TaxTMI 
TaxTMI 
TaxTMI 
2014 (11) TMI 266
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....he ruling pronounced by the Hon'ble Income-tax Appellate Tribunal ('ITAT'), Delhi Bench in the appellant's own case for AY 2008-09 which was submitted before the Ld. DRP during the hearing on August 23, 2013 and rehearing on November 13, 2013 wherein the appellant had received a favourable order deleting the adjustment on account of "alleged excessive" AMP expenses incurred by the appellant; even though the facts of the case has remained unchanged in AY 2009-10 from those in AY 2008-09; 1.2. disregarding the fact that the premium profits earned by the appellant more than compensate the allegedly excessive AMP spends, if any, incurred by it: 1.3. misinterpreting or placing incorrect reliance on the international guidance in relation to the 'marketing intangibles' and 'bright line test' from Organisation for Economic Co-operation and Development ('OECD'), US TP Regulations and Australian Tax Office ('ATO') and relying on several erroneous/factually incorrect and contradictory statements/ observations in the TP order, which are not relevant to the instant case, only in order to justify an otherwise inappropriate and unwarranted TP adjustment; ....
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.... judicial pronouncements in this regard; and 2-4 ignoring that the facts and circumstances of the appellant's case during the year remained unchanged when compared to previous years in which detailed audit and scrutiny was done with regard to the pricing and methodology of this transaction and subsequently no adverse inference drawn. CORPORATE TAX MATTER 3. The Ld. AO has erred in law and on facts and circumstances of the case, in reclassifying certain assets under the Block of "Plant and Machinery" eligible for depreciation @ 15% which were originally classified by the appellant under the Block of "Computers" eligible for depreciation @ 60%. 4. Without prejudice to the above , the Ld. AO has erred in law and on facts and circumstances of the case, in disallowing an amount of INR 0.48 crores towards the depreciation allowance on individual assets so reclassified by calculating depreciation on the original cost of the assets instead of the Written Down Value ('WDV')and without appreciating that depreciation allowance of only INR 0.17 crores has actually been claimed on such assets in the return of income, where computed on a standalone basis . 5. The Ld. AO also erred i....
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....of the Special Bench has been followed the perception that the said order was not followed presumably based on reporting in the "headnotes" in the published orders may not be the appropriate way to conclude that L.G. Electronics case has been bi-passed in the case of the assessee. In view of the apparent conflict/confusion between the conclusion based on publisher's view of what has been said instead of what has been written in the order we are of the view that reading the order itself should be relied upon. The parties were accordingly required to address the issues and were heard at length. Despite this time was given to the Ld. CIT DR to further supplement his arguments with written submissions if need be for the sake of completeness and place the same on record after mutually exchanging the same with the rejoinder if any sought to be filed on behalf of the assessee. The specific order sheet entry of the said date is reproduced hereunder:- 22nd July 2014 Mr. P.Jain, CIT DR and Mr. Rahul Kr. Mitra CA present. The Ld. AR places reliance on assessee's own order for the immediately preceding assessment year and Ld. CIT DR states that in the order of Casio India Co. and Perfetti Van....
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.... observations in para 5 and 6 of the order appears to completely overlook the fact that the material finding in BMW India Pvt. Ltd. actually considered and followed wherever applicable the principles laid down by the Special bench in L.G. Electronics. Hence the surprising observation in para 6 that "there is no prize for guessing that Special Bench order has more force and binding effect over the Division Bench order on the same issue. This contention raised by the Ld. AR, therefore, fails" appears to be the result of the mistaken submissions which could not have been based on reading the entire order and appears to be based only on a reading of the headnotes. The fact that headnotes can at times be misleading is a well known fact as they are only the reporting done for the convenience of the professionals and it is imperative therefore to read the entire order. Be it as it may, we would not be out of place to sound a caution that hasty conclusions based on arguments advanced on the basis of the headnotes in the reporting of the orders may not be advisable and it may lead to misleading conclusions. Reference may be made to the decision rendered by the Apex Court in Nahar Industrial....
