Transfer pricing adjustment case remanded to AO/TPO for fresh consideration under Section 92C and Rule 10B

ITAT DELHI allowed the assessee's appeals for statistical purposes in a transfer pricing adjustment case. The tribunal set aside the final assessment order and remanded the matter to AO/TPO for fresh consideration, directing acceptance of additional evidence and reports under Section 92C of the Income-tax Act, 1961 read with Rule 10B. The decision followed similar precedent from assessee's own case for AY 2004-05. Issues regarding valuation and depreciation of goodwill were also remitted to AO/TPO for fresh determination with proper opportunity for hearing.

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Issues Involved:
1. Transfer Pricing
2. Corporate Taxation

Transfer Pricing Issue:
The assessee, engaged in marketing support services for American Express Bank Limited, challenged the assessment orders for AY 2005-06 and AY 2006-07. The primary contention was the erroneous selection of comparable companies by the TPO, which were engaged in financial and leasing services instead of marketing support services. The assessee sought the admission of additional evidence to benchmark the transactions correctly. The Tribunal, following its precedent in the assessee's case for AY 2004-05, admitted the additional evidence and remanded the matter to the TPO for fresh adjudication, directing the TPO to accept the fresh evidence and report of the assessee for the purpose of Section 92C of the Income-tax Act, 1961, read with Rule 10B of the Income-tax Rules, 1962.

Corporate Taxation Issues:
1. Disregard of Cost of Goodwill and Depreciation on Goodwill:
The assessee contested the restriction of the cost of goodwill to NIL instead of Rs. 80,000,000 and the disallowance of depreciation on goodwill. The Tribunal, referring to its decisions in the assessee's own case for AY 2002-03 and AY 2010-11, acknowledged the assessee's entitlement to depreciation on goodwill as an intangible asset under Section 32 of the Act.

2. Disregard of Acquisition Cost of Business Database and Depreciation:
For AY 2006-07, the assessee challenged the restriction of the cost of the acquired database to Rs. 30,000,000 instead of Rs. 120,000,000 and the disallowance of depreciation on the database. The Tribunal referred to its earlier decisions that recognized the database as an intangible asset eligible for depreciation.

3. Interest Under Section 234B:
The assessee argued against the excess interest charged under Section 234B of the Act. The Tribunal remanded the issue to the AO for reconsideration.

4. Set-Off of Brought Forward Losses and Unabsorbed Depreciation:
The Tribunal directed the AO to consider the set-off of brought forward losses and unabsorbed depreciation against the income for the relevant assessment years as per Sections 72 and 32(2) of the Act.

Conclusion:
The Tribunal allowed the appeals for statistical purposes, remanding the transfer pricing and corporate tax issues to the AO/TPO for fresh consideration, ensuring the assessee is given a proper opportunity to present its case. The order was pronounced on January 9, 2024.

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