DRESSER RAND INDIA P.LTD, MUMBAI V. ADDL CIT RG 6(2), MUMBAI

ITA 7723/MUM/2012

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3455 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Assessment Year: 2008-2009
• Appeal Filed On: 28-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Transfer pricing; Corroborative evidences
• Section: 143(3); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I ' BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL ACCOUN TANT MEMBER ITA N O. 7723 /MUM./201 2 ( ASSESSMENT YEAR : 20 08 - 09 ) DRESSER - RAND INDIA PRIVATE LIMITED LOTUS BUSINESS PARK, 11 TH FLOOR VEERA DESAI ROAD OFF. ANDHERI - LINK ROAD OPP.FUN - REPUBLIC ANDHERI(W), MUMBAI - 400 053 PAN AACD9897P . APPELLANT V/S A DDL.CIT, RANGE - 6(2) ROOM NO.512, 5 TH FLOOR AAYKAR BHAWAN M.K.ROAD, MUMBAI - 400 020 . RESPONDENT ITA N O. 1127 /MUM./201 4 ( ASSESSMENT YEAR : 20 09 - 10 ) DRESSER - RAND INDIA PRIVATE LIMITED LOTUS BUSINESS PARK, 11 TH FLOOR VEERA DESAI ROAD OFF. ANDHERI - LINK ROAD OPP.FUN - REPUBLIC ANDHERI(W), MUMBAI - 400 053 PAN AACD9897P . APPELLANT V/S DCIT,CIRCLE - 6(2) ROOM NO.504, 5 TH FLOOR AAYKAR BHAWAN M.K.ROAD, MUMBAI - 400 020 . RESPONDENT 2 DRESSERS - RAND INDIA PRIVATE LIMITED ITA N O. 1068/ /MUM./201 4 ( ASSESSMENT YEAR : 20 09 - 10 ) DCIT,CIRCLE - 6(2) ROOM NO.504, 5 TH FLOOR AAYKAR BHAWAN M.K.ROAD, MUMBAI - 400 020 . APPELLANT V/S DRESSER - RAND INDIA PRIVATE LIMITED LOTUS BUSINESS PARK, 11 TH FLOOR VEERA DESAI ROAD OFF. ANDHERI - LINK ROAD OPP.FUN - REPUBLIC ANDHERI(W), MUMBAI - 400 053 PAN AACD9897P . RESPONDENT REVENUE BY : SHRI KANHIYA LAL KANAK, DR ASSESSEE BY : SHRI NITESH JOSHI, AR DATE OF HEARING 21 . 10 .2020 DATE OF ORDER 09.11.2020 O R D E R PER SAKTIJIT DEY. J.M. CAPTIONED APPEALS ARISE OUT OF FINAL ASSESSMENT ORDER S PASSED U/S 143(3) R.W.S. 144C(13) OF THE INCOME T AX ACT, 1961 (IN SHORT THE ACT) IN PURSUANCE TO DIRECTION S OF L EARNED DISPUTE RESOLUTION PANEL (DRP) - 1 , MUMBAI. WHILE APPEAL FOR A SSESSMENT Y EAR 2008 - 09 IS BY THE ASSESSE E ALONE, THERE ARE CROSS APPEALS FOR A SSESSMENT Y EAR 2009 - 10. ITA NO.7723/MUM./2012 (ASSESSEES APPEAL FOR ASSESSMENT Y EAR 2008 - 09) 3 DRESSERS - RAND INDIA PRIVATE LIMITED 2. IN GROUND N O .1 TO 4, THE ASSESSEE HAS CHALLENGED ADDITIONS MADE OF RS.4, 4 4,07,733/ - ON ACCOUNT OF TRANSFER PRICING A DJUSTMENT ON COST CONTRIBUTION CHARGES PA I D TO THE OVERSEAS ASSOCIATED ENTERPRISES (AES). 