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TMI Blog2016 (3) TMI 590X X X X Extracts X X X X X X X X Extracts X X X X ..... mark and intellectual property rights paid to Ciel Aircon Ltd - Held that:- once the completion of the agreement is done by payment of the consideration as on the completion date specified in the agreement the assessee would be in possession of the duly executed instruments of transfer, assignment and Conveyances of the assets as specified in the agreement which are basically the intellectual property' rights and the fixed assets. This being so, as also the principles as laid down by the Hon'ble Supreme Court in the case of Mysore Minerals Ltd. [1999 (9) TMI 1 - SUPREME Court ] it would have to be held that the assessee was the owner of the property and the assessee having used the same in its business was entitled to depreciation on the same. - Decided in favour of assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessee in regard to import of raw-material and noted that assessee had used cost plus method taking Associated enterprises (suppliers) as tested party. He noted that assessee had compared the mark up charged by respective AE's from assessee with mark up charged by similar companies operating in Asia pacific region. He further noted that using one source database assessee had concluded that comparable companies were charging mark up of 30.48%, whereas the AEs were charging less than this on its cost and, thus, the assessee's transactions of import of raw-material were at arm's length. Ld. TPO did not accept the assessee's approach in considering foreign AE as tested party because assessee failed to demonstrate that foreign AE was less complex and its accounts were available and accessible for verification. 5. As regards the second argument of assessee that resale price method could not be applied because of insufficiency of data, he pointed out that the same was acceptable to the extent that if assessee company took itself as tested party and comparables of same and similar trade were not available, resale price method could not be applied. However, on this basis taking of fore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature of international transactions. It was further submitted that bench marking analysis should be done based on the segmentation into manufacturing and trading functions and the gross margin of the respective segment be compared with the gross margin earned by the comparables selected by the TPO. Ld. CIT(A), however, did not accept the assessee's contention and observed that primary benchmarking analysis cannot be substituted by another benchmarking analysis. A secondary benchmarking analysis may be conducted to support the Primary benchmarking analysis and not to substitute the primary benchmarking analysis. Therefore, the gross level analysis presented by the assessee could not be accepted as a substitute for the benchmarking analysis. He, accordingly, upheld the TPO's order. Aggrieved, the assessee in appeal before the Tribunal. Grounds taken by the assessee in its appeal are as under: Disallowance on account of arm's length price - ₹ 141.268,918 In the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) - XX (hereinafter referred to as "learned OT (An, has grossly erred in confirming the entire addition of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coming to the argument of the learned Departmental Representative that once the /assessee itself has chosen TNMM as most appropriate method in TPR, then it cannot resort to change its method at an assessment or appellate stage. In our opinion, such a contention cannot be upheld because if it is found on the facts of the case that a particular method will not result into proper determination of the ALP, the TPO or the appellate authorities can very well hold that why a particular method can be applied for getting proper determination of ALP or the assessee can demonstrate a particular method to justify its ALP. Thus, even if the assessee had adopted TNMM as the most appropriate method in the transfer pricing report, then also it is not precluded from raising the contentions/objections before the TPO or the appellate Courts that such a method was not an appropriate method and is not resulting into proper determination of ALP and some other method should be resorted. The ultimate aim of the transfer pricing is to examine whether the price or the margin arising from an international transactions with the related party is at ALP or not. The determination of approximate ALP is the key f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clusion, apart from the clear wording of sub-section (3) of section 92CA, is that, apart from the civil consequences that the determination of the arm's length price would have on the assessee, any adjustment by the Assessing Officer to the arm's length price determined by the assessee based on the determination by the Transfer Pricing Officer under sub-section (3) of section 92CA, would result in imposition of penalty under section 271 (1)( c) of the Act read with Explanation 7 thereto." 14. In view of above discussion, we are of the opinion that assessee has been denied proper opportunity to place relevant facts before the ld. TPO and, therefore, without going into the merits of the case, we restore the matter to the file of ld. TPO to decide the issue de novo after affording reasonable opportunity of being heard to assessee. 