TaxTMI 
TaxTMI 
2011 (7) TMI 963
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....ear 2005-06. 2. The following substantial questions of law have been claimed for determination of this Court: " (i) Whether in the facts and circumstances of the case, the Tribunal was legally correct in directing the Assessing Officer (AO) to re-compute Arm's Length Price (ALP) at 21.97% even when the Transfer Pricing Officer (TPO) had arrived at 35.26% after due consideration of all the relevant factors. (ii) Whether in the facts and circumstances of the case, the ITAT was justified in issuing direction to the AO to recomputed ALP after adopting total cost at Rs. 1,70,84,964/- instead of Rs. 2,02,67,550/- and whether the adjustment for the depreciation on administrative assets, as directed by the ITAT, is sustainable in the eyes ....
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....of Advertisement expenses amounting to Rs.1,00,000/-. 5. Both the sides felt aggrieved by the order of the CIT(A) and preferred their separate appeals before the Tribunal. The Tribunal, by order dated 27.8.2010, dismissed the appeal of the Revenue and partly allowed the appeal of the assessee in respect of the addition of Rs. 1,00,000/- on account of disallowance of Advertisement expenses holding that expending of money on signboard enables conduct of assessee's business more profitably and facilitated the assessee's trading operations even if the advantage was of enduring nature. 6. The Tribunal further set aside the order of the CIT(A) on the issue of addition made on account of Arm's Length Price and while doing so, a direction was....
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....ogies Ltd. (Cosmic Global) 1.90 19.08 21.25 6.87 2. Ace Software Exports Ltd. 5.91 15.46 10.46 5.94 3. Goldstone Teleservices 5.96 15.95 Average 16.83 10. The Tribunal, however, on appreciation of the material on record concluded that 21.97% was the appropriate percentage to be applied for adopting the Arm's Length Price. For doing so, the Tribunal took into consideration the data of the following comparable Companies: Sr. No Comparable Companies S To. OP/TC% Wages/TC (%) Depr/TC (%) 1. Tulsyan Technologies Ltd. (Cosmic Global) 1.90 19.08 21.25 6.87 2. Ace Software Exports Ltd. 5.9....
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....f circumstances, in our considered opinion, the following four companies out of the list searched by the TPO and contained in para 7.4.2 of his order, deserve to be selected for the purpose of comparability analysis: 12. The Tribunal found the four comparable companies for adopting the Arm's Length Price. No perversity could be pointed out by the learned counsel for the appellant that may warrant interference in the finding recorded by the Tribunal in the above context. 13. Adverting to question No.2, the Tribunal held that the claim for depreciation on administrative assets amounting to Rs. 31,82,586/- was liable to be accepted for determining the profits of the assessee. The findings recorded by the Tribunal in this regard are notic....
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....e assets (cars purchased), Wages/ Total cost and Depreciation/ Total cost ratios are taken at 40% Income Tax Appeal No. 169 of 2011 8 and 12% respectively (as submitted by the assessee vide its letter dated 14.10.2008)" (underlined for emphasis by us) 18. Ostensibly, TPO accepted the Depreciation/Total cost ratio computed at 12% by the assessee, which working is placed at page 95 of the Paperbook filed by the assessee. Pertinently, the Depreciation/Total cost ratio computed and accepted by the TPO at 12% was calculated after making adjustment for the said extraordinary item of depreciation amounting to Rs. 31,82,586/-. Having accepted the working, the TPO in para 9 of the order while determining the ALP has failed to make adjustment for ....