2026 (3) TMI 331

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....s of the case are that the assessee company is engaged in the business of supply of spare parts and other equipment used by engine-based power plants and oil and gas pumping systems. The assessee during the previous year, has operated for only Two months from 04.02.2012 to 31.03.2012. It is the second round of proceedings wherein in first round, amortization of goodwill of INR 1,99,27,211/- being the extra-ordinary expenses whether is to be taken as operating expenses or not was considered by the Tribunal and matter was remand back to the file of AO/TPO for fresh verification of the claim of the assessee. Thereafter, TPO vide order dated 27.01.2023 has again worked out the amount of adjustment towards purchase of trading goods wherein as ag....

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....e appellant's case in not properly following the directions of the Hon'ble ITAT with respect to treatment of amortization of goodwill while re-computing the PLI of the assessee at an entity level, under Transactional Net Margin Method (TNMM) for arm's length determination of the purchase of traded goods from the Associated Enterprise (AE) of the assessee, which is against the principles of judicial hierarchy. 4. That the directions given by the Ld. DRP in Para 8.4 of its order are contrary to the issue under consideration specially when the issue was to be explained as per the directions of Hon'ble ITAT in the first round of appeal, which is erroneous and bad in law. 5. Without prejudice to above, the Ld. A....

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....rating in nature for computing operating PLI as per TNMM. The assessee while claiming of depreciation on Goodwill (intangibles) accounted the same for due to a Business purchase under Sec 32 of the Income Tax Act and submitted that the same cannot change the extra ordinary nature of Goodwill amortized in the Audited Financials as per the Companies Act, which is used for the computation of ALP (including PLI) under Chapter-X of the Act, as these are mutually exclusive. The Ld. AR submitted that the assessee had also objected the treatment of goodwill as operating before the ITAT in AY 2013-14 wherein the Tribunal did not adjudicate this ground since the assessee had got the entire relief of TP adjustment without adjudicating this. But the TP....

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....justice. Thus, Ground No.6 is partly allowed for statistical purposes." 7. Ld.AR for the assessee submits that though the Co-ordinate Bench has held that the assessee is not entitled for depreciation on the goodwill however, has very clearly accepted the alternate contention of the assessee that goodwill should be treated as extraordinary item which effect the normal profitability for the years on which it is amortized and should be adjusted for computing the PLI. By observing so, only for the purpose of verification whether assessee had claimed depreciation and not on goodwill, the matter was remanded back to the file of AO. However, AS per the ld. AR, in the remand order, the TPO has not followed the directions of Tribunal and wrongly ....