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TMI Blog2019 (2) TMI 2101X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of obsolete inventory on the ground that the assessee did not furnish any report from any Engineer, production head or certificate from the third party that said inventory has become obsolete - DRP found that no such report from the Engineer or production head or third-party certificate was produced before the learner DRP, thus the Assessing Officer was directed to verify the submission of the assessee and bring out the facts properly and passed a speaking order on the issue - HELD THAT:- As the assessee failed to produce any certificate from the expert third-party, respectfully following the finding of the Tribunal [ 2018 (2) TMI 1525 - ITAT DELHI] , we reject the contention of the assessee and dismiss the grounds of appeal raised by assessee in this regard. Disallowance as excess depreciation claimed on fixed assets acquired by the assessee from NCR Corporation India Private Limited. - HELD THAT:- The issue in dispute being identical to the issue decided by the Tribunal (supra), respectfully following the same, the issue of excess depreciation claimed is restored to the file of the Ld. Assessing Officer for verification and decide in view of the direction of the Tribunal [ 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Entities ( AEs ); iii. by determining the Comparable Uncontrolled Price ( CUP ) method as the most appropriate method without providing any comparable uncontrolled transaction(s) thereby compromising the most fundamental rules and provisions laid down in the Act and the Rules to determine the arm's length price of the international transaction; iv. by applying an interest rate on outstanding receivables at LIBOR plus 400 basis points. v. By ignoring the fact that account receivables arising from an international transaction are closely linked to the main transaction and should be benchmarked, using a combined transaction approach, by making a working capital adjustment. vi. by disregarding the order passed by the Hon'ble ITAT in Appellant's own case for AY 2012-13 and AY 2013-14; vii. by disregarding the fact that the Hon'ble ITAT had placed reliance on the order passed in case of Kusum Health Care Private Limited (ITA No. 765/2016) by the Hon'ble High Court of Delhi 5. That, without prejudice to the above, once working capital adjustment is granted no separate adjustment on account of outstanding receivables is maintainable. Part II-Corporate tax grounds of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee with Associated Enterprises (AE's), the Assessing Officer referred the matter of determination of arm's length price of those transactions to the Ld. Transfer Pricing Officer (TPO), who vide his order dated 31/10/2017 under section 92CA(3) of the Act, proposed an upward adjustment of Rs. 27,38,47,156/- to the value of international transactions declared by the assessee as under: S.No. Adjustment on account of Amount in Rs. 1. Provision of Software Development Services and Provision of GCC 27,05,29,398/- 2. Interest on receivables 33,17,758/- Total 27,38,47,156/- 2.1 The Assessing Officer included the above adjustment in the draft assessment order dated 22/12/2017 along with following corporate additions proposed: 1. disallowance of stock written off mounting Rs. 25,24,421/- 2. disallowance of claim of excess depreciation amounting to Rs. 16, 56, 842/- 3. disallowance of excess claim of foreign exchange loss of Rs. 69,261/- 2.2 Against the draft assessment order passed by the Assessing Officer, the assessee filed objection before the Ld. DRP. After considering objections of the assessee, the Ld. DRP issued directions to the Assessing Officer vide order dated 23.08.2018. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee, following the decision of the Hon'ble Jurisdiction High Court in the case of Principal Commissioner of Income Tax Vs. Kusum Health Care Pvt. Ltd. in I.T.A. No. 765/2016 vide judgment dated 25th April, 2017, held that no separate adjustment on account of interest receivable is required when working capital adjustment has already been made to the margins of the comparables while comparing the margin of the assessee under the TNMM. The relevant finding of the Tribunal is reproduced as under: 9. We have heard both the parties and perused the relevant case laws along with order of TPO, DRP A.O. In respect of first issue the Ld. AR relied upon the order of jurisdictional High Court in case of Kusum Health Care Pvt. Ltd. wherein it is held as under:- 10. The Court is unable to agree with the above submissions. The inclusion in the Explanation to Section 92B of the Act of the expression 'receivables' does not mean that de hors the context every item of 'receivables' appearing in the accounts of an entity, which may have dealings with foreign AEs would automatically be characterised as an international transaction. There may be a delay in collection of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the matter, we are of the view that the issue is covered in favour of the assessee by the order of the ITAT, Delhi Bench in the case of the same assessee for the A.Y. 2012-2013 in ITA. No. 87/Del./2017 dated 08th August, 2017. Even if an appeal would have been pending before the Hon'ble jurisdictional Delhi High Court, is not a ground to take a contrary view against the assessee unless the order of the Tribunal have been set aside or stayed by the Hon'ble jurisdictional Delhi High Court. In this view of the matter, we set aside the orders of the authorities below and delete the entire addition. In the result, ground Nos. 3 to 6 of the assessee are allowed . 