4 . BRIEFLY STATED, THE ASSESSEE, A RESIDENT COMPANY , IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF VARIOUS TYPES OF PROCESS GAS COMPRESSORS INCLUDING RECIPROCATING COMPRESSORS . AS STATED BY THE ASSESSING OFFICER , THE ASSESSEE ALSO SUPPLIES PARTS AND PROVIDE SERVICE S TO THE OIL AND GAS SECTORS WHERE ITS COMPRESSORS ARE U SED . THE ASSESSEE HAD ENTERED INTO A COST CO NTRIBUTION AGREEMENT WITH ITS AE DRESSERS - RAND GROUP INC. USA UNDER WHICH CERTAIN SERVICES WERE RENDERED TO THE ASSESSEE. TOWARDS RENDER ING OF SUCH SERVICES , THE ASSESSEE PAID AN AMOUNT OF RS.4,44,07,733/ - DURING THE YEAR TO THE AE. THE T RANSFER PRICING OFFICER (T PO ) WHILE EXAMINING THE ARM S L E NGTH NATURE OF SUCH TRANSAC TION ULTIMATELY CONCLUDED THAT THE ARMS LENGTH PRICE (ALP) OF SUCH TRANSACTION HAS TO BE DETERMINED AS NIL . ACCORDINGLY , HE MADE ADJUSTMENT OF THE ENTIRE AMO UNT OF RS.4,44,07,733/ - . THE LEARNED DRP AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE ALLOWED 50% OF THE AMOUNT PAID. IN OTHER WO RDS, LEARNED DRP DETERMINED THE ALP OF THE COST CO NTRIBUTION CHARGES PAID TO AE AT RS.2,22,03,867. BEFORE US , SHRI NI TESH JOSHI , LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT FOR SETT L ING THE DISPUTE RELATING T O THIS ISSUE , THE ASSESSEE HAD APPLIED FOR MUTUAL A GREEMENT P ROCEDURE (MAP). HE SUBMITTED , ULTIMATELY THIS DISPUTE HAS BEEN RESOLVED UNDER MAP BY DETERMINING THE ALP AT RS.3 , 33,05,800/ - , THEREBY , PROPOSING AN ADJUSTMENT OF RS.1,11,01,933/ - . THUS, HE SUBMIT TED , IN VIEW O F THE AGREEMENT REACHED UNDER MAP PROCEEDING, THE ASSESSEE HAS WITHDRAWN GROUND N O .1 TO 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE AGREED WITH THE AFORESAID SUBMISSIONS OF THE ASSESSE E . IN VIEW OF THE SUBMISSIONS MADE BY THE LEARNED C OUNSEL S APPEARING FOR THE PARTIES, WE DISMISS GROUNDS N O .1 TO 4 AS NOT PRESSED. 4 DRESSERS - RAND INDIA PRIVATE LIMITED 5 . IN GROUND NO .5 AND 6, THE ASSES SEE HAS CHALLENGED THE ADDITION MADE OF RS. 3,47,360/ - ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT TO THE PAYMENT MADE TOWARDS FIELD SUPERVISION SERVICES. 6 . BRIEFLY STATED , DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD RENDERED CERTAIN SERVICES TO ITS AE TERMED AS FIELD SERVICES AND RECEIVED AN AMOUNT OF RS.58,07,858/ - AFTER PROVIDING DISCOUN T @15%. THE TPO , WHILE DETERMINING THE ALP OF SUCH SERVICES RENDERED TO AE HELD THAT THE DISCOUNT ALLOWED IS NOT AT ARMS LENGTH AND ACCORDINGLY MADE ADJUSTMENT OF RS.3,47,360/ - . THE LEARNED DRP ALSO UPHELD THE ADJUSTMENT MADE BY THE TPO. 7. THE LEAR NED C OUNSEL FOR THE ASSESSEE SUBMITTED , THE AMOUNT RECEIVED TOWARDS FIELD SERVICES INCLUDES AN AMOUNT OF RS.23,74,16 2/ - RECEIVED FROM THE AE IN USA. H E SUBMITTED , THE ALP OF THE SAID TRANSACTION