, in law and in facts, by not providing the basis for arriving at the arm's length interest rate of Libor plus 400 basis point for computing notional interest to be charged on the alleged delay in collection of receivables. Ground of appeal No. 16 - Without prejudice to our ground of appeal No. 12 above, the learned AO/DRP/TPO have erred, in law and in facts, by using short term deposit rates of interest of State Bank of India prevailing for FY 2013-14 as the arm's length interest rate for computing notional interest to be charged on the alleged delay in collection of receivables. 4. The assessee is engaged in the business of providing ITeS to its group companies. The assessee had entered into international transaction with its AE. The assessee had allowed credit period for payment by the AE. The Transfer Pricing Officer (TPO) in his order passed under section 92CA of the Act, considered the grant of excessive credit period beyond normal period to the AE as an international transaction and made adjustment by imputing interest on outstanding receivables a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A proceedings, the detailed weighted average realization period for rollback years including A.Y. 2014-15 were submitted with the India Competent Authority office (Pg No. 622 to 632 of Paper book I). The Indian Competent Authority office observed that the 60 days credit period will be considered as normal and for late realization beyond 60 days prevailing bank rate will be charged. 8. It is the plea of the learned Counsel for assessee that the concept and the methodology laid down in APA can have a guidance value for the revenue authorities. The main intent of the APA is to protect the fair share of the revenue of the states in simple and efficient manner and to protect the tax base. Therefore, the agreement entered into by CBDT with the assessee, which has considered all the aspects of the manner of determination of ALP should be given highest sanctity and hence, mechanism suggested in that agreement should be necessarily followed, wherein the APA clearly provides a realization period of 60 days to the assessee. 9. Our attention was drawn to the clarifications on rollback provisions issued by the CBDT vide Circular No. 10/2015 dated 10 June 2015, Rule 10MA(2)(i) of the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with respect to software expenses disregarding the fact that these invoices were submitted within the time granted by the learned AO, and consequently erred in disallowing the same. Without prejudice to the above, the Appellant prays to the Hon'ble Tribunal, being an Appellate authority to consider the invoices so submitted and admit/consider ANZSS's claim as revenue expenditure for deduction in the computation of total income. 20. Without prejudice to the above, the learned AO has erred in law and in facts in restricting the depreciation to INR 1,95,15,706 on software expenses of INR 6,50,52,354 to 30% without providing any basis of calculation of such depreciation amount. 21. The learned AO has erred in not considering the entire Foreign Tax Credits available for an amount of INR 1,727,084 based on the Withholding Tax certificates received from the service recipients. 22. The learned AO has erred in law and in facts in not considering the impact of the disallowances in relation to expense incurred towards renewal of software licenses on the profit and gains from business and profession, on the deduction under section 10AA of the Act. 13. As far as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity, has considered depreciation at a rate of 30% only. 16. Further, in relation to deduction under section 10AA of the Act, while the AO did acknowledge the allowance as per the directions of DRP however, in the computation of tax liability, the disallowance was retained. 17. In the draft assessment order, the AO did not to grant credit of foreign tax paid by the assessee which was also upheld by the Hon'ble DRP. The assessee was not given an opportunity to file any detail in this regard, the copy of withholding tax certificate evidencing the taxes paid in foreign countries (Vietnam and Taiwan) were filed as additional evidence before the Tribunal. 18. It is the contention of the assessee that based on the DRP direction, the assessee filed the details of software expenses specifying the period of renewal of software in the said A.Y. However, the AO did not accept the details filed by assessee (vide its letter dated 26 September 2018 and 10 October 2018) disregarding the fact that the invoices disclosed the period of software licence and also balance details filed by the assessee was within the additional time granted by the AO (vide its letter dated 10 October 2018). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Payee Invoice No Invoice Amount (INR) Period of License/ Subscription Valuepoint Techsol 100163 6,00,300 12 Months Dimension Data 7930028498 3,68,764 12 Months Thomson Reuters 71908763C 3,40,507 6 Months Thomson Reuters 71905967C 3,37,417 6 Months Bloomberg 6750047978 3,30,311 2 Months Bloomberg 6750049085 3,26,331 3 Months Bloomberg 6750057557 3,26,776 3 Months Bloomberg 6750054783 3,22,123 4 Months Bloomberg 675005199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee vide submission dated 10 October 2018, the assessee has filed copy of invoices as an additional evidence before us on 18 February 2021. 21. In relation to deduction under section 10AA of the Act (with respect to communication and travelling expenses), the AO acknowledged the allowance as per the directions of DRP, however, in the computation of tax liability, the disallowance was retained. 22. The assessee has submitted the copy of withholding tax certificates before us evidencing taxes amounting to INR 17,27,084 paid in foreign countries, hence the assessee should be allowed the credit under section 90 of the Act. 23. We have considered the submissions of the learned Counsel for the assessee who reiterated the facts stated above. Learned DR relied on the order of the AO. We have given a careful consideration to the rival submissions. As far as grounds 17 to 20 raised by the assessee are concerned, we are of the view that it would be just and appropriate to direct the AO to consider the claim of the assessee regarding software expenses in the light of the invoices admitted as additional evidence by us. To the extent that the software expenditure is in the nature of paym ..... X X X X Extracts X X X X X X X X Extracts X X X X
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