4.4 In view of the above, following the decision of the Tribunal in assessment years 2012-13 and 2013-14, we set aside the finding of the learned DRP complied by the Assessing Officer in the impugned order and delete the adjustment on account of the interest receivables. In the result, the grounds No. 3 to 5 of the appeal of the assessee are allowed. 5. In grounds No. 6 and 7, the assessee has challenged disallowance of Rs. 25,20,421/- towards stock written off . 5.1 We have heard rival submission of the parties on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e no facts, as mentioned by the AO has been filed before us, the AO is directed the AO verify the submissions of assessee, bring out the facts properly pass a speaking order in this year as well. 5.2 Identical issue came before the Tribunal in assessment year 2013-14, in ITA No. 7885/Del/2017. The Tribunal dismissed the grounds raised by the assessee in this regard observing as under: 16. Considering the facts of the case in the light of the submission of Learned Counsel for the Assessee, we are of the view that no interference is called for in the matter. The assessee-company did not file any evidence in support of its claim except filing copy of the ledger account. Assessee-company did not submit any report of Engineer or Production Head to verify that actually the inventory has become obsolete. Mere filing of the ledger account is not sufficient to support the claim of the assessee-company that the stock has become obsolete. Merely referring to Accounting Standard would not support the claim of the assessee-company that in fact the stock of the assessee-company has become obsolete. In the absence of any evidence in support of the claim of the assessee-company, no interference is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ert in certifying the obsolescence of inventory, his role is only to verify what inventory is remaining with the assessee and what has been declared obsolete by the assessee. Similarly, management confirmation can also not be taken to be conclusive proof of the obsolescence of the inventory. The AR on next hearing i.e. on 26.10.2018 could not provide any such proof by a technical expert. Hence, on perusal of the submissions, the explanation offered by the AR of the assessee, in the opinion of the Assessing Officer, is not satisfactory. Hence, an addition u/s. 36 of the Act amounting to Rs. 25,20,421/- is made to the returned income of the assessee . 5.4 As the assessee failed to produce any certificate from the expert third-party, respectfully following the finding of the Tribunal (supra), we reject the contention of the assessee and dismiss the grounds of appeal raised by assessee in this regard. 6. In ground No. 8, the assessee has raised the issue of disallowance of Rs. 16,56,842/- as excess depreciation claimed on fixed assets acquired by the assessee from NCR Corporation India Private Limited. 6.1 The learned counsel submitted that identical issue of excess depreciation claime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of assets as per the valuation certificate has to be transferred to capital reserve as it represents the actual cost of assets to the assessee and the depreciation should be fully allowed on the same . 11.5. On the contrary the Ld. AR relied upon the orders passed by the authorities below. 11.6. We have perused the orders passed by the authorities below and the arguments advanced by both the parties. It is seen that tire Ld. AO had taken different figures for calculating the value of fixed assets. We accordingly set aside the issue to the Ld. AO to verify the claim of the assessee as per law. Thus on similar line in the present Assessment year also the Assessing Officer is directed to verify the claim of the assessee as per law. Therefore, Ground NO. 14 15 are partly allowed as the matter is remanded back to the Assessing Officer to verify the said claim. 20. After considering the rival contentions and in the light of the order of the Tribunal dated 08th August, 2017, we by respectfully following the order of the Tribunal dated 08th August, 2017 (supra), direct the A.O. to verify the claim of the assessee-company as per law and pass consequential order. Ground No. 9 of appeal of ..... 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