W AS DETERMINED AT RS.25,16,157/ - . HE SUBMITTED , THE ASSESSEE HAS INVOKED MAP PROCEDURE IN RESPECT OF THE TRANSACTIONS WITH USA, AE AND ULTIMATELY AN ADJUSTMENT OF RS.1,41,995/ - HAS BEEN PR OPOSED UNDER MAP. THE LEARNED C OUNSEL FURTHER SUBMITTED , SINCE THE TRANSACTIONS WITH THE USA, AE IS UNDER MAP, THE ASSESSEE WOULD NOT CONTEST THE ADJUSTMENT MADE TO TH AT EXTENT. HOWEVER, HE SUBMITTED , INSOFAR AS BALANCE AMOUNT OF RS.2,05,365/ - IS CONCERNED , THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN AY 2006 - 07 . IN THIS CONTE XT HE DREW OUR ATTENTION TO THE RELEVANT OBSERVAT IONS OF THE TRIBUNAL. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON BY THE OBSERVATIONS OF THE TPO AND LEARNED DRP. 8 . HAVING CONSIDERED RIVAL SUBMISSIONS, WE FIND , WH ILE CONSIDERING IDENTICAL ISSUE IN ASSESSEES OWN CASE IN A SSESSMENT YEAR 2006 - 07, THE 5 DRESSERS - RAND INDIA PRIVATE LIMITED TRIBUNAL IN ITA N O . 8753/MUM/2010 , DATED 07/09/2011 HAS ACCEPTED THE PRICE CH ARGED BY THE ASSESSEE TO THE AE S TOWARDS PROVISION OF FIELD SERVICES AF TER ALLOWING DISCOUNT TO BE AT ARMS LENGTH. IN THI S CONTEXT, WE REPRODUCE THE OBSERVATIONS OF THE TRIBUNAL HEREUNDER: - 11. THE NEXT ADJUSTMENT OF RS 4,70,000, ON THE GROUND THAT THE ASSESSEE OUGHT NOT TO HAVE ALLOWED DISCOUNT OF 10% TO AES, IS ALSO EQUALLY DEVOID OF ANY MERITS. WE HAVE NOTED THAT THE ASS ESSEE HAS FOLLOWED THE TNMM FOR DETERMINATION OF ALP AND THE ASSESSING OFFICER HAS NOT EVEN DISPUTED TNMM BEING MOST APPROPRIATE METHOD ON THE FACTS OF THIS CASE. THE QUESTION OF APPLYING CUP, EVEN IF THAT BE SO, CAN ONLY ARISE WHEN TNMM IS REJECTED. EVEN UNDER CUP METHOD, IT IS NOT NECESSARY THAT ALL SALES MUST TAKE AT THE SAME PRICE. THERE CAN ALWAYS BE VARIATIONS OF PRICES FOR THE SAME PRODUCT OR SERVICES ON VALID GROUNDS, SUCH AS QUANTUM OF BUSINESS, RISK FACTORS, MARKETING EFFORTS NEEDED ETC. WHEN ASSE SSEE IS DEALING WITH AN AE, AT LEAST THERE ARE NO COMMERCIAL RISKS, NO MARKETING COSTS AND THERE COULD BE SEVERAL OTHER FACTORS AS WELL JUSTIFYING A NORMAL DISCOUNT AS THE ASSESSEE COULD INDEED GO TO MANY IMPORTANT CUSTOMERS. IT HARDLY NEEDS TO BE EMPHASIZ ED THAT EVEN IN INDEPENDENT BUSINESS SITUATIONS GRANTING DISCOUNT IS A NORMAL OCCURRENCE, AND UNLESS THE ASSESSING OFFICER DEMONSTRATES THAT THE DISCOUNT SO ALLOWED WOULD NOT HAVE BEEN ALLOWED IN AN ARM'S LENGTH SITUATION, ALP ADJUSTMENT CANNOT BE MADE IN RESPECT OF THE SAME. WE ARE ALIVE TO THE FACT THAT THE DISCOUNT IS ALLOWED BY THE VIRTUE OF STATUS AS ASSOCIATED ENTERPRISE, BUT THAT IS NOT A MATERIAL FACTOR; IN OUR CONSIDERED VIEW, THE MATERIAL FACTOR