15. Assessee's appeal is allowed for statistical purposes. ITA no. 2922/Del/2011 ( revenue's appeal): 16. While completing the assessment, the AO had, inter alia, made following additions/disallowances: - Disallowance of advertisement and publicity expenses; - depreciation on WDV and exclusive business rights (goodwill) paid to Usha Interna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k Ltd. v. Re. 21 ITR 353 (All) - National Industrial Corporation Ltd. 124 Taman 413 (Delhi) - CIT v. Berger Paints (India) Ltd. 254 ITR 503 (Cal.) - Campa Beverages (P) Ltd. V. IAC 34 ITD 241 (Delhi Tribunal) 20. The AO concluded that expenditure was basically for launch of a new business product as well as benefit of enduring nature was there. Accordingly, relying o the decision of the Hon'ble Supreme Court in CIT Vs. Madras Auto Service (P) Ltd. (1998) 233 ITR 468, he denied the assessee's claim. 21. Before ld. CIT(A), the assessee pointed out that these expenses were incurred for the purpose of rental payments for putting hoardings of the assessee company, expenses incurred on posters/ banners for increasing the visibility of the product, designing of advertisement, advertisement agency commission, mega shows at different places, advertisement in news papers, fabrication and light fitting charges at places for mega shows, photographs assignment charges for shoots, glow sign boards, printing of envelopes, posters and stickers, cost of participation and holding exhibitions, printing of catalogues, calligraphy charges, hiring media clipping charges, booking of stalls etc. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. for acquiring the business and commercial rights sin AY 2001-02. She noted that the assessee company vide Business Purchase Agreement entered on 8.8.2000, purchased the business of manufacture of air-conditioner/ cooler from Siel Aircon Ltd. Usha International Ltd. carried on the business of , inter alia, distribution of air-conditioners and water coolers manufactured by Siel Aircon Ltd. The assessee company also entered into an agreement with Usha International Ltd. called "Business Purchase Agreement" dated 1.5.2000 for purchase of said business and its assets including exclusive business rights. Ld. CIT(A) further noticed that as per clause 4 of the agreement with Usha International Ltd. consideration for exclusive business right payable to Usha International Ltd. was ₹ 1,73,00,000/- and for other business and commercial rights of ₹ 27,00,000/- was capitalized as goodwill in the books of a/c. She noted that in AY 2001-02 the Tribunal had allowed the assessee's claim and following the same she allowed the assessee's claim of ₹ 28,12,500/-. 27. Having heard both the parties, we find that the issue relating to depreciation on WDV of goodwill paid to Usha Inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 37,50,000/-. For the assessment year 2001-02, the CIT (A) 'granted the relief. The revenue went in appeal before the IT AT wherein the ITAT had dismissed the revenue's appeal by upholding the order of the CIT (A). The ITAT has held as under :- "A perusal of the business purchase agreement also clearly shows that UIL as agreed to sell to the assessee and. the assessee agreed to purchase the business and the goodwill and the other assets thereof. A perusal of the consideration also clearly shows that the agreement is for selling S items, first one being the business, second goodwill and third other assets. The purchase consideration also shows the computation of such 3 items being the exclusive business rights for a consideration of Rs.l,73,00,000/-, 27,00,0001- Without any specifications and (c) the transferable deposits which would have to be considered as other assets. This being as the amount of ₹ 27,00,000/- as shown in the purchase price has not been shown to be in relation to either exclusive business rights or for transferable deposits. The same would have to be treated as being towards "goodwill". This being so, we are of the view that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In this regard reference was made to sections 37 & 38 of the Trademarks Act, 1999. It was further pointed out that there was no statutory requirement under the law to get the trademark registered under the Trademarks Act, 1999 so as to enjoy the legal ownership thereof. It was pointed out that registration of trademarks was desirable but not a statutory compulsion. The assessee had relied on various judicial pronouncements wherein it was held that the registration of an asset in the name of purchaser was not necessary for the purpose of claiming depreciation. Following the Tribunal's decision for AY 2001-02 the ld. CIT(A) allowed the assessee's appeal. 30. Having heard both the parties we find that we find that the issue relating to depreciation on patents, trademarks and intellectual property rights acquired by the assessee from Siel Aircon Ltd. is covered in favour of the assessee by earlier decisions of the Tribunal. The ITAT Delhi Bench 'B' vide its order dated 23.12.2011 rendered in ITA no. 1346/Del/2010 & 1404/Del/2010 has decided the issue in favoaur of the assessee by observing as under: "8. The assessee company has purchased manufacturing business of M/s. SIEL Aircon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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