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.... is distinct is a well accepted fact for which no authority need be cited, however for the sake of addressing lingering doubts if any we refer to the order dated 30.08.2013 in ITA No-6283/Del/2012 in Nokia India Pvt. Ltd., though not in the context of AMP expenses but in the context of allowable expenses of a distributor. In the facts of that case on consideration it was again recognized that a distributor's model of remuneration has peculiar and unique characteristics which are distinct and separate from the remuneration model of a licensed manufacturer. The assessee therein was engaged in providing services in the industry of installation, commissioning and erection of tele-communication equipment, selling (trading) of mobile phones networks and accessories, research & development services to the Nokia Group of company whose claim of expenses based on price protection to its dealers was denied. In the facts of that case the dealers were offered apart from discounts based on the incentives to the distributor on goods sold but also promotional schemes for achieving sales target. Over and above this price protection was also offered for the handsets which were not sold. The assessee....
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....stify the claim especially since discounts and commissions are anyway stated to be made available and paid to the distributors/dealers. Accordingly while admitting fresh evidences filed before us the AO is directed to consider them alongwith the evidence which had been filed before the DRP. We further direct the assessee to place necessary and relevant evidences as brought out above and also find mentioned in the assessment order to justify its claim. Liberty to file fresh evidences before the AO is granted and the AO shall be dutybound to consider the same before the passing of his order. Needless to say that a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard shall be passed by the AO." 3.3. Hence though it may appear to be intellectually sound to precede or follow up ones main argument with judicial decisions that purport to support or explain the main arguments one needs always to keep in mind the well recognized and accepted proposition that a judgement should be read as a whole and practice of picking stray sentences and words should be avoided as the language used in a decision cannot be treated with the same level of ri....
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....observations which may have been made in passing in these deliberations do not form the ratio decidendi of the decision. It would be too much to ascribe and read precise meaning to words in a decision which the judges who wrote them may not have had in mind. In support of the above legal position, we may make specific reference to CWT vs Dr. Karan Singh and Others. (1993) 200 ITR 614 (SC); CIT vs K. Ramakrishnan (1993) 202 ITR 997 (Kerala) and KTMTM Adbul Kayoom & another vs. CIT (1962) 44 ITR 689. The observations of the Hon'ble Apex Court in the case of CIT vs. Sun Engineering Works Pvt. Ltd. (1992) 198 ITR 297 (SC) specifically observed that it is neither desirable nor permissible to pick out a word or a sentence from the judgement of the Hon'ble Supreme Court divorced from the context of the question under consideration and treat it to be the complete law declared." (Emphasis provided herein) 3.4. Accordingly reverting to the controversy on the issue at hand we hold that there is no conflict between the decision in BMW India Pvt. Ltd. with L.G. Electronics. Hence in view of the above the parties were directed to address the issues on the basis of facts available on record kee....
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....122,574 Interest on External Commercial Borrowings 48,151,177 Reimbursement of expenses by group companies 40,990,036 4. A perusal of the TPO's order shows that the TPO, considering the Transfer Pricing study of the assessee, wherein the assessee described its activities as that of a distributor; and considering the Importation Agreement entered into by the assessee with the parent company, i.e. BMW w.e.f 01.01.2006 which assigned the duties of the assessee with regard to marketing and promotion of the products of the parent company, came to the following conclusions:- 4.2. "It is evident from the TP study of the assessee that its job is to promise the "BMW" brand in India and it had incurred huge expenditure under the heads of advertisement, marketing and promotional expenditure[AMP] in the year under consideration. The details of expenditure incurred by the assessee for trade mark promotion and development of marketing intangibles are as under:- Expenditure on AMP 922230438 Value of Gross Sales 10867616561 AMP/Sales of the assessee 8.49% 4.3. It is evident from above discussion that the assessee has incurred a cost in connection with a benefit and se....
