Tektronix (India) Private Limited), Bangalore V. DCIT, Bangalore

ITA 669/BANG/2016

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 5305 (ITAT-BANGALORE)
• Duration Of Justice: 6 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 29-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Transfer pricing; Principle of natural justice; International transaction; Revenue expenditure; Capital expenditure; TDS
• Section: 271(1)(c); 43B; 92; 195; 13; 92CA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH : BANGALORE BEFORE SHRI. CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER IT(TP)A No. 669/Bang/2016 Assessment Year : 2011-12 M/s. Tektronix (India) Pvt. Ltd. Survey No. 16, Salarpurai Premia, Kadubeesanahalli, Varthur Hobli, Sarjapur, Outer Ring Road, Bangalore – 560 103. PAN: AABCT1733D Vs. The Deputy Commissioner of Income Tax, Circle – 7 (1)(1), Bangalore. APPELLANT RESPONDENT Assessee by : Shri Sharath Rao, AR Revenue by : Shri Manjunath Karkihalli, CIT- DR Date of Hearing : 10-02-2022 Date of Pronouncement : 04-04-2022 ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal has been filed by assessing against the final assessment order dated 27/01/2016 passed by the Ld.DCIT Circle7(1)(1), Bangalore, for the assessment year 2011-12 on following grounds of appeal: “1. The assessment order passed by the learned Assessing Officer ("AO"), the order of the Honourable Dispute Resolution Panel ("DRP") and the order of the Transfer Pricing Officer ("TPO") made under section 92CA of the Income-tax Act, 1961 ("the Act") are not in accordance with the law, made in violation of the Page 2 of 20 IT(TP)A No. 669/Bang/2016 principles of equity and natural justice and are contrary to the facts and circumstances of the present case. 2. Transfer Pricing 2.1. The Honourable DRP and the learned AO/TPO have erred in law and on facts in upholding the adjustment of INR 2,64,78,574 to the total income of the Appellant, based on the order, purportedly passed under section 92CA of the Act. 2.2. The Honourable DRP and the learned AO/TPO have erred in law and on facts by rejecting without cogent reasons, the transfer pricing ("TP") documentation which was prepared by the Appellant in the manner contemplated under the relevant provisions of the Act and the Income-tax Rules, 1962 ("Rules"). 2.3. The Honourable DRP and the learned AO/TPO has erred in law and on facts in rejecting certain comparable companies selected in the TP study of the Appellant based on certain unreasonable criteria's, including reasons which are contrary to the facts and circumstances. 2.4. The Honourable DRP and the learned AO / TPO has erred in law and on facts in rejecting the use of multiple year data by the appellant, without considering that the past year's data had an influence on the determination of arm's length price and that the appellant had considered contemporaneous data available at the time when it carried out the benchmarking study having regard to the statutory requirement to maintain the TP documentation by the specified date. 2.5 The Honourable DRP and the learned AO / TPO has erred in law and on facts in conducting a fresh search for comparable companies based on the updated information available in the database and by rejecting the search process carried out by the appellant, without giving adequate and appropriate reasons for the rejection (refer show cause notice dated January 8, 2015). 2.6. The Honourable DRP and the learned AO / TPO has erred in applying persistent loss, and negative net worth as additional filters for the purpose of selection of the comparable companies. 2.7. The Honourable DRP and the learned AO / TPO has erred in not sharing the search process adopted by the learned TPO for the purpose of Page 3 of 20 IT(TP)A No. 669/Bang/2016 undertaking the fresh search of comparable companies. 2.8. The Honourable DRP and the learned AO/TPO have erred in law and on facts in rejecting the additional companies proposed by the Appellant during the course of TP assessment/audit, without considering that such comparables meet the test of broad comparability as required under Transactional Net Margin Method ("TNMM"). The Honourable DRP and the Learned TPO failed to appreciate that the Learned TPO himself has selected companies like Adtech Systems Limited and Alert Fire Protection Systems Private Limited which are engaged in distribution of cameras, and fire protection system as against the Appellant, which deals in testing and measurement instruments. (Refer Para 6.6 of the TP Order). In case the said additional comparable companies identified by the Appellant are considered as not comparable to the Appellant on account of difference in products, then Adtech Systems Limited and Alert Fire Protection Systems Private Limited which are engaged in trading of cameras and fire protection systems should also not be considered as comparable to the Appellant. 