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TMI Blog2013 (9) TMI 264X X X X Extracts X X X X X X X X Extracts X X X X ..... comparable cases nor examined the effect of the above discussed relevant factors on the question of determination of the cost/value of international transaction, the ends of justice will meet adequately if the order of the TPO and that of the AO giving effect to such order is set aside and the matter is restored to the file of the TPO for determining the cost/value of the international transaction and the consequent ALP afresh as per law – In the present case also, matter is restored to the file of the TPO for determining the cost/value of the international transaction and the consequent Arm's Length Price afresh as per law Rate of depreciation to be applicable on UPS and Printer - Depreciation on UPS and printer from 60 percent to 15 percent, by treating the same as Plant and Machinery without appreciating that UPS and printer is "integral part of the computer system" – Held that:- Reliance has been placed upon the judgment in the case of Orient Ceramics and Inds. Ltd [2011 (1) TMI 26 - DELHI HIGH COURT], wherein it has been held that depreciation @ 60% on such items shall be allowed – In the instant case also, depreciation allowed @ 60% - Decided in favor of Assessee. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ggrieved with the order of AO, the assessee is in appeal before us and has taken following grounds of appeal: - 1. "That, the impugned order of assessment framed by the ld. DCIT, Circle 15(1), New Delhi (hereinafter referred to as 'the ld. AO') in pursuance to the directions of the Hon'ble Dispute Resolution Panel - II (hereinafter referred to as 'the Hon'ble DRP') under section 143(3) read with section 144C of the Income-tax Act, 1961 ('Act'), is a vitiated order having been passed in violation of principles of natural justice and is otherwise arbitrary and is thus bad in law and void ab-initio. 2. That without prejudice, the ld. AO has grossly erred in computing the income of the assessee company at Rs. 387,416,762 against the returned total income at Rs. 299,334,424. Thus, the addition of Rs. 80,082,338 made to the returned total income is highly unjustified and is apparently a case of high pitched assessment. 3. That the Hon'ble DRP has committed gross errors when it confirmed the adjustments aggregating to Rs. 87,866,465 out of the Transfer Pricing adjustment of Rs. 128,389,628 initially proposed by the ld. TPO under section 92CA of the Act and only granti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany are "excessive" on the basis of a "bright line limit" arrived at by considering inappropriate comparables, not having similar product/brand profile as the Assessee company. 3.8 That the ld. TPO/DRP has erred in concluding that trade and channel discounts offered by the assessee company to dealers results in promotion of brands owned by Luxottica group. Furthermore, the ld. TPO has in this regard, ignored the fact that in the preceding assessment year i.e., AY 2007-08, the ld. TPO had accepted the assessee company's plea of excluding trade and channel discounts from advertisement expenses for computing the 'bright line limit'. 3.9 That the Hon'ble DRP has failed to appreciate that once the ld. TPO had accepted that the international transactions entered into by the assessee company were at arm's length on the basis of Transactional Net Margin Method (TNMM) as the most appropriate method, he could not have undertaken an analysis of the individual elements of cost and the same is inconsistent with the tenets of application of TNMM. 3.10 That the ld. DRP has erred in law and in fact by endorsing the ld. TPO's approach of re-characterizing the assessee company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Sr. Counsel, Shri G.C. Srivastava submitted that ground nos. 1 to 3 are general and, therefore, do not require any specific adjudication. He further pointed out that as far as ground nos. 3.1 to 3.14 are concerned, they are in regard to TP adjustments relating to expenditure incurred by assessee in regard to advertisement, marketing and business promotion (AMP expenses). Ld. Sr. Counsel further submitted that in view of the decision of Special Bench in the case of L.G. Electronics India (P.) Ltd. v. Asstt. CIT the matter needs to be adjudicated in the light of observations of Tribunal particularly in para 17.4 of its order. Ld. Counsel for the assessee further pointed out that in A.Y. 2007-08 also this issue has been restored to AO by Tribunal vide its order dated 9th August, 2012 in ITA No. 5282/Delhi/2011. 6. Ld. DR relied on the order of AO. 7. We have considered the submissions of both the parties and have perused the record of the case. 8. The TPO vide its order dated October 12, 2011 held that AMP expenditure incurred in excess of the mean "expenditure incurred on AMP upon sales" of comparable companies (i.e. Bright Light) can be considered towards promoting the bran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consequent Arm's Length Price afresh as per law after allowing a reasonable opportunity of being heard to the assessee. 11. In the result, ground nos. 3.1 to 3.14 are allowed for statistical purposes. 12. Ground no. 4 reads as under: - 4. That on the facts and the circumstances of the case and in law, the ld. AO has erred in reducing the rate of depreciation on UPS and printer from 60 percent to 15 percent, by treating the same as Plant and Machinery without appreciating that UPS and printer is "integral part of the computer system" and have been held to be in the nature of 'Computers' by the Hon'ble jurisdictional High Court in the case of BSES Rajdhani Powers Ltd. (ITA No. 1266/2010) and by the Hon'ble Special Bench of Mumbai Tribunal in the case of Datacraft India Limited (133 TTJ 377). 13. Brief facts apropos this issue are that AO noticed that assessee had claimed depreciation @ 60% after considering the assessee's submissions. He allowed depreciation @ 15% and made an addition of Rs. 2,15,873/-. 14. Having heard both the parties, we find this issue is covered by the decision of Hon'ble Delhi High Court in the case of Orient Ceramics and Inds. Ltd., wherein in p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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