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....arables chosen by the assessee and their relevant AM P data is reproduced hereunder: S.No. Name of the Company Advertising, Marketing and Promotional Expense/Sales (A/B) (%) 3. Eastman Industries Ltd. 0.94 4. Lucas India Services Ltd. 0.94 5. MGF Automobiles Ltd. 4.77 6. Machino Techno Sales Ltd. 5.15 7. Popular Vehicles & Services Ltd. 4.46 8. Sri Ramadas Motor Transport Ltd. 2.18 Further examination of the details of comparables used last year for AMP analysis revealed that the following comparables have not been considered by the assessee. These are also being considered as comparable as there has been no change in the operating circumstances of either the assessee or of the comparables. S.No. Name of the Company Advertising, Marketing and Promotional Expense/Sales (A/B) (%) 1. AVG Motors Ltd. 0.74 2. Competent Automobiles CO. Ltd. 0.14 9. Sai Services Station Ltd. 0.55 10.6. The final comparables therefore for AMP analysis are as under:- Sr. No. Name of the Company Advertising, Marketing and Promotional Expense/Sales (A/B) (%) 1 AVG Motors Ltd. 0.74 2 Competent Automobiles CO. LTd. 0.14 3 Eastman Industries Ltd.....
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....diture but also a normal return on such AMP activities provided for the benefited of the AEs My view get supported by OECD transfer pricing guidelines at 7.33 'which stipulate that "in an arm's length transaction, an independent enterprise normally would seek to charge for services in such a way as to generate profit than providing the services merely at cost" It is pertinent to mention here that these services are not covered by situations in which markup is not necessary as discussed in preceding paragraph of this order. The next issue is about quantum of markup which the assessee must charge at arm's length price. In the show cause notice, it was proposed to use PLR+2.5% which equals to a markup of 15.27%. The assessee has objected to use of PLR for computing the minimum return expected to be earned on amount of AMP expenses. However, I am not inclined to accept the submission of the assessee that PLR cannot be considered for computing the mark-up non routine AMP expenditure incurred by the Assessee. If the assessee would have invested the money spent on AMP expenses over and above the bright line limit (non- routine AMP), assessee would have earned a return which i....
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....sues arising in the present proceedings qua the grounds raised and the jurisprudence available specific submissions were made issue wise which we shall address shortly. 6. The Ld. CIT DR apart from relying upon the orders of the authorities below submitted that the issue may be restored to the TPO to decide the same applying the ratio of the Special Bench in the case of L.G. Electronics case. Ld. CIT DR was also heard in response to issue wise discussion addresses by the ld. AR and was also directed to place on record his written submission addressing the departmental concerns for which purposes the hearing was adjourned directing the parties to place their respective positions on the issues on record after mutually exchanging the same amongst themselves first. On the next date of hearing the Ld. CIT DR filed the following written submissions dated 30.07.2014 which for the sake of completeness are reproduced here under:- May It Please Your Honours Sub-In the case of M/s BMW India P Ltd., AY 2009-10, ITA No. 385/DeI/2014, Date of Hearing 31/07/2014 1.lt is prayed that the matter relating to Transfer Pricing adjustments in respect of AMP expenses be adjudicated in light of Delhi....
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....on pages 468 and 469, being reproduction of departmental counter submissions in AY 2008-09, pages 465 till 470 of paper book) it has been held - 21.10. It was also contended on behalf of the assessee that if the overall profit of the Indian entity is more than the comparable cases then it should be presumed that the foreign enterprise supplied goods at relatively low price to make up for the AMP expenses incurred in India towards brand promotion. In our considered opinion there are no roots for such a presumption. In order to take benefit of such a contention the assessee is required to directly prove the fact of cheap purchases de hors the overall higher net profit rate. This fact can be established by demonstrating that the foreign AE charged a specially low price from the assessee in comparison with that charged for the similar goods supplied to other independent entities dealing with it in India or in case there is no to her independent entity in India, then the price charged for similar goods from other foreign parties. It can also be proved by showing that goods with identical features are available in the Indian market at a higher price. The fact that the assessee has a bet....
