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TMI Blog2015 (7) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... cepted the applicability of higher rate of depreciation by relying on the Special Bench order passed in the case DCIT vs. Data Craft India Ltd. (2010) 133 TTJ (Mum) (SB) 377. The Hon'ble Delhi High Court in the case CIT vs. BSES Yamuna Powers Ltd. 2010-TIOL-636-HC-DEL-IT has approved similar view by holding that depreciation on computer peripherals should be allowed at 60% instead of the regular rate of depreciation applicable to machinery. No distinguishing feature was pointed out by the ld. DR in the facts of the instant year vis-à-vis the preceding year. In view of the aforediscussed legal position, we decide this issue in favor of the assessee. 4. The next issue is against the disallowance of depreciation on company owned vehicles amounting to Rs. 1,85,45,102/-. 5. After considering the rival submissions and perusing the relevant material on record, we find it as an undisputed fact that the company provided vehicles to its employees for their use for which the purchase price was paid by the company to the extent it did not exceed the fixed benchmark. The major reason given by the AO for disallowing depreciation is the personal use of vehicles by the employees of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny disallowance on account of running and maintenance expenses of the vehicles used by the employees of the company. Similar view has been taken by the tribunal in assessee's own case for the preceding year. Following the same, we, order for the deletion of the addition. 8. Ground No. 7 is against not following the direction of the DRP about charging of interest u/s 234A. 9. Having heard both the sides and perused the relevant material on record, we find that the DRP dealt with the issue of charging of interest u/s 234A in para 3.14 of its direction and made the following observations:- "The CBDT had in order u/s 119 issued in file number 225/13/2007 in LTA-II (pt) had extended the last date for filing the return to 15.11.2007 and assessee filed it on 13.11.2007. The AO is directed to verify the facts and take action as per facts as record and as per law." 10. It is an admitted position that the AO passed the final order without complying with the above direction given by the DRP in the context of charging interest u/s 234A. Under such circumstances, we set aside the assessment order on this issue and direct the AO to comply with the direction given by the DRP. Needless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sted the following six companies as comparables:- S.No. Name of the company WC Adjusted OP/ OC-After DRP Directions 1. IDC India Limited 13.94% 2. TSR Darashaw (Segmental) 33.90% 3. TCF Consulting Engineers Ltd. 18.04% 4. Vimta Labs Ltd. 26.34% 5. Water & Power Consultancy Services (India) Ltd. (WAPCOS) 32.92% 6. ICRA Management Consulting Services Ltd. 8.83% Arithmetic Mean 22.33% 13. With the reduced OP/TC of the average of the above mentioned six comparables at 22.33%, the amount of transfer pricing adjustment was slashed down to Rs. 43,28,67,764/-. The AO made the above addition in the impugned order. The assessee is aggrieved against such addition on account of transfer pricing adjustment so made in the final assessment order. 14. We have heard the rival submissions and perused the relevant material on record. The controversy before us relates to the determination of ALP of the international transaction of 'Provision of marketing support services.' At this juncture, we want to record that the assessee adopted TNMM as the most appropriate method for determining the ALP of this international transaction, which method ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e before the Tribunal, which has since been disposed of by the Tribunal vide its order dated 18th December, 2014. A detailed description of the nature of provision of marketing support services has been set out in paras 13 and 14 of the above referred order of the tribunal, which is adopted for the purposes of the instant year as well without burdening this order with the repetition of the same. The ld. DR was also fair enough to admit that there is no difference in the nature of marketing support services provided by the assessee during the instant year as well as the preceding year. With the above understanding of the nature of marketing support services rendered by the assessee to its AE, we will now try to ascertain whether the above referred four companies are, in fact, comparable or not. i. TSR Darashaw (Segmental) 16. This company was chosen by the assessee as comparable in its transfer pricing study report. The TPO accepted the functional comparability of this segment of the company with the assessee's marketing support services agreement. The ld. AR contended that this company was wrongly included in the list of comparables and the same should be excluded. The ld. DR obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n considered by the assessee as comparable. This company on an overview is a broking and investment banking house. Its other segments are : 'Registrar and Transfer Agent activity (R&D)' and 'Records management activity (Records).' The segment of 'Pay Roll' was considered by the assessee as comparable in its TP study report and the same is now assailed. Under the 'Pay Roll' segment, this company undertakes pay roll and employee trust fund administration and management. When we compare the nature of pay roll activity undertaken by this company with the marketing support services rendered by the assessee to its AEs, we find that both are way apart from each other. There can be no logical comparison between a specific pay roll services rendered by a company to its clients with the marketing support services rendered by the assessee to its AEs. This company is, therefore, directed to be excluded from the final set of comparables. ii. TCE Consulting Engineers Ltd. 19. This company was considered by the TPO as comparable on the strength of his reason of inclusion in the list of comparables for the AYs 2002-03 and 2003-04. 20. We find that this company is engaged in the provision of eng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sultancy & engineering products' and 'Lumpsum turnkey projects'. It is noticed that the TPO has considered only `Consultancy and engineering products segment' for the purposes of comparison and has not taken into consideration the other segment of `Lumpsom turnkey projects'. The company, under the alleged comparable segment, provides consultancy services, such as, pre-feasibility report of hydroelectric projects, field investigation drilling of tube wells, etc. From the above description of the activities performed by the company under this segment, it is vivid that the same is engaged in providing engineering and consultancy services, which can be no match to the assessee's marketing support services. Similar view has been taken by the Tribunal in the case of the assessee for the immediately preceding assessment year. This company is also directed to be excluded from the list of comparables. 25. In view of the foregoing discussion, we set aside the impugned order and remit the matter to the file of TPO/AO for a fresh determination of the ALP of the international transaction of 'Provision of marketing support services' in line with our above directions, after allowing a reasonable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y as under:- "ICRA Management Consulting Services Ltd., was incorporated in 2005 with the objective of taking over the entire business of the Management Consulting Division of ICRA Limited. The operations pertaining to the Advisory services division of ICRA Limited during FY 2005-06 have been transferred to ICRA Management Consulting Services Ltd." 29. A careful perusal of the nature of business done by IDC (India) Ltd. transpires that this company is an Information technology research and advisory firm. This company earns all its income in the form of research and survey. We fail to appreciate as to how this company can be considered as comparable with the international transaction of `Provision of marketing support services' rendered by the assessee to its AE. Similar is the position regarding ICRA Management Consulting Services Ltd., which is providing 'Advisory services.' In our considered opinion, a company providing advisory services can be no match with a company providing actual marketing support services. Despite this clear mismatch of the functional profile of the assessee's international transaction of `Provision of marketing support services' with the IT research/Adv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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