2.9. Inappropriate use of segmental information to benchmark the single integrated business of the Appellant under TNMM: 2.9.1. The Honourable DRP and the learned AO/TPO have erred in law and on facts in adopting segmented approach when applying the TNMM, for the purpose of benchmarking the following sources of income of the Appellant ie income from trading/distribution of goods, income from warranty and support service, and indent sales (ie commission income) without appreciating that these are part of one segment/ integrated business of the Appellant ie distribution of Tektronix products. 2.9.2. The Honourable DRP and the learned AO/TPO failed to appreciate that the aggregation approach be followed, as all the transactions are closely linked and intertwined to the distribution of test and measurement products carried out by the appellant and form a single class of transactions. Therefore, for the purpose of applying TNMM all the said streams of income had to be aggregated and benchmarked together. Page 4 of 20 IT(TP)A No. 669/Bang/2016 2.9.3. The Honourable DRP and the learned TPO have erred in not following the approach adopted by the Learned TPO himself in AY 2009-10. 2.10. Without prejudice the above, the Honourable DRP and the learned AO/TPO have erred in not considering that the appellant's transactions would be at an arm's length even under the segmented approach adopted by the learned TPO, if the allocation of expenses to the segments is considered on a more accurate or appropriate basis. 2.11. The Honourable DRP and the learned AO/TPO has erred, in law, by not providing the appellant the benefit of 5 percent range as provided by the proviso to section 92C(2) of the Act. 3. Addition / disallowance of provision for non- collection of C forms 3.1. The learned AO has erred in law and on facts in disallowing an amount of INR 22,99,776 being the closing balance in the provision account, by treating the amount as contingent expenditure. The provisions were created over a number of years to meet any sales tax liability that would arise in the event of non-collection of C forms from customers. 3.2. The learned AO has erred in law and on facts by not adhering to the directions of the Honourable DRP and thereby by not restricting the disallowance amount to INR 14,60,008 being the actual amount of provision for C forms debited in the profit and loss account for the subject year. 3.3. The Honourable DRP and the learned AO have further erred in law in disallowing the said amount under section 43B of the Act, treating it as outstanding VAT liability towards the State Government which can be claimed only on payment basis. 4. Disallowance of custom duty paid on demo equipment 4.1. The Honourable DRP and the learned AO have erred in law and on facts by disallowing the custom duty paid on demonstration ("demo") equipment amounting to INR 1,27,18,765 by treating the same as capital in nature. 4.2. The Honourable DRP and the learned AO have erred in law and facts by not appreciating that the demo equipment were not capitalized in the books of accounts as they are re-exported/ returned after demo usage. In the absence of capitalization of Page 5 of 20 IT(TP)A No. 669/Bang/2016 these equipment, the customs duty paid on such equipment cannot be treated as capital in nature. 4.3. The Honourable DRP and the learned AO have erred in law and facts by disregarding the fact that any duty benefits received on re-export of the demo equipment are being credited to the Profit and Loss Account under the head 'Rates and Taxes'. 5. Addition and disallowance of warranty reserves 5.1. The Honourable DRP and the learned AO have erred in facts by making an addition of INR 72,51,126, being the closing balance of the warranty reserves appearing in the balance sheet, on the basis that it is unproved and not made on a scientific basis. 5.2. Without prejudice to the above, the learned AO has erred on law and on facts in not restricting the addition to INR 21,17,979 which is the amount debited to the profit and loss account during the year. 5.3. The Honourable DRP and the learned AO have erred in facts by failing to consider the decision of the Appellant's own case for the AY 2006-07 wherein the Hon'ble Income-tax Appellate Tribunal ("ITAT") had held that the warranty reserves computed on a scientific basis is a deductible expenditure. 