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.... exhaustive. The principles(s) have been duly laid down. The assessee's case, among others, is covered by point nos. 1,2,3,4,9,10,14 etc, of para 17.4. Paras 17.5 and 17.6 have further elaboration of the matter. [2] In Para 17.3 and 17.4 the Special Bench has duly considered that the cases of interveners are distinguishable from each other. After considering various scenario they have laid down guidelines applicable to various scenario(s). These guidelines are not exhaustive. The principles(s) have been duly laid down. The assessee's case, among others is covered by point nos. 1,2,3,4,9,10,14 etc, of para 17.4. Paras 17.5 and 17.6 have further elaboration of the matter. [3] The assessee has pointed point that some of the intervening entities in LG case were similar to the assessee. Since there facts have been duly considered, the assessee's case is covered. [4,5,6] In paras 21.5 till 21.8 it has been held that each international transaction has to be separately bench marked. There cannot be any cross subsidisation. The assessee has failed to disclose the transaction of Brand Building etc, by incurring AMP expenses, as a separate transaction. Therefore the assessee....
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....0 The Assessee has paid excess price to the extent of Rs.40,000/- 2. AMP Expenditure towards Brand building (that should have been received from AE), (a)Transaction not reported by assessee). Nil 20,000 The Assessee has not received Rs.20,000/- from the AE, though it should have received the same. 3. Subsidy received 30,000 It has not been specified, as to the purpose for which subsidy has been received. According to the assessee, the subsidy is to be applied to AMP expenditure. If such is the situation then ALP of AMP expenditure, according to the assessee, would be Rs.(-)10,000/-, (Rs. 20,000 being ALP of AMP expenditure less Rs. 30,000 being subsidy). This is an absurd result. Revenue's contention is that since the AMP expenditure towards Brand Building (or creation or feeding of Intangibles etc.) has not been reported as an international transaction, at all, how can subsidy be attributed to AMP (or Brand Building or creation of Intangibles etc). This is too far-fetched a proposition and an afterthought. Subsidy could not have been given for a transaction which the assessee claims is not an international transaction. Even the Hon....
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.... other independent entity in India, then the price charged for similar goods from other foreign parties. It can also be proved by showing that goods with identical features are available in the India market at a higher price. The fact that the assessee has a better net profit rate in comparison with other comparable entities is not decisive in itself of the assessee having purchased the goods at a concessional rate from its foreign AE as a compensation for its incurring AMP expenses towards the promotion of their brand". [12,13] The assessee has sought comparison at Gross level. The transaction of brand building has to be bench marked using TNMM (Transactional Net Margin Method). In TNMM there is no provision of Gross Profit. It has to be net margin. The assessee has failed to report the transaction. of Brand Building as an international transaction. As held in the order of LG (Para 21.B) each international transaction has to be separately benchmarked. The assessee is showing gross profit at entity level which in itself is not acceptable. [14,15,16] As submitted in counter No. 11, subsidy needs to be specifically attributed and detailed Para 21.10 of LG order further elaborat....
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....nal for AY 2008-09, namely the one filed on 3rd May, 2013 (pages 451 to 459 of Paper Book No II), had elaborately dealt with all the objections raised by the learned DR vide his written submission filed before the Hon'ble Tribunal on 25th April, 2013 (pages 465 to 470 of Paper Book No II). c. As stated above, the Hon'ble Tribunal had considered all the said submissions before deciding the matter in favour of the appellant, as has been acknowledged by the learned DR at paragraph (2) of his written submission tiled for the current appeal. 2. At paragraph (3) of the written submission, the learned DR has drawn reference to the letter filed by the appellant dated 28th April, 2014, wherein the appellant had interalia submitted that there were contrary rulings by Division Benches of the Hon'ble Tribunal on the issue of marketing intangibles in the context of distributors. The appellant submits that irrespective of any possible conflicting views ill this regard, given the fact that the case of the appellant is squarely covered in its favour by the ruling of the Hon'bIe Delhi Tribunal in its own case for AY 2008-09. the said ruling may be applied in the case of the appellant ....
