Segment-wise transfer pricing benchmarking and non-compete fee treatment were both sent back for fresh tax adjudication.

Segment-wise benchmarking was required for the assessee's transfer pricing analysis because earlier co-ordinate bench rulings had accepted separate business segments and directed verification of segmental accounts, comparables and the proviso to section 92C(2); the adjustment was therefore restored for fresh decision. Depreciation on non-compete fee also required reconsideration because the Tribunal followed the later Supreme Court ruling and the assessee's own prior-year order, holding that the earlier disallowance could not stand; the tax treatment and consequential depreciation claim were sent back for reworking. Remaining grounds were treated as consequential.

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Issues: (i) Whether the transfer pricing adjustment required reconsideration on a segment-wise benchmarking of the assessee's business and comparable selection; (ii) whether the disallowance of depreciation on non-compete fee required reconsideration in light of the Supreme Court ruling.

Issue (i): Whether the transfer pricing adjustment required reconsideration on a segment-wise benchmarking of the assessee's business and comparable selection.

Analysis: The appeal concerned the benchmarking of international transactions for the assessee's distinct business segments. The Tribunal noted that in the assessee's earlier years, the co-ordinate bench had already accepted the existence of separate business segments and had directed segment-wise benchmarking rather than an entity-wide approach. It further noted that the issue of arm's length price computation had been restored in earlier years for verification of segmental accounts, comparables, and tolerance under the proviso to section 92C(2) of the Income-tax Act, 1961.

Conclusion: The transfer pricing adjustment was restored to the file of the Transfer Pricing Officer and the Assessing Officer for fresh decision in accordance with law after segment-wise examination.

Issue (ii): Whether the disallowance of depreciation on non-compete fee required reconsideration in light of the Supreme Court ruling.

Analysis: The Tribunal followed the later Supreme Court ruling on treatment of non-compete fee and the co-ordinate bench decision in the assessee's own case for a prior year. It held that the earlier view sustaining the disallowance could not stand in the light of the settled position and that the Assessing Officer had to rework the tax treatment and consequential depreciation claim accordingly.

Conclusion: The issue was restored to the file of the Assessing Officer for action in accordance with the Supreme Court ruling and the co-ordinate bench directions.

Final Conclusion: The appeal succeeded on the substantive issues to the extent that both the transfer pricing matter and the non-compete fee issue were sent back for fresh adjudication, and the remaining grounds were treated as consequential.

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