Caterpillar India Private Limited Vs DCIT (ITAT Chennai)
Secondment Payment Disallowance Deleted Because Salary Reimbursements Were Not Fees for Technical Services; Licensed Software Eligible for 60% Depreciation Because It Qualifies as Computer Software; Stamp Duty on Lease Registration Allowed as Revenue Expense Because Liability Crystallised During the Year; Repair Expenditure Treated as Capital Because It Created Additional Office Space and Enduring Benefit.
The assessee filed an appeal against the final assessment order for Assessment Year (AY) 2013-14 passed under Sections 143(3) read with 144C of the Income-tax Act pursuant to the directions of the Dispute Resolution Panel (DRP). The assessment involved transfer pricing (TP) adjustments in the Engineering Design Services (EDS), Information Technology (IT), and IT-enabled Services (ITeS) segments, along with various corporate tax disallowances. The Revenue’s cross-objection on limitation became infructuous as the assessee did not press the additional grounds.
Transfer Pricing Adjustments
In the EDS segment, the Tribunal directed exclusion of Acropetal Technologies Ltd. because its financials were affected by fraud as found by the SEBI adjudicator, and Vama Industries Ltd. because software development services were not comparable with engineering design services. Since exclusion of these entities would bring the assessee’s margin above the comparable margin, the remaining grounds became academic.