6. Addition of balance in accrued expenses 6.1. The Honourable DRP and the learned AO have erred in law and on facts by making an addition of INR 13,18,258 which was appearing as accrued expenses in the balance sheet, by treating it as contingent liability without appreciating the fact that such amount was not even debited to the profit and loss account for the year. 6.2. The Honourable DRP and the learned AO have further erred in treating the same as prior period expenses without understanding the facts of the case and dis-regarded the evidences submitted in this behalf. 7. Disallowance of expenses for non-deduction of tax at source 7.1. The Honourable DRP and the learned AO have erred in law and on facts by disallowing an amount of INR 7,29,445 payment for which was made to Tektronix Network Systems, Germany ("TNS"), a group company, as reimbursement of placement fee of an employee, for non-deduction of taxes at source under section 40(a)(i) of the Act. Page 6 of 20 IT(TP)A No. 669/Bang/2016 7.2. The Honourable DRP and the learned AO have erred in law by making the disallowance without considering that the reimbursement was made on cost to cost basis and hence there was no sum chargeable to tax in India in the hands of TNS in order to trigger the applicability of withholding tax under section 195 of the Act. 8. Disallowance of expenses incurred in foreign currency 8.1. The Honourable DRP and the learned AO have erred in law and on facts by disallowing the expenses incurred in foreign currency amounting to INR 14,13,716 for non-deduction of tax at source, without even examining the nature of such expenses. 8.2. The learned AO has failed to follow the directions of Honourable DRP and disallowed the entire amount of INR 14,13,716 without appreciating the following facts: 8.2.1. The total amount of disallowance of INR 14,13,716 included an amount INR 7,29,445 relating to placement fee paid to TNS which was already disallowed separately and thereby leading to double disallowance of the same amount; 8.2.2. With respect to software expenses amounting to INR 4,03,770, taxes were actually deducted and deposited and did not warrant the disallowance; 8.3. The Honourable DRP and the learned AO have erred in law and on facts by stating that other expenses viz WebEx, employee related charges and inter-call charges amounting to INR 2,80,501 included under expenses incurred in foreign currency, would require tax deduction at source under section 195 of the Act without appreciating that such payments were not taxable in accordance with the provisions of the India-USA Double Taxation Avoidance Agreement. 9. Addition of accrued interest 9.1. The learned AO has erred in law and on facts by making an addition of INR 1,39,159 appearing under the head 'loans and advances' as interest accrued on fixed deposits on the basis that the same is not forming part of the returned income. 9.2. The learned AO has erred in law by not adhering to the directions of the Honourable DRP which had accepted the objections of the appellant on this issue. Page 7 of 20 IT(TP)A No. 669/Bang/2016 9.3. The learned AO has erred on facts by not appreciating the fact that the amounts pertained to amounts offered to tax in the return of income for AY 2011- 12. 10. Disallowance of expenses by treating the same as capital expenditure 10.1. The Honourable DRP and the learned AO have erred in law and on facts by disallowing an amount of INR 56,235 as capital expenditure without appreciating that the same was suo-moto disallowed by the appellant in the return of income; 10.2. The Honourable DRP and the learned AO have erred in law and on facts by making an addition of an amount of INR 5,02,611 incurred for replacing one of the servers, and hence qualified as revenue expenditure. 10.3. Without prejudice to the above ground, the learned AO has erred in law and on facts by allowing depreciation at the rate of 15 percent instead of 60 percent which would be the applicable rate for computers, even if the disallowance was to be accepted. 11. Short grant of Tax Deduction at Source ("TDS") credit 11.1. The learned AO has erred in law and on facts in short granting TDS claimed in the return of income by INR 3,76,101 and by ignoring the reconciliation and copies of the certificates in Form 16A's submitted by the Appellant. 12. Other consequential ground 12.1. The learned AO has erred in initiating penalty proceedings under section 271(1)(c) of the Act. The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds, at any time before or at the time of hearing of the appeal. Each of the above grounds of appeal is independent and without prejudice to the other grounds preferred by the Appellant.” 