IS WHETHER SUCH A DISCOUNT OF 10% IS AN ARM'S LENGTH DISCOUNT I.E. A DISCOUNT WHICH IS GIVEN EVEN IN A SITUATION IN WHICH AN ENTERPRISE IS DEALING WITH INDEPENDENT ENTERPRISE. THERE IS NOTHING ON RECORD ITA NO.8753/MUM/2010 ASSESSMENT YEAR: 2006 - 07 TO EVEN SUGGEST THAT SUCH A DISCOUNT IS NOT AN ARM'S LENGTH DISCOUNT, OR THAT DISCOUNTS HAVE NOT BEEN ALLOWED UNDER ANY OTHER SITUATIONS. IN VIEW OF THESE DISCUSSIONS, AND BEARING IN MIND ENTIRETY OF THE CASE, WE DELETE THE IMPUGNED DISALLOWANCE OF RS 4,70,000 AS WELL. 9 . F ACTS BEING IDENTICAL , RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE CO - ORDINAT E BENCH, WE DELETE THE ADDITION OF RS.2,05,365/ - , WHICH IS NOT COVERED UNDER THE MAP PROCEEDINGS. THESE GROUNDS ARE PARTLY ALLOWED. 10 . IN GROUND N O .7, THE ASSES SEE HAS CHALLENGED DISALLOWANCE OF COST CONTRIBUTION CHARGES U/S 37(1), SECTION 40A( 2 )(B) AND SECTION 40A(I) OF THE ACT. 11. BRIEFLY STATED , THOUGH, THE AMOUNT IN DIS PUTE IN THE AFORESAID GROUND WAS ADDED TO THE INCOME OF THE ASSESSEE ON ACCOUNT OF TRANSFER PRICING 6 DRESSERS - RAND INDIA PRIVATE LIMITED ADJU STMENT , HOWEVER , THE ASSESSING OFFICER MADE ALTERNATIVE DISALLOWANCES OF THE AMOUNT UNDER THE AFORESAID PROVISION S . A T THE TIME OF HEARING , T HE LEARNED C OUNSEL FOR THE ASSESSE SUBMITTED , SINCE , IN THE FINAL ASSESS MENT ORDER NO SUCH DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER AND IN THE ORDER GIVING EFFECT TO THE MAP PROCEEDINGS, THE ASSESSING OFFICER HAS ALLOWED DEDUCTION OF RS.3,33,05,800/ - , T HE ASSESSEE PRACTICALLY HAS NO GRIEVANCE. 12. CONSIDERING THE FACT TH AT NO SEPARATE DISALLOWANCE ON T HE ISSUE S RAISED IN THE PRESENT GROUND HAS BEEN MADE BY THE ASSESSING OFFICER, THE GROUND RAISED BY THE ASSESSEE HAS BECOME REDUNDANT, HENCE DISMISSED. 13 . IN GROUND NO. 8, THE ASSESS EE HAS CHALLENGED THE ADDITION OF RS. 22,36,615/ - ON ACCOUNT OF ADJUST MENT OF UNUTILIZED CENVAT CREDIT TO CLOSING STOCK BY INVOKING THE PROVISION OF SECTION 145A OF THE ACT. 14. THE LEARNED C OUNSEL FOR THE ASSESSEE SUBMITTED , IDENTICAL ISSUE ARISING IN ASSESSEES OWN CASE IN PRECEDING ASSESSMENT YEAR S HAS BEEN RESTORED T O THE ASSESSING OFFICER . HE SUBMITTED , SIMILAR VIEW MAY BE TAKEN IN THE IMPUGNED ASSESSMENT YEAR AS WELL. 15. THE LEARNED DEPARTMENTAL REPRESENTATIVE AGREED WITH THE AFORESAID SUBMISSIONS OF THE ASSESSEE. 