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TMI Blog2019 (10) TMI 1589X X X X Extracts X X X X X X X X Extracts X X X X ..... uch requirement. Moreover, the taxpayer is a captive service provider having no loan requirement nor paid any interest. So, following the decision rendered by the coordinate Bench of the Tribunal in taxpayer s own case for AY 2014-15 (supra), addition made/confirmed by TPO/AO/CIT (A) on account of transfer pricing adjustment qua interest on receivables is not sustainable, hence ordered to be deleted. Reducing the claim of depreciation on cable cubbies and wireless access points by applying the depreciation rate of 15% as applicable to plant and machinery - HELD THAT:- As perused the order passed by the ld. DRP for AY 2009-10 [ 2017 (9) TMI 178 - ITAT DELHI] wherein the similar depreciation claimed by the taxpayer has been allowed by providing depreciation @ 60% on the computer peripherals by following the decision rendered in case cited as CIT vs. BSES Rajdhani Powers Ltd. [ 2010 (8) TMI 58 - DELHI HIGH COURT] Even otherwise, when we perused the list of computer peripherals provided by the taxpayer to AO/CIT (A), the taxpayer has not purchased any cable cubbies as mentioned by the AO. We are of the considered view that the taxpayer is entitled for depreciation @ 60% of computer per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... once the primary transaction of provision of IT support services is held to be at ALP, then the inter-company receivables arising therefrom (being consequential and closely linked to the main transaction) also conform to the arm's length principle, and need not be analysed separately. 5. Without prejudice to Ground 3 and 4, the learned TPO / AO / CIT(A) have erred in imputing interest on outstanding receivables in respect of the Appellant without factoring into the credit period allowed by comparable companies, which essentially represents the arm's length conduct in uncontrolled transaction. B. GROUND RELATING TO CORPORATE TAX MATTERS 6. The learned AO / CIT (A) has erred on the facts and circumstances of the case and in law by reducing the claim of depreciation on cable cubbies and wireless access points (collectively referred to as 'assets' hereinafter) by applying the depreciation rates of 15 percent as applicable to Plant and Machinery instead of 60 percent as applicable to Computers amounting to INR 123,483. (i) The learned AD / CIT (A) failed to appreciate that the assets classified as computer accessories/peripherals i.e. cable cubbies and wireless access po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 1 31.03.2009 Rs.4,01,32,745 25.08.2009 87 Rs.14,12,250 Interest on receivables standing on 31st March 2009 1 20.10.2009 Rs.2,94,79,692 09.12.2009 0 - 2 31.03.2010 Rs.3,90,79,428 12.08.2010 74 - 3 31.03.2010 Rs.3,38,578 12.08.2010 74 - Total Rs.14,12,250 And thereby proposed transfer pricing adjustment of Rs.14,12,250/- on account of outstanding receivables. 5. Assessing Officer also made addition of Rs.1,59,483/- on account of excess depreciation claimed on computer accessories on the ground that the assessee has purchased Cable Cubbies, printers and wireless access point of Rs.1,30,957/-, Rs.80,000/- Rs.1,43,450/- total Rs.3,54,407/-, on which claimed depreciation @ 60% and thereby disallowed the excess depreciation @ 45% at Rs.1,59,483/- i.e. 45% of Rs.3,54,407/-. 6. The taxpayer carried the matter before the ld. CIT (A) by way of filing an appeal who has partly allowed the appeal. Feeling aggrieved, the taxpayer has come up before the Tribunal by way of filing the present appeal. 7. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal financing' used there particularly refers to loans or advances given for capital financing, whereas in Assessee's case, these are outstanding services rendered but not capital financing. The words are to be interpreted invoking the principles ejusdem generis and so the outstanding receivables cannot be equated to capital financing as amended by the provisions of the Act. It was further submitted that working capital adjustments are being made while analyzing the operational performance of the companies, therefore, outstanding amount gets adjusted in working capital adjustments and another separate addition is not required under the TP provisions. Thus, it was contended that the outstanding amounts are not to be considered for adjustment. 17.3. We have considered the issue and examined the rival contentions. In the case of Evonik Degussa India P. Ltd., in ITA No.7653/Mum/2011, it was already held the TP adjustment cannot be made on hypothetical and notional basis, until and unless there is some material on record that there has been under charging of real income. Thus on the facts and circumstances of the case, we are of the opinion that addition on account of notional i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at no funds have been borrowed by the taxpayer to carry out its business activities nor there was any such requirement. Moreover, the taxpayer is a captive service provider having no loan requirement nor paid any interest. So, following the decision rendered by the coordinate Bench of the Tribunal in taxpayer s own case for AY 2014-15 (supra), we are of the considered view that addition made/confirmed by TPO/AO/CIT (A) on account of transfer pricing adjustment qua interest on receivables is not sustainable, hence ordered to be deleted. 11. So far as second ground raised by the taxpayer as to reducing the claim of depreciation on cable cubbies and wireless access points by applying the depreciation rate of 15% as applicable to plant and machinery is concerned, the ld. AR for the taxpayer contended that the ld. DRP has already given the similar relief to the taxpayer in AY 2009-10 vide order dated 23.12.2013 and this issue has since attained finality having not been challenged further by the Revenue, but the ld. CIT (A) has decided the issue in mechanical manner by making a cut-paste of the findings returned by the AO in AY 2009-10 in para 4 at page 46 of the paper book. 12. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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