2. Brief facts of the case are as under: 2.1 Assessee is a company engaged in the business of trading in test and measurement equipment and commission agent for the parent holding company and fellow subsidiaries. For year under consideration assessee filed its return of income on 29/11/2011 declaring total income of ₹4,57,78,025/-. The case were selected Page 8 of 20 IT(TP)A No. 669/Bang/2016 for scrutiny and notice under section 143 (2) along with 142 (1) of the act was issued, in response to which representative of assessee appeared before the law and even file requisite details as called for. 2.2 The Ld. TPO noted that assessee has international transaction with the associated enterprises exceeding ₹ 15 crore and accordingly reference was made to the transfer pricing officer in order to determine the arms length price of the international transactions. 2.3 Upon receipt of the reference under section 92 CA of the act, the Ld.TPO called upon assessee to file the economic details of the international transactions. 2.4 The Ld.TPO noted that assessee had following international transactions: Particulars Amount (Rs) Provision for non-collection of C forms 22,99,776 Customs duty paid for demo equipment 1,27,18,765 Warranty reserves 72,51,126 Details of accrued expenses 13,18,258 Non deduction of TDS 7,29,445 Expenses incurred in foreign currency 14,13,716 Addition of accrued interest 1,39,159 Expenses of capital nature 5,58,846 2.5 The Ld.TPO observed that, assessee used RPM as the most appropriate method for the distribution segment. The Ld.TPO noted that, the assessee aggregated the resale transaction and warranty service transaction with the distribution segment, thereby computing its margin by using OP/OC at 11.63%. Page 9 of 20 IT(TP)A No. 669/Bang/2016 2.6 The Ld.TPO disagreed with such kind of aggregation and segregated the transaction of commission and warranty receipt and sale services from the distribution segment. The Ld.TPO used TNMM as the most appropriate method. Before the Ld.TPO, the assessee also referred to the decision of coordinate bench of this Tribunal for assessment in 2006-07 wherein, RPM was upheld to be the most appropriate method for distribution segment. It was also submitted that, this Tribunal noted categorically that, warranty provisions made on reasonable and scientific basis, would not affect RPM as the most appropriate method. The Ld.TPO however rejected the submissions of assessee and applied TNMM is the most appropriate method by holding that, the facts for year under consideration are different from the facts that was available at the time of disposal by this Tribunal. 2.7 He thus computed the margin of assessee for sales and service segment at -9.4% and 4 commission agency service segment at 41.03%. The Ld.TPO thus proposed an adjustment of ₹ 2,64,78,574/-with respect to purchase of goods from the associated enterprises and receipt of warranty service charges and related support charges. 2.8 On receipt of the order under section 92 CA, the Ld.AO passed draft assessment order by further making following adjustments: Particulars Amount paid Import of finished products 16,53,44,158 Capital equipment services 69,96,012 Commission agency services 15,44,41,026 After sales warranty services 20,58,263 Service charges for warranty services and other 2,31,27,283 Page 10 of 20 IT(TP)A No. 669/Bang/2016 3. Against the draft assessment order, the assessee filed objections before the DRP. The DRP after verifying the submissions advanced by assessee appears the adjustment proposed by the Ld.AO/TPO. 4. On receipt of the DRP directions, the Ld.AO passed the final assessment order under section 143 (3) read with section 140 4C (13) of the act by making an adhesion in the hands of assessee at ₹9,86,01,860/-. Aggrieved by the order of the Ld.AO, assessee is on appeal before this Tribunal. 5. At the outset Ld.AR submitted that ground no. 1 is general in nature and therefore do not require any adjudication. He submitted that ground number 2 is basically on the selection of comparable adopted by the revenue authorities and the allocation of expenses to be considered in respect of the segregation of the segments. 6. The Ld.AR emphasised on Ground Nos. 2.9.1-2.9.3, wherein, rejection of RPM is the most appropriate method is challenged by the assessee. The Ld.AR submitted that, if these grounds are dealt with, the issue needs to be remanded to the Ld.AO/TPO, as there is an inconsistent in the approach adopted by the revenue authorities for year under consideration, in considering the most appropriate method vis-à-vis the subsequent and preceding assessment years. He thus requested to consider the grounds before adjudicating the other sub grounds raised in ground number 2. 