16. HAVING CONSIDERED RIVAL SUBMISSIONS, WE FIND THAT WHILE DECIDING IDENTICAL ISSUE IN ASSESSEES OWN CASE IN AY 2007 - 08 IN ITA NO. 5412 AND 5435/MUM/2014, DATED 10/08/2020 , THE TRIBUNAL HA S RESTORED THE ISSUE TO THE ASSESSING OFFICER OBSERVING AS UNDER: - 5.4 AS RIGHTLY POINTED OUT BY LD. AR, W E FIND THAT TRIBUNAL IN ASSESSEE'S OWN CASE FOR AY 2006 - 07, ITA NO.8753/MUM/2010 ORDER DATED 07/09/2011 FOLLOWED ITS EARLIER ORDER FOR AY 2001 - 02 DATED 07/02/2008 AND VIDE PARA 20, REMITTED THE MATTER BACK TO THE FILE OF LD. AO FOR REDOING THE COMPUTATION IN ACCORDANCE WITH ORDER FOR AY 2001 - 02. FACTS BEING PARI - MATERIA THE SAME, WE RESTORE THE MATTER BACK TO THE FILE OF LD. AO ON SIMILAR LINES TO REDO THE COMPUTATIONS IN ACCORDANCE 7 DRESSERS - RAND INDIA PRIVATE LIMITED WITH EARLIER YEARS AS PER THE DIRECTIONS OF THE TRIBUNAL. RESULTANTLY, THIS GROUND STAND ALLOWED FOR STATISTICAL PURPOSES. 17 . FACTS BEING IDENTICAL , RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE TRIBUNAL, WE RESTORED THE ISSUE TO THE ASSESSING OFFICER WITH SIMILAR DIRECTION. THIS GROUND IS ALLOWED FOR STATISTICAL PURP OSE. 18 . IN GROUND N O . 9, THE ASSESSEE HAS CHALLENGED ADDITIONS OF RS.42,383/ - MADE ON THE BASIS OF ANNUAL INFORMATION RETURN (AIR) . 19. D URING THE ASSESSMENT PROCEEDINGS , T HE ASSESSING OFFICER ON THE BASIS OF IN FORMATION AVAILABLE ON RECORD FOUND THA T THE ASSESSEE HAS NOT OFFERED INCOME TO THE EXTENT OF RS.42,383/ - , DETAILS OF WHICH ARE AS UNDER: - SR. NO. NAME OF THE PARTY AMOUNT AS PER AIR (RS.) AMOUNT AS PER BOOKS (RS.) DIFFERENCE (RS.) 1 CENTURY TEXTILES & INDUSTRIES LTD. 8,652 NIL 8,652 2 UTTAR GUJARAT VIJ COMPANY LTD. 30,120 NIL 30,120 3 EASTERN ELECTROLYSERS LTD. 54,212 51,050 3,162 4 HINDUSTAN PETROLEUM CORP.LTD. 2,35,654 2,35,564 449 TOTAL 42,383 20 . A LLEGING THAT THE ASSESSEE HAS FAILED TO RECONCILE THE DIFFERENCE IN INCOME OFFERED AS PER BOOKS OF ACCOUNT AND INCOME RECE IVED BY THE ASSESSEE AS PER AIR INFORMATION, THE ASSESSING OFFICER ADDED BACK TH E AMOUNT OF RS.42,383/ - . LEARNED DRP ALSO SUSTAINED THE ADDITION . 2 1. THE LEARNED C OUNSEL FOR THE ASSESSEE DRAWING OUR ATTENTION TO THE RECONCILIATION STATEMENTS AND OTHER DETAILS PLACED IN THE PAPER BOOK SUBMITTED , DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD 8 DRESSERS - RAND INDIA PRIVATE LIMITED ABSOLUTELY NO D EALING WITH CENTURY TEXTILES AND INDUSTRIES LIMITED AN D UTTAR GUJARAT VIJ COMPANY LTD. AS REGARDS EASTERN ELECTRO LYSERS LTD, LEARNED C OUNSEL FOR THE ASSESEE SUBMITTED , THE ASSESSEE HAS RAISED INVOICES OF RS. 51,050/ - DURING THE YEAR . T HEREFORE , HE SUBMITTED , THE ASSESSEE HAVING PROPERLY RECONCILE D THE DIFFERENCE WITH SUPPORTING EVIDENCE, NO ADDITION SHOULD HAVE BEEN MADE. AS REGARDS , HI NDUSTAN PETRO LEUM CORPORATION LTD. , THE LEARNED C OUNSEL SUBMITTED , THE ASSESSEE IS UNABLE TO RECONCILE THE DIFFERENCE. 