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....nd advertising of products, which together constituted one single and indivisible cohesive whole of distributions function carried out by the appellant under the importation agreement entered into with BMW AG; and all the said functions were inextricably subsumed within the distribution activities, for which the appellant received adequate and proper remuneration in the form of a gross margin, vis-a-vis the comparable companies, duly commensurate with differences with respect to intensity of functions. c. BMW AG's pricing of products to the appellant has always been in compliance with the arm's length principle and no adjustment for AMP expenses of the appellant has ever been made, being not required, for the reasons explained in sub-paragraph (b) above. The appellant's remuneration was always adequate and thus, there was no occasion or requirement on the part of the appellant to lower or adjust the import price of the goods on account of AMP or brand building expenses. d.The relevant figures with reference to gross margins and intensities of distribution functions, both of the appellant and the comparable companies, which incidentally have been accepted by the transf....
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....essee has to substantiate its claim and demonstrate the same qua the comparables allegedly incorrectly considered to be so before the TPO. The issue pertaining to inclusion of selling expenses in the AMP basket of expenses which were directed to be excluded by the Tribunal in assessee's own case in the immediately preceding assessment year which direction has been given following the Special Bench in LG Electronics case is also restored to the TPO over ruling the directions of the DRP which are in direct conflict with the order of the Tribunal in assessee's case including order of the Special Bench. The issue of mark-up accordingly which is claimed to not arise in the present proceedings is also restored to the TPO. 11. In terms of the above submissions, we hold on perusing the material available on record that the assessee's ground assailing the DRP order for not referring to the order of the Tribunal in assessee's own case as academic not requiring any adjudication. The reason for coming to the said conclusion is based on the assessee's submissions that the order was brought to the notice of the DRP on 13.11.2013 , it is seen that the DRP's order is dated 13.11.2013. It is also ....
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....n relevant facts of the case to be compared and the assessee's case, by making suitable plus or minus adjustments. 17.3. From the arguments of the ld. counsel for some of the interveners it transpires that the nature and terms of the agreements between the Indian AEs and foreign AEs differ from case to case. In some cases there is payment of royalty for the brand use, while in others it is not. In some cases, the tenure of agreement is less, while in others it is more, while still in some others there is no reference to the termination date of the agreement. In some cases, the Indian entity has paid a consolidated payment towards fees for the use of technical knowhow and royalty. In some cases, the payment is only for technical know-how, still in some others the payment is only for royalty. In some cases the Indian enterprise is engaged in manufacturing of the products having foreign brand, while in others, the Indian entity is only a distributor. In some cases, the Indian entity has got subsidy on the purchases made from the foreign AE, while in others, there is no such subsidy. In some cases, the foreign entity has presence in Indian only in one field through one Indian enterpri....
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....field or different fields ? Where it is involved in different fields, then is there only one Indian entity looking after all the fields or there are different Indian AEs for different fields ? If there are different entities in India, then what is the pattern of AMP expenses in the other Indian entities ? 12. Whether the year under consideration is the entry level of the foreign AE in India or is it a case of established brand in India ? 13. Whether any new products are launched in India during the relevant period or is it continuation of the business with the existing range of products ? 14. How the brand will be dealt with after the termination of agreement between AEs ? 17.5. In fact, it is the collective effect of the above factors in the comparable case and the case to be compared with, which needs to be kept in view before determining the cost/value of the international transaction. There can be no straitjacket formula for giving weight to each of these factors. What is result of each of such factors in determining the cost/value of international transaction depends on the facts of each case. It is the duty of the TPO to give due regard to such factors by making suitable ....