7. The Ld.AR primarily submitted that, the authorities below have erred in adopting segmented approach by applying TNMM Page 11 of 20 IT(TP)A No. 669/Bang/2016 as the most appropriate method and independently benchmarked the income generated from trading/distribution of goods, income from warranty and support services and indent sale. It is submitted that these are all inextricably connected with each other and cannot be segregated. 8. The Ld.AR submitted that assessee carries out one single indivisible business of distribution of the products and the segregation of business either on the basis of activities or products is not practical and would lead to inconsistency in the financials of business. 9. Before this Tribunal, assessee has filed a petition for admission of additional evidence that containing the details justifying why the commission agency segment should not be clubbed with other segments since the commission agency segment was an integral part of the distribution activity carried on by assessee. It is submitted that these details could not be collated at the stage of transfer pricing proceedings as these are the transfer pricing orders of the subsequent assessment years. 10. It is the prayer of the Ld.AR that a consistent approach may be adopted based on the above orders. He also plays reliance on assessee’s own case for assessment year 2006-07 wherein coordinate bench of this Tribunal by order dated 31/10/2012 has upheld the RPM as the most appropriate method as there is a resale without any value addition to the product there. Whereas for assessment year 2015-16 the Ld.TPO accepted the aggregated approach of transactions using TNMM as the most appropriate method. Similar was the approach accepted for assessment year 2018-19. Page 12 of 20 IT(TP)A No. 669/Bang/2016 11. The Ld.CIT.DR submitted that, the issue may be remanded to the Ld.AO/TPO to verify the details and to consider a consistent approach acceptable in accordance with the law. We have perused submissions advanced by both sides in light of records placed before us. 12. The additional evidence filed by assessee are mainly the transfer pricing orders passed in the subsequent assessment years by the Ld.TPO, and the transfer pricing study report, for the relevant assessment years. Assessee do not object for aggregating the transactions and computing the margin by using TNMM as the most appropriate method as has been done in the subsequent assessment years. 13. Based on the above submission, we remand the issue back to the Ld.AO/TPO to analyse the transaction by using TNMM as the most appropriate method, by aggregating the transactions. The ld.TPO is directed to consider the fresh comparable and compute the ALP of the transaction in accordance with the law. Needless to say that opportunity of being heard must be granted to assessee. The assessee is directed to file requisite detail in support of the claim. Accordingly grounds 2.9.1-2.9.2 stands allowed for statistical purposes. As we have remanded the transfer pricing adjustment, to the Ld.AO/TPO, other issues raised becomes academic at this stage and is left open. Accordingly Ground No.2 is allowed for statistical purposes. Page 13 of 20 IT(TP)A No. 669/Bang/2016 14. Ground No.3 is raised by assessee for the reason that the direction of DRP has not been followed by the Ld.AO, while passing the final assessment order. 14.1 It is submitted that the DRP held that the amount of VAT liability towards state government can be claimed under section 43B of the act on actual payment basis. The DRP directed to restrict the disallowance to provision created and debited to the profit and loss account during the relevant financial year under consideration. The Ld.AR submitted that, out of the closing balance of provision of ₹22,99,776/- an amount of ₹1,46,008/- pertains to financial year 2010-11. 14.2 It is submitted that the Ld.AO while passing the final assessment order disallowed the entire provision of ₹22,99,776/-. The Ld.CIT.DR submitted that, the issue may be remanded to the Ld.AO for verification. We have perused submissions advanced both sides in light of records placed before us. 15. The Ld.AO did not carry out directions of DRP. We direct the Ld.AO to compute the disallowance as per the directions of DRP. Accordingly the ground raised by assessee stands allowed for statistical purposes. 16. Ground No.4 raised by assessee is against disallowance of customs duty paid for demonstration equipment. 