22. THE LEARNED DEPARTMENTAL REPRESENTATI VE SUBMITTED , SINCE , THE ASSESSING OFFICER RECEIVED SPECIFIC INFORMATION SHOWING NON DISCLOSURE OF INCOME BY THE ASSESSEE AND THE ASSESSEE FAILED TO RECONCILE THE SAME , ADDITION MADE WAS JUSTIFIED. 23. WE HAVE CONSIDERED RIVAL S UBMISSIONS AND PERUSED MATERIAL ON RECORD. AS COULD BE SEEN FROM THE FACTS O N RECORD, THE DISPUTED ADDITION IS ON ACCOUNT OF DIFFERENCE IN INCOME SHOWN AS PER BOOKS OF ACCOUNT AND INCOME RECEIVED AS PER AIR INFORMATION. HOWEVER, IT IS THE SPECIFIC CASE OF THE ASSESEE THAT DURIN G THE YEAR UNDER CONSIDERATION , IT HAD NO D EALINGS WITH CENTURY TEXTILES AND INDUSTRIES PVT.LTD. AND UTTAR GUJARAT VIJ COMPANY LTD. ON PERUSAL OF FACTS ON RECORD , WE FIND THAT AFORESAID CLAIM OF THE ASSESSEE H AS NOT AT ALL BEEN ENQUIRED INTO BY THE ASSESSING OFFICER BY MAK ING ENQUIRY WITH THE CONCERN ED PARTIES. FURTHER , ASSESSEES CONTENTION THAT DURING THE YEAR UNDER CONSIDERATION INVOICE S OF RS.51,050/ - WAS RAISED ON EASTE RN ELECTROLYSERS LTD. HAS NOT AT ALL BEEN E NQUIRE D INTO BY THE ASSESSING OFF ICER . WHEN THE ASSESSEE HAS FURNISHED EVIDENCE TO RECONCILE THE DIFFERENCE AND CLAIMS THAT THERE IS NO SUCH INCOME WAS EARNED BY IT , THE ASSESSING OFFICER WAS DUTY BOUND TO MAKE PROPER ENQUIRY TO ASCERTAIN THE CORRECTNESS OF ASSESSEES CLAIM. W ITHOUT MAKIN G ANY ENQUIRY, THE ASSESSING OFFICER CANNOT MAKE THE ADDITIONS . M ORE SO , WHEN THE ASSESSEE HAS DISCLOSED HUGE TURNOVER AND HAS ALSO OFFERED SUBSTANTIAL LY HIGH 9 DRESSERS - RAND INDIA PRIVATE LIMITED INCOME. THAT BEING THE CASE , IT CANNOT BE EXPECTED THAT THE ASSE SSEE WOULD NOT DISCLOSE SUCH A PE TTY AMOUNT . H OWEVER , IT IS A FACT ON RECORD THAT THE ASSESSEE WAS UNABLE TO RECONCILE THE DIFFERENCE OF RS.449 / - ON ACCOUNT OF INCOME RECEIVED FROM HINDUSTAN PETR OLIUM CORPORATION LTD. IN VIEW OF THE ABOVE, WE SUSTAIN ADDITION ONLY TO THE EXTENT OF RS.44 9/ - AND DELETE THE BALANCE AMOUNT. T HIS GROUND IS PARTLY ALLOWED. 24 . IN THE GROUND NO.10, THE ASSESEE HAS CHALLENGED PAR T DISALLOWANCE OF DEPRECIATION CLAIMED ON UNINTERRUPTED POWER SUPPLY ( UPS ) BY TREATING IT AS PLANT AND MACHINERY. 25. BRIEFLY THE FACTS ARE , IN THE RETURN OF INCOME FILED FOR THE YEAR, ASSESSEE CLAIMED DEPRECIATION AT 60 % ON UPS BY TREATING IT AS PART OF COMPUTER. THE ASSESSING OFFICER , HOWEVER , RESTRICTED THE CLAIM OF DEPRECIATION TO15% BY TREATING IT AS PLANT AND MACHINERY. THE LEARNED DRP ALSO AGREED WITH THE DECISION OF THE ASSESSING OFFICER . 