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....ers and salesman bonus etc. from the AMP bundle of expenses following the precedent in assessee's own case in 2008-09 assessment year decided by Tribunal which direction is further fortified by the precedent laid down by the Special Bench in the case of L.G. Electronics case and similar directions following the Special Bench have been given in:- S.No. Judicial Precedents ITA No. Pronouncement Date 1. L.G. Electronics India Pvt. Ltd. 5140/Del/2011 15.01.2012 2. Glaxo Smithkline Consumer Healthcare Ltd. vs. ACIT 1148/Chd/2011 02.04.2013 3. Haier Appliances India (P.) Ltd. vs DCIT 4680/Del/2010 24.05.2013 4. Canon India Pvt. Ltd. vs DCIT 4602/Del/2010, 5593/Del/2011 & 6086/Del/2012 03.05.2013 5. Panasonic Sales & Services India Pvt. Ltd. vs ACIT 1911/Mds/2011 03.06.2013 6. Diageo India Private Limited vs DCIT 7932/Mum/2011 19.07.2013 7. Ford India Pvt. Ltd. vs DCIT 2089/Mds/2011 04.06.2013 8. Reebok India Co. vs ACIT 5857/Del/2012 14.06.2013 9. Rayban Sun Optics India Ltd. vs DCIT 5933/Del/2012 28.02.2013 10. Sony India Pvt. Ltd. vs ACIT 4978/Del/2011 & 6381/Del/2012 07.06.2013 12. The fact relatable to Ground No-2 raised by the ....
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....ring such services to any other AEs/independent parties also. If yes the details thereof including the rates/amount charged from such AEs along with mark up if any. 13. If the AE has rendered services to more than one entity including the assessee company, then the basis of allocation amongst various entities may be furnished. Please also furnish the basis of choosing a particular allocation key. 14. If the above information is not furnished, complete in all respects, along with contemporaneous documentary evidences, the arm's length payment for these intra group services would be treated as Nil by applying CUP method." 12.1 In response to the same the assessee gave its reply dated 14.12.2012 which is extracted in the TPO's order and is reproduced hereunder for ready-reference:- 11.1. "The assessee submitted its reply vide its letter dated 14.12.2012 submitted as under:- 21 With respect to the IT related needs of the Company, BMW Group supports BMW India by providing online troubleshooting services for its various hardware/software related problems and helps maintaining the IT infrastructure used by BMW India. In lieu of this support, as part of Class I transactions, BMW I....
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....iver, DIVA) * Provisioning of a Client-end Email interface {MS Outlook client installations, Mail address settings, Web access interfaces). * Access to the BMW group-wide calendaring infrastructure * Access to the BMW Intranet * Anti Virus (File definition update, configuration management) * Systems Management (SMS2003, Software Self Service) Email Services * Mailing List Management * a Antivirus / AntiSpam * Mail on demand (MOD) * Non-MOD Support * Group Importer System operations: GIS (Group Importer System) is an integrated software solution mainly based on SAP R/3 and SAP Automotive to cover the following business processes of BMW India: * Vehicle processing * Warranty processing * Parts processing * Financial accounting * Controlling * Local purchasing * Online Dealer Access Provision / operation of a SAP system and/or the components that comprise a SAP system. * Basic operation of Windows and Unix servers, operation of hardware, operating system, antivirus client, monitoring agent, volume manager and clusters as a framework, monitoring, resolution of incidents, implementation of changes, patches. * Upon request by authorized application owner or the serve....
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....er to identify the charges relating to services, there should be a mechanism in place which can identify (i) the cost incurred by the AE in providing the intra group services and (ii) the basis of allocation of cost to various AEs. 4. Whether a comparable independent enterprise would have paid for the services in comparable circumstances?" 12.3 Considering the various judicial precedents he further culled out in para 11.7 at page 52 that the following crucial issues need a mention. These are extracted for ready-reference:- 11.7. "It may be mentioned that as already stated above the following are crucial issues to be seen in such related party transactions:- a. The taxpayer's agreement with the associated enterprises related to intra group services is to be examined to see as to what kind of services were to be provided by the AE to the taxpayer. As normally such agreements refer to a large number of services which could be rendered by the AE, the taxpayer has to specify the service[s] which is actually received by it for which the payment is made. b. Whether the taxpayer really needed such services or not. IF so, what direct or tangible benefit it has derived. c. Contemporane....