16.1 The Ld.AR submitted that, assessee incurred octroi and customs charges on the import of equipment which was brought to India for purpose of demonstration to the Indian market. The demonstrating equipment was re-exported to the suppliers once the purpose was achieved. The Ld.AR submitted that, on such re- Page 14 of 20 IT(TP)A No. 669/Bang/2016 export assessee was entitled to duty drawback scheme. It is submitted that the refund received on account of duty drawback was credited to the P&L account in subsequent years and offer to tax in the return of income for that period. 17. The Ld.AR submitted that assessing officer disallowed the customs duty paid by assessee treating the same as capital in nature. The DRP held that the equipment provided enduring benefit to assessee as there was no legal obligation to return the same. The DRP however held that the amount received as duty drawback become sale price of the equipment and the same should be reduced from the block of assets. He also submitted that the DRP granted assessee to depreciation on such capital assets which has not been computed by the Ld.AO while passing the final assessment order. The Ld.CIT DR on the contrary submitted that the issue may be remanded to the Ld.AO for due verification. We have perused submissions advanced by both sides in light of records placed before us. 18. The DRP has observed the depreciation could be granted on the capital asset since the assessee do not have a legal binding to return the equipment. In our considered opinion the view taken by the DRP is in accordance with the provisions of the act and for the year under consideration the assessee deserves to be granted depreciation on such capital asset. Assessee has also already submitted that on receipt of the duty drawback the same has been credited to the P&L account in the subsequent years and offered to tax. To this we concur with the observations of the DRP Page 15 of 20 IT(TP)A No. 669/Bang/2016 that the duty drawback received by assessee will be considered as sale of the equipment. We direct the Ld.AO to grant depreciation on the cost of the capital asset for the year under consideration. Accordingly, this ground raised by assessee stands allowed for statistical purposes. 19. Ground No.5 is raised by assessee against disallowance of warranty reserve amounting to Rs.72,51,126/-. 19.1 It is submitted that the Ld.AO as well as the DRP observed that no details were these provided as to how the provision for warranty has been determined. The Ld.AR submitted that, detailed submissions were made which is placed in the paper book at page 460. He also referred to the decision of coordinate bench of this Tribunal in assessee’s own case for assessment year 2006-07, wherein, the warranty provision was granted to assessee and the methodology adopted was upheld. 19.2 We note that as the details filed by assessee has not been verified and looked into by the authorities below in the interest of justice it is necessary that the issue to be remanded. Accordingly, we remand this issue to the Ld.AO, to consider the details filed by assessee in accordance with law, and in consonance with the view taken by the Coordinate Bench of this Tribunal in assessee’s own case for assessment year 2006-07. Accordingly this ground raised by assessee stands allowed for statistical purposes. 20. Ground No.6 is raised by the assessee against addition of accrued expenses amounting to ₹13,18,258/-. Page 16 of 20 IT(TP)A No. 669/Bang/2016 20.1 The Ld.AR submitted that, during assessment years 2005- 06 and 2008-09 assessee had accrued buying and selling commission of ₹17,00,493/- payable to “AA enterprises” was not discharged and there was an ongoing litigation before Hon’ble Karnataka High Court. The Ld.AO made addition considering the amount to be contingent liability. The DRP upheld the action of the Ld.AO by holding it to be prior period expenses which could not have been claimed in the year under consideration. 20.2 It is a submission of the Ld.AR that, there are evidences placed on record in order to consider the claim of assessee which has been ignored by the authorities below. The Ld.CIT.DR submitted that this issue may be remanded to the Ld.AO in the interest of justice. We have perused submissions advanced for both sides in light of records placed before us. The details filed by assessee has not been considered by the Ld.AO and the litigation that is pending in respect of the amount due and payable by assessee which pertains to the preceding assessment years. We direct the Ld.AO to consider the claim of assessee in accordance with law in the light of the evidences filed by assessee. Accordingly this ground raised by assessee stands allowed for statistical purposes. 