26. THE LEARNED C OUNSEL FOR THE ASSESSEE SUBMITTED , UPS BEING A PART OF COMPUTER SYSTEM , WITHOUT WHICH THE COMPUTER CANNOT WORK , SHOULD BE ALLOWED DEPRECIATION @60 % . I N SUPPORT OF SUCH CONTENTION HE RELIED UPON THE FOLLOWING DECISIONS: - PCIT VS GOA TOURISM DEVELOPMENT LTD. 2019 102 TAXMAN.COM 437 (BOM.) DCIT VS SARSWATH INFOTECH LTD. ITA NO. 6722/MUM/12 DATED 15/01/2014. 27 . THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , UPS CANNOT BE CONSIDERED AS A PART OF COMPUTER AS IT CAN BE USED ON STAND ALONE BASIS, SINCE , IT SUPPLIES CONTINUES POWER IN CASE OF POWER FAILURE. 28. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS N OTICE D , IN THE CASE OF PCIT VS GOA TOURISM DEV ELOPMENT LTD. THE HONBLE J URISDICTION AL HIGH COURT HAS HELD THAT UPS 10 DRESSERS - RAND INDIA PRIVATE LIMITED BEING A PART/ACCESSORY OF COMPUTER IS E LIGIBLE FOR DEPRECIATION AT 60%. T HE SAME VIEW HAS BEEN EXPRESSED BY THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS ORIENT CERAMICS AND INDSTRIES LTD. AS RE FERRED TO IN THE DECISION OF THE TRIBUNAL IN CA S E OF DCIT VS M/S. SARSWATH INFOTECH LTD. (SUPRA) . IN VIEW OF THE RATIO LAID DOWN IN THE JUD ICIAL PRECEDENTS REFERRED TO ABOVE , WE ALLOW ASSESSEES CLAIM OF DEPRE CIATION ON UPS @ 60%. THIS GROUND IS ALLOWED. 29. IN THE RESULT, APPEAL IS PARTLY ALLOWED. ITA NO. 1127 /MUM./201 4 (ASSESSEES APPEAL FOR A.Y. 200 9 - 10 ) 30 . IN GROUND N O . 1 TO 4 ARE IDENTICAL TO GROUND N O . 1 TO 4 OF ITA NO. 7723/MUM/2012 . F OLLOWING OUR DISCUSSIONS AND D ECISION THEREIN, WE DISMISS THESE GROUND S AS NOT PRESSED. 31. ISSUE RAISED IN GROUND N O. 5 IS IDENTICAL TO THE ISSUE RAISED IN GROUND NO .5 AND 6 OF ITA NO.7723/MUM/12 . F OLLOWING OUR DISCUSSIONS AND DECISION THEREIN, WE DE LETE THE ADDITION OF RS. 10,80,065/ - . T HE BALANCE ADDITION OF RS. 5,38,937/ - IS SUSTAINED AS IT IS COVERED UNDER MAP PROCEEDINGS . THIS GROUND IS PARTLY ALLOWED. 32 . ISSUE RAISED IN GROUND N O . 6 AND 7 ARE IDENTICAL TO GROUND N O . 7 OF ITA NO . 7723/MUM/2012. CONSIDERING THE SUBMISSION OF LEARNED C OUNSEL FOR THE ASSESSEE THAT THE ASSESSEE HAS NO GRIEVANCE AS SUCH, AS, THE ASSESSING OFFICER HAS NOT MADE ANY DISALLOWANCE IN THE FINAL ASSESSMENT ORDER, THESE GROUNDS ARE DISMISSED AS NOT PRESSED. 33 . IN GROUND N O . 8 , ASSES SEE HAS CHALLENGED THE ADDITION MADE OF RS. 2,91,32,770/ - ON ACCOUNT OF ADJUSTMENT OF UNUTILIZED CENVAT CREDIT TO CLOSING STOCK. T HIS GROUND IS IDENTICAL TO GROUND N O . 8 OF ITA NO. 11 DRESSERS - RAND INDIA PRIVATE LIMITED 7723/MUM/2012. FOLLOWING OUR DECISION THEREIN, W E RESTORE THE ISSUE TO THE ASSESSING OFFICER WITH SIMILAR DIRECTION . 