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TMI Blog2014 (1) TMI 921X X X X Extracts X X X X X X X X Extracts X X X X ..... ition taken by the TPO, the DRP has not expressed any reasons for coming to such a conclusion with regard to the arrangements or materials placed before it by the assessee – the contention of the assessee that there is violation of rules of principles of natural justice by not considering the submissions of the assessee and documentary evidences produced to be acceptable - matter remitted back to the DRP for fresh consideration – Decided in favour of Assessee. Computation of operating margin – Adjustment towards cost of repairs and plant & machinery and incremental depreciation not considered – Held that:- Various issues raised by the assessee before the DRP in relation to the ground have not at all been considered by the DRP – matter r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.1 are general in nature, hence, need no adjudication. 3. Ground Nos. 2.2 to 2.5 relate to the issue of royalty payment. 4. Briefly the facts are the assessee formerly known as Saint- Gobain Vetrotex India Ltd. was a wholly owned subsidiary of Saint-Gobain Vetrotex International S.A., France (SGVI) and part of Saint Gobain Group. The assessee is engaged in the business of manufacturing and trading of glass fibre products and related articles. For the AY under dispute, the assessee filed its return of income on 29/10/2007 by declaring total income at Nil under the normal provisions after setting off of brought forward losses and book profit of Rs. 5,54,63,007/- u/s 115JB of the Act. The assessee's return was initially processed u/s 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arm's length rate no separate adjustment to the ALP was suggested excepting royalty payment of Rs. 4,27,37,655/-, which was not accepted by the TPO and treated as adjustment to be made u/s 92CA of the Act. As a consequence of the order passed by the TPO, the AO passed a draft assessment order proposing additions of Rs. 4,27,37,655/- as per the order of the TPO. The AO also disallowed the claim of depreciation on non- competing fees and marketing net work charges. The assessee filed objection against the draft assessment order before the DRP. 5. The DRP rejected the objections of the assessee and confirmed the draft assessment order. 6. Being aggrieved of the aforesaid order of the DRP, the assessee is in appeal before us. 7. The lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the DRP though he could not be able to controvert the contention of learned AR that the DRP while rendering its decision has not considered all the documentary evidences submitted by the assessee. 9. We have heard the submissions of the parties and perused the material on record. The limited grievance of the assessee in this ground is that the DRP has not at all considered either submissions of the assessee or documentary evidences produced before it while rejecting the assessee's claim of royalty payment to its AE. On perusal of the order of the DRP, prima-facie, it gives an impression that they have not considered the submissions of the assessee or the documentary evidences while rejecting the claim of the assessee. The or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Needless to mention the assessee shall be afforded reasonable opportunity of being heard in the matter. These grounds of the assessee are thus allowed for statistical purposes. 10. Ground No. 2.6 is with regard to computation of operating margin by the assessee at 3.59% without considering the adjustment towards cost of repairs and plant machinery and adjustment towards incremental depreciation by the assessee. 11. The learned AR submitted before us that the assessee in case of its furnace assets (included in Plant Machinery) has adopted higher rate of depreciation based on the estimated useful life in comparison to the rates as prescribed in Schedule XIV of the Companies Act. However, the comparables selected by the TPO claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee had specifically raised the issues before them. After considering the submissions of the parties, we remit the issue back to the DRP, who shall consider this issue afresh after taking into account all the facts and materials on record and pass a reasoned order after affording reasonable opportunity of being heard to the assessee. 15. In ground No. 3, the assessee has challenged the disallowance of depreciation of non-compete fees and marketing net work rights. 16. We have heard the submissions of the parties and perused the material on record. The claim of depreciation on non-compete fees and marketing net work rights have been disallowed by the AO and confirmed by the DRP on the ground that they do not come within the definition of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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