21. Ground No.7 is raised by assessee against this disallowance on account of non-deduction of TDS. 21.1 The Ld.AR submitted that, the revenue disallowed ₹7,29,445/-which was shown under legal and professional charges for the payment made towards Tektronix network Page 17 of 20 IT(TP)A No. 669/Bang/2016 system, Germany. It was submitted that the amount pertains to placement fees which is in the nature of referral fee and accrues on selection of a candidate referred by recruiting agency which had entered into a contract with Tektronix Network System, Germany. 21.2 On perusal of the order passed by the DRP as well as the Ld.AO, we note that, no specific details of services, agreements were furnished by assessee before the authorities below in order to establish the nature of payment made to a non-resident company. 21.3 The Ld.AO has disallowed the said amount under section 40(a)(i) of the Act, for non-deduction of TDS. 21.4 In the interest of justice we deem it necessary to remand this issue back to the Ld.AO/TPO to determine the nature of payment made by assessee and whether there is any element of income embedded in the payment so as to invoke the TDS provisions. We direct the assessee to furnish all necessary details in the form of agreements, invoices in respect of the payments made to Tektronix network system, Germany. The Ld.AO/TPO shall then verify the details and consider the claim of assessee in accordance with law. Needless to say that proper opportunity of being heard must be granted to assessee. Accordingly this ground raised by the assessee stands allowed for statistical purposes. 22. Ground No.8 is raised by assessee against disallowance of expenses incurred in foreign currency. 22.1 The Ld.AR submitted that revenue disallowed following expenses incurred by assessee in foreign currency: Page 18 of 20 IT(TP)A No. 669/Bang/2016 S No. Nature of Expenditure Amount 1 Reimbursement of placement fee of employee 7,69,724 2 Reimbursement of software, licenses and products 4,03,770, 3 Reimbursement of WebEx and Telecom charges 2,40,222 22.2 The addition is made for the reason that no details were furnished by assessee as has been observed by the Ld.AO. The Ld.AR submits that voluminous details were filed before the DRP as well as before the Ld.AO which has not been considered. 22.3 In the interest of justice we deem it necessary to remand this issue back to the Ld.AO/TPO to determine the nature of payment made by assessee and whether there is any element of income embedded in the payment so as to invoke the TDS provisions. We direct the assessee to furnish all necessary details in the form of agreements, invoices in respect of the payments made. The Ld.AO/TPO shall then verify the details and consider the claim of assessee in accordance with law and having regards to the various decisions passed by this Tribunal as well as Hon’ble Supreme Court and High Court on similar issues. Needless to say that proper opportunity of being heard must be granted to assessee. Accordingly this ground raised by assessee allowed for statistical purposes. 23. Ground No.9 is raised by assessee against the addition of accrued interest amounting to ₹1,39,159/-. 23.1 The Ld.AR submitted that, the disallowance is suo moto made by the assessee under the head ‘loans and advances’, and Page 19 of 20 IT(TP)A No. 669/Bang/2016 does not form part of the returned income. He submitted that the DRP had directed Ld.AO to verify the submission as claimed by assessee. 23.2 The ld.AO, while passing the final assessment order has not carried out necessary verification as per the DRP directions. 23.3 We accordingly remand this issue back to the Ld.AO to verify the same as directed by the DRP and to consider the claim of assessee in accordance with law. Accordingly this ground raised by assessee stands allowed for statistical purposes. The Ld.AR submitted that, Ground No.10 is not pressed by assessee. Accordingly Ground no.10 stands this dismissed as not pressed. 24. Ground No.11 is in respect of non-granting of TDS credit. Ld.AO is directed to grant the TDS credit out upon verification of the details filed by assessee. Accordingly this ground raised by assessee stands allowed for statistical purposes. 25. Ground No.12 is consequential in nature and therefore do not require adjudication. In the result appeal filed by assessee stands allowed for statistical purposes. Order pronounced in open court on 04 th April, 2022. Sd/- Sd/- (CHANDRA POOJARI) (BEENA PILLAI) Accountant Member Judicial Member Bangalore, Dated, the 04 th April, 2022. /MS / Page 20 of 20 IT(TP)A No. 669/Bang/2016 Copy to: 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Bangalore 3. CIT 6. Guard file By order Assistant Registrar, ITAT, Bangalore