NOKIA SOLUTIONS & NETWORKS INDIA PVT. LTD., Gurgaon V. ADDL. CIT, SPECIAL RANGE- 6, NEW DELHI

MA 101/DEL/2020

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3301 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 2 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-08-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I1
• Next Hearing Date: 04-08-2022
• Assessment Year: 2012-2013
• Appeal Filed On: 02-03-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 64; 72

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘I-1’ BENCH, NEW DELHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER MA No. 101/DEL/2020 A/o ITA No. 6376/DEL/2017 [A.Y 2012-13] Nokia Solutions and Networks India Pvt Ltd Vs. The Dy.C.I.T 7 th Floor, Building No. 9A Circle – 18(2) DLF Cyber City, Sector 25A New Delhi Gurgaon - Haryana PAN No: AACCN 3871 [Appellant] [Respondent] Date of Hearing : 05.08.2022 Date of Pronouncement : 05.08.2022 Assessee by : Shri Ankul Goyal, Adv Revenue by : Shri Anuj Garg, Sr. DR ORDER PER N.K. BILLAIYA, AM:- This Miscellaneous Application by the assessee is directed towards the order of this Tribunal in ITA No. 909/DEL/2016, 6376/DEL/2017 and CO No. 188/DEL/2016 order dated 28.01.2020 pertaining to Assessment Years 2011-12 and 2012-13. 2 2. With this MA, it has been brought to the notice of the Tribunal that while deciding the appeal, facts and decision have been jumbled in the impugned paras and needs to be corrected for a proper appreciation of facts. 3. It is the say of the ld. counsel for the assessee that there is no error in the findings of the Tribunal, but the only mistake is in paragraphing the facts and decision. 4. The ld. DR fairly stated that if this is the case, then the error may be rectified. 5. We have given thoughtful consideration to the contents of the MA. We find force in the contention of the ld. counsel for the assessee. There is a mistake in paragraphing of the facts and decision. The same is rectified as Paras 67 to 71 and part of Para 72 are inserted between paras 64 and 65 as under: “64. Ground No. 4 relates to disallowance of provision for liquidated damages. 3 65. During the course of scrutiny assessment proceedings, the Assessing Officer noticed that during the assessment proceedings of Assessment Year 2010-11, disallowances were made on account of provisions for liquidated damages and the assessee was asked to explain why similar disallowances should not be made during the year under consideration. 66. The assessee filed detailed reply vide submissions dated 21.03.2016 explaining that during the year under consideration, provision for liquidity damages amounting to Rs. 50.64 crores has been created and provision amounting to Rs. 15.55 crores has been realized/written back to the Profit and Loss Account being provision no longer required. It was further explained that since the assessee is engaged in the business of manufacturing and trading of telecom network equipment and, therefore, is obliged to supply and provide installation and commissioning services in respect of such telecom network equipment under the terms of its contract with the customers. 4 67. Accordingly, in the event any compensation for default or delay on contracts becomes payables and such payables are pending at the end of the FY due to events undertaken during the FY, the assessee creates a provision for such likely compensation. The said provision is written back only after the fulfillment of all obligations by the assessee. It was brought to the notice of the Assessing Officer that provisions are utilized/released any time between one to five years. It was further explained that the said provision is based on invocation of liquidated damages clause by the customers on delay in support/short supply of equipment to the customers or for any default in respect of contractual obligations of the assessee with its customers. 68. The Assessing Officer was of the opinion that the provisions for liquidity damages has been debited to profit and loss account but not added back in the computation of income. Therefore, provisions are unascertained liabilities and are not admissible deduction under the provisions of the Act. The Assessing Officer, accordingly, made addition of Rs. 22,23,38,673/-. 5 69. The assessee raised objections before the DRP but without any success. 70. Before us, the ld. counsel for the assessee stated that similar issue arose in Assessment Year 2004-05 and 2005-06 and the Tribunal has decided the issue in favour of the assessee in ITA No. 3202/DEL/2014 for Assessment Year 2004-05.” 71. Ground No. 5 relates to disallowance of utilization from provision for foreseeable losses. 72. The ld. counsel for the assessee drew our attention to the computation of income and pointed out the assessee has added back provision of Rs. 69.67 crores and then claimed a deduction for provision for forseeable loss utilized during the year amounting to Rs. 34.53 crores. It is the say of the ld. counsel for the assessee that the assessee has been consistently following a practice of first creating provision and in the year provision is created, it is added back in the computation of income and in the year when the actual losses are claimed, it is deducted in the computation of income. The ld. counsel for the assessee stated 6 that this being the first year of actual claim of loss, the same should be allowed.” Para 78 Page No. 32 Third Line The words “write off” may be replaced with the word “utilization” Para 78 The amount “Rs. 22,13,38,673/-“ may be replaced with “Rs. 34,53,00,000/-“. 6. In the result, the MA is allowed as above. Sd/- Sd/- [CHALLA NAGENDRA PRASAD] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 05 th August, 2022. VL/ 7 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar ITAT, New Delhi Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr.PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr.PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order