2012 (8) TMI 1208 - AT - Income Tax

Summary

Issues involved: Transfer pricing adjustments, depreciation rate on UPS, disallowance of expenses for non-deduction of TDS.

Transfer Pricing Adjustments: The Dispute Resolution Panel confirmed adjustments under section 92CA of the Income-tax Act, 1961, totaling Rs. 421,00,000 out of proposed adjustments of Rs. 44,200,000. The appellant contended that the TP adjustment was not valid as the international transactions were at arm's length based on the Transactional Net Margin Method. The appellant argued that the advertisement and marketing expenses were for product promotion, not just brand promotion. The Tribunal set aside the issue for the Assessing Officer to decide afresh.

Depreciation Rate on UPS: The Assessing Officer erred in reducing the depreciation rate on UPS from 60% to 15%, considering it as Plant and Machinery. The appellant argued that UPS is an integral part of the computer system and should be eligible for higher depreciation. The Tribunal allowed this ground of the appellant based on previous rulings.

Disallowance of Expenses for Non-deduction of TDS: The Assessing Officer disallowed expenses of Rs. 293,379 for non-deduction of TDS on traveling expenses reimbursed to Luxottica S.r.L Italy. The appellant argued that there is no TDS requirement on reimbursement of expenses. The Tribunal allowed this ground of the appellant.

Conclusion: The Tribunal partly allowed the appellant's appeal for statistical purposes, setting aside the TP adjustment issue for fresh consideration, allowing higher depreciation rate on UPS, and accepting the non-deduction of TDS on reimbursed expenses.