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2021 (7) TMI 157 - ITAT DELHITP Adjustment - Arm's Length Price - royalty to the Associated Enterprises (AE) - contention raised by the ld. DR for the Revenue based upon the findings returned by the ld. TPO/DRP in Assessment Year 2006-07 that no evidence has been brought on record by the taxpayer to prove rendition of services - HELD THAT:- Following the order passed by the coordinate Bench of the Tribunal in taxpayer’s own case for AY 2005-06 [2020 (12) TMI 723 - ITAT DELHI] we are of the considered view that ld. TPO/DRP have erred in treating the value of the transaction at nil by ignoring the entire evidence brought on record by the taxpayer without making any analysis or bringing on record evidence to support their findings that no material benefit has been received by the taxpayer and order is also not supported with any evidence to prove that taxpayer’s business could be managed and operated by exclusion of various technical operating and strategic services extended by the AE to the taxpayer. So, in these circumstances, addition made by the TPO and confirmed by the ld. DRP for AY 2006-07 is ordered to be deleted. Addition u/s 40(a)(ia) - payment of salary to non-resident - global account management expenses - HELD THAT:- As decided in own case [2020 (12) TMI 723 - ITAT DELHI] we are of the considered view that the amount paid by the taxpayer to M/s. Expeditors International of Washington Inc. on account of global account management expenses cannot be treated as payment of salary to non-resident but it was in the nature of reimbursement of expenses which cannot be subjected to deduction for TDS, provision u/s 40(a) of the Act being not applicable. We are of the considered view that amount of expenses incurred by the taxpayer on account of VSAT charges cannot be treated as charges for consultancy or technical services and as such, cannot be subjected to deduction of tax under section 40(a) of the Act. Consequently, order passed by the AO/DRP in AY 2006-07 is not sustainable, hence ordered to be set aside and addition made on account of global account management charges and VSAT charges are ordered to be deleted. Disallowing the lease line uplinking Charges (VSAT charges) as royalty in view of the Explanation 6 to section 9(1)(vi) - HELD THAT:- In view of the decision rendered in case of Engineering Analysis Centre of Excellence Pvt. Ltd. [2021 (3) TMI 138 - SUPREME COURT] wherein it is held that unilateral amendment as made in the domestic law cannot be read into Treaty. Hon’ble Apex Court decided that Explanation 6 to section 9(1)(vi) is not applicable to the facts and circumstances of the case. Unilateral amendment in Act cannot be read in as DTAA. Consequently, addition made by the AO and confirmed by the ld. CIT (A) in AY 2008-09 is ordered to be deleted Excess depreciation claimed by the taxpayer on UPS, printer, etc. - as per AO depreciation on computer accessories @15% as against 60% claimed by the taxpayer - HELD THAT:- As decided in own case [2020 (12) TMI 723 - ITAT DELHI] we are of the considered view that taxpayer is entitled for depreciation @ 60% because computers cannot be run without its accessories i.e. UPS, printer, etc. Education cess (EC) and Secondary and Higher Education Cess (SHEC) paid on the income tax was an allowable deduction for computing total income - HELD THAT:- Following the decision rendered in case of Sesa Goa Ltd. [2020 (3) TMI 347 - BOMBAY HIGH COURT] and order passed by the coordinate Bench of the Tribunal in case of Sicpa India Pvt. Ltd. [2020 (4) TMI 425 - ITAT DELHI] we are of the considered view that education cess and secondary & higher education cess is an allowable deduction being not hit by the provisions of section 40(a)(ii) of the Act.
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