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....nd concrete benefits have actually accrued to the assessee. * Under uncontrolled circumstances any independent enterprise having skilled and sufficiently trained manpower would not have been willing to pay any third party to do so. In my opinion, services which are incidental or mere duplicity do not fall in the category of intra group services, * However, without prejudice to the above discussion, it may not be impossible, however, for a group member to benefit incidentally from services being provided to one or more fellow affiliates. For example in this case, the assessee might be benefited from services rendered by AE in general to its other AEs, However, such incidental benefits do not give rise to Intra Group Services and cannot be regarded as giving rise to arrangement subject to arm's length pricing as stipulated in OECD TP guidelines paragraph 7.13 under Chapter VII. These findings lead to an irresistible conclusion that payments for liaison services allegedly provided by the AEs are not at arm's length price. * Moreover, it is seen from the details contained in the transfer pricing report of the assessee submitted under Rule 10D that the assessee had not conduc....
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....he TPO has made a clear findings that there are no details available on record in respect of the nature of services rendered by Singapore affiliate to the assessee company. Therefore, we are of the considered view that the TPO is justified in holding that the assessee has not proved any commensurate benefits against the payments of service charges to the Singapore affiliate. Therefore, the TPO is justified in making the adjustment of ALP under sec.92CA of the Income Tax Act 1961.' In the case of Knorr-Bremse India Pvt. Ltd. vs. ACIT [2012] 27 taxmann.com 16 (Delhi) the Hon'ble ITAT, Delhi has held that "The perusal of emails and other contemporaneous record only goes to reveal that incidental and passive association benefit has been provided by the associate enterprise. In this view of the matter there could neither be any cost contribution or cost reimbursement nor payment for such services to the AE. The TPO, therefore, has rightly adopted Nil value for benchmarking the arm's length price in respect of both these services. We, therefore, do not find any reason to interfere with the well reasoned conclusion reached by the AO on this count. The grounds raised in appeal in this resp....
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.... for the Appellant that are required by it to communicate within the Company, BMW Group and externally, and carry out its day-to-day operations. Complete disallowance of the payment/expenditure by the Ld. TPO is unwarranted as the Ld. TPO is bound to determine the ALP of a transaction and not disallow a payment/expense completely. In this regard, the Appellant placed reliance on the following cases (Refer pages 116 to 117 of Appeal set):- * AWB India Pvt. Ltd. {TS-67-ITAT-2013 (DEL)-TP}-The Tribunal held that a general observation by the ld. TPO that no independent party would have made such payment in uncontrolled circumstances, is expected to examine the international transactions and make a suitable adjustment, but a wholesale disallowance of the expenditure, particularly on extraneous grounds, is neither contemplated, nor authorized. * Ericson India Pvt. Ltd. vs DCIT (TS-319-ITAT-2012 (DEL))-The Tribunal held that it would be wrong to hold that the expenditure should be disallowed only on the ground that these expenses were not required to be incurred by the assessee. *McCann Erickson India Pvt. Ltd. vs Addl. CIT [TS-391-ITAT-2012(Del)]-The Tribunal has held that the value o....
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....t a direction may be given that on identical reasoning higher depreciation for Cisco Switch mentioned at Serial No.27 totaling 3 in number may also be allowed. This fact it was submitted is found demonstrated from page 154-155 of the appeal set wherein depreciation @ 15% has been allowed for 33 items out of which the claim qua the issue is referred to at serial No-25. Addressing the other assets on which higher depreciation at 60% should have been allowed, attention was invited to Serial No-10 which refers to 3 Panasonic Projectors valued at Rs. 1,18,125/- and Serial No-26 & 27 page no- 155 of the appeal set which refers to Touch Screen thin client X29 and Touch screen thin X12 totaling 3 & 4 in number respectively valued at Rs. 19,55,934 and Rs. 8,09,352/-. It was submitted that higher depreciation qua these assets should have been granted as they can be used only with computer and in terms of the judicial precedents, the same deserves to be allowed. 18. Whereas the Ld. CIT DR though had no objection to the grant of higher depreciation on account of 3 Cisco Switches on the same reasoning for which higher depreciation was allowed by the AO himself the only request was that the AO ....