34 . IN GROUND N O. 9 THE A SSESSEE HAS CHALLENGED ADDITION OF RS. 1,12,423/ - ON ACCOUNT OF AIR INFORMATION. 35. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. I T IS NOTICED , DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FURNISHED RECONCILIATION STATEMENT CLEARLY STATING THAT DURING THE YEAR UNDER CON SIDERATION, THE ASSESSEE HAD NO DE ALING WITH THE CONCERNED PARTIES. HOWEVER , WITHOUT MAKING ANY ENQU IRY THE ASSESSING OFFICER HAS ADDED BACK THE A MOUNT. WHEN THE ASSESSEE CLAIMS THAT HE HAS NOT ENTERED INTO ANY TRANSACTION WITH THE CONCERNED PARTIES , THE LEAST THE ASSESSING OFFICER COULD HAVE DONE IS TO ASCERTAIN THE CORRECTNESS OF ASSESSEES CLAIM BY MAKING ENQ UIRY WITH THE CONCERN PARTIES. THE ASSESSING OFFICER HAVING NOT DONE SO, THE ADDITION CANNOT BE SUSTAINED . FURTHER , LOOKING AT THE HUGE TURNOVER AND SUBSTANTIALLY HIGH INCOME DECLARED BY THE ASSESSEE, IT IS NOT AT ALL BELIEVABLE THAT THE ASSESSEE WOULD SUP PRESS SUCH A SMALL AMOUNT. ACCO RDINGLY, WE DELETE THE ADDITION . 36 . IN GROUND N O. 10, THE ASSESSEE HAS CHALLENGED DEPRECIATION ALLOWED AT 15% ON UPS BY TREATING IT AS PLANT AND MACHINERY . T HIS GROUND IS IDENTICAL TO GROUND NO .10 OF ITA NO. 7723/MUM/2012 . F OLLOWING OUR DECISION THEREIN, WE ALLOWED ASSESSEES CLAIM OF DEPRECIATION AT 60%. 37. THIS APPEAL IS PARTLY ALLOWED. ITA NO. 1068 /MUM./201 4 ( REVENUE S APPEAL FOR A.Y. 200 9 - 10 ) 12 DRESSERS - RAND INDIA PRIVATE LIMITED 38 . IN GROUND N O .1, THE REVENUE HAS CHALLENGED THE DECISION OF THE LEARNED DRP IN DETERMININ G THE ALP OF THE COST CONTRIBUTION CHARGES AT 50% OF THE AMOUNT PAID. I N VIEW OF OUR D ECISIO N IN GROUND N O .1 TO 4 OF ITA NO. 7723/ MUM/12 AND ITA NO. 1127/MUM/2014, THIS GROUND HAS BECOME INFRUCT UOUS, HENCE , DISMISSED. 39 . IN G ROUND NO.2, THE ASSESSEE HAS CHALLENGED DIRECTION OF LEARNED DRP WITH REGARD TO THE ADDITION MADE OF UNUTILIZED CENVAT CREDIT TO THE CLOSING STOCK. THIS GROUND IS IDENTICAL TO THE GROUN D NO.8 OF ITA NO. 1127/MUM/2014. S INCE , WHILE CONSIDERING THE SAID GROUND, WE HAVE RESTORED THE ISSUE TO THE ASSESSING OFFICER , THERE IS NO NEED FOR SEPARATE ADJUDICATION FOR THIS GROUND. ACCORDINGLY, THIS GROUND IS DISMISSED. 40 . IN THE RESULT, THE APPEAL IS DISMISSED. 41 . TO SUM - UP, ASSESSEES APPEALS ARE PARTLY ALLOWED AND REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.11.2020 SD/ MANOJ KUMAR AGGARWAL ACCOUNTANT MEMBER S D/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 09.11.2020 13 DRESSERS - RAND INDIA PRIVATE LIMITED COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER KASARLA THIRUMALESH SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI