TaxTMI 
TaxTMI 
2019 (7) TMI 24
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.... 1. General: The learned DCIT, pursuant to the directions of the Hon'ble DRP has erred in law and on the facts and in circumstances of the case in making an adjustment amounting to INR 38,25,56,571/- (INR 38,20,01,686/- to the value of international transactions entered into by the Appellant with its associated enterprise ("AE") with respect to export of transaction processing service, INR 41,533/- on account of excess claim of depreciation and INR 5,13,352/- on account of disallowance of repairs and maintenance expenses). 2. Erroneous selection of comparable companies The learned DCIT, pursuant to the directions of the Hon'ble DRP has erred in law and on the facts and circumstances of the case i....
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....The learned DCIT, pursuant to the directions of the Hon'ble DRP has erred on the facts and in circumstances of the case in non-granting risk adjustment to the Appellant. 6. Disallowance of claim of depreciation on professional wireless devices The learned DCIT, pursuant to the directions of the Hon'ble DRP, has erred in law and on facts in disallowing the claim of depreciation of INR 41,533 on professional wireless devices on the ground that the same are not in the nature of computer or computer related items. 7. Disallowance of repairs and maintenance expenses under section 37 of the Act The learned DCIT, pursuant to the directions of the Hon'ble DRP, has erred in law and on the facts in disa....
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....concerns as comparables whose weighted average worked out to 10.87%. Hence, the claim of assessee that since the margins were better than the margins of comparables, international transactions were at arm's length price. The TPO however, only selected two of the concerns selected by assessee, which were later rejected, and the TPO applied data of contemporaneous period and by revising the filters had finally selected four concerns as comparables, which are as under:- Sr. No. Name of the Company PLI = OP/OC% 1 Excel Infoways Ltd. (Seg.) 41.48 2 Ninestar Information Technologies Ltd. 19.57 3 Microgenetics Systems Ltd. 20.43 4 Universal Print Systems Ltd. (Seg.) 59.40 7. Since the average mea....
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....ard, the learned Authorized Representative for the assessee placed reliance on the orders of Pune Bench of Tribunal in Emerson Climate Technologies (India) Pvt. Ltd. Vs. DCIT in ITA Nos.359/PUN/2016 and 2847/PUN/2016, relating to assessment years 2011-12 and 2012-13 along with SA Nos.45 & 46/PUN/2018, order dated 25.04.2018 and also in Cummins Turbo Technologies Limited Vs. DCIT in ITA No.388/PUN/2017, relating to assessment year 2012-13, order dated 21.01.2019. 9. We find that the issue of comparable following different module wherein filter of employee cost is applied and the concern has low employee cost to sales ratio, then the margins of such concern cannot be applied as in ITES segment it is an admitted position that the said segme....
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.... employee cost filter, then also the said concern cannot be picked up as comparable. Similarly, the employee cost ratio vis-à-vis sales ratio of Universal Print Systems Ltd. needs verification and in case it is less than 25%, then the said concern is not to be included in the final list of comparables. The Assessing Officer shall afford reasonable opportunity to the assessee and after verification, determine the arm's length price of international transactions." 10. Following the same parity of reasoning, we hold that where a concern is selected was showing low employee cost to sales ratio, then such concern cannot be selected while benchmarking international transactions of assessee in ITES segment, which is an employee orien....
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....other TP grounds of appeal become academic. Accordingly, we hold so. 12. Now, coming to corporate issue raised vide ground of appeal No.6 i.e. claim of depreciation on wireless devices. The assessee was of the view that the said devices were in the nature of computers and hence, were entitled to depreciation @ 60%. However, depreciation was allowed to assessee as office equipment @ 15%. The DRP confirmed the disallowance proposed by Assessing Officer in the draft assessment order, Assessing Officer in turn, passed final assessment order. 13. The claim of assessee before us is that the said devices were multipurpose devices used in BPO industries and since it was supposed to be intelligent wireless systems, which were ideal for BPO off....