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TMI Blog2014 (6) TMI 469X X X X Extracts X X X X X X X X Extracts X X X X ..... uter accessories and peripherals cannot be used without the computer - they are the part of the computer system, they are entitled to depreciation at the higher rate of 60% - Decided in favour of Assessee. - ITA No. 5749/Del/2011 - - - Dated:- 29-5-2014 - Shri R. P. Tolani And Shri B. R. Jain,JJ. For the Appellant : Shri Ved Jain FCA Smt. Rano Jain CA. Shri V. Mohan AR For the Respondent : Shri Peeyush Jain CIT (DR) Shri Yogesh Kr. Verma CIT (DR) ORDER Per R. P. Tolani, J.M: This is assessee s appeal against the assessment order dated 29-8- 2011, passed by the ACIT, Circle 18(1), New Delhi U/s 143(3)/144C of the Income-tax Act, 1961, pursuant to the directions of Dispute Resolution Panel ( DRP ), pertaining to assessment years 2007-08. Following grounds are raised: 1. On the facts and circumstances of the case the order passed by the learned AO under section 143(3) read with section 144C of the Act is bad, both in the eye of law and on facts. 2. On the facts and circumstances of the case, the learned AO has erred, both on facts and in law in assessing the loss of the appellant at Rs. 108,32,69,967/- as against loss of Rs. 130,56,81, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of adjustment of arm s length price in respect of expenditure incurred by the assessee on advertisement and publicity. During the year under consideration the assessee has incurred a total expenditure of Rs.49,68,34,848/- on account of sales promotion and a sum of Rs.65,10,19,077/- on account of advertisement. Assessee s return of income was supported by a TP report in accordance with the provisions. 2.2. The learned TPO called for details in respect of this expenditure, assessee contended that out of expenditure in question an amount to the extent of Rs.44,68,34,848/- was incurred on account of sales promotion by way of discounts and incentives, servicing cost, repairs, etc., therefore, this amount cannot be considered as promotion of brand. 2.3. The TPO out of the above list, deducted the expenditure only on account of servicing cost, incentive to dealers but did not deduct expenditure on account of discounts and incentives to the extent of Rs.34,43,94,922/-. Thus, a total expenditure of Rs. 99,54,13,999/- was considered as expenditure on AMP for TP adjustment. 2.4. It was further contented that sale to the extent of 21.68% was in respect of an Indian model of two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ademark/logo; ii) bright line itself is not one of the prescribed method to determine the arm s length price; iii) No markup is required as the assessee is not in any type of advertisement business; iv) The comparable selected for markup are not justified. 2.10. The DRP, however, rejected all the contention of the appellant and confirmed the order of the TPO. 3. Ld. counsel for the assessee Shri Ved Jain contends that apropos TP additions the main issue in question pertains to addition of Rs.22,23,28,349/- worked out by TPO. While doing so ld TPO has in effect partly applied the Special Bench of the ITAT in the case of L.G. Electronics India Pvt. Ltd. vs. ACIT 152 TTJ 273, 22 ITR (Trib.) 1 by deducting the amounts attributable to servicing cost and incentive to dealers. However ld TPO without giving any cogent reasons or justification did not deduct expenditure on account of discounts and incentives to the extent of Rs.34,43,94,922/- which are also deductible by L G Electronics judgment. Thus the ld. TPO s order suffers from this manifest inconsistency in applying the SB judgment which is otherwise accepted by the department. 3.1 The L.G. Electronics Special Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his appeal. After such exclusion the following calculation will emerge:- Rs. Total expenditure considered by the TPO in para 7.14 on page 654 99,54,13,999 Less: Expenditure incurred on discount and incentive to dealers 34,43,94,922 Balance 65,10,19,077 Proportionate expenditure towards Gladiator model (21.68%) as allowed by TPO in para 7.14 14,11,40,936 Balance 50,98,78,141 Amount eligible as per TPO 18,37,88,712 Balance 32,60,89,429 Markup of 13.04% on above expenditure as per TPO 4,25,22,061 36,86,11,490 Amount received from associated enterprise, YMC, Japan by way of reimbursement and allowed by the TPO 45,11,86,056 3.4. Since the amount received by the appellant company by way of reimbursement from its associated enterprise is more than the amount computed, no adjustment will be requ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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