9911796707
TMI Blog2019 (7) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer / TPO to verify the claim of assessee and after giving reasonable opportunity of hearing to the assessee, determine arm's length price of international transactions, if any. Hence, ground of appeal No.2 raised by assessee is allowed. Depreciation on wireless devices - @ 25% OR 60% - HELD THAT:- The claim of assessee before us is that the said devices were multipurpose devices used in BPO industries and since it was supposed to be intelligent wireless systems, which were ideal for BPO office professionals and the said devices were compatible with certain types of PCs only, could be connected to computers via Bluetooth and similar technology, hence claim of depreciation @ 60%. We find no merit in the plea of assessee in this regard. The systems / devices are helping the assessee undoubtedly, but the same are to be connected with computers and mere connection with computers would not make it part of computers eligible for deduction under section 32 of the Act. Accordingly, we direct the Assessing Officer to allow depreciation on the said devices under the head plant machinery @ 25%. The plea of assessee is thus, partly allowed. Disallowance of repai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.3 R Systems International Ltd. 3.4 Caliber Point Business Solutions Ltd. 3.5 Jeevan Scientific Technology Ltd. 3.6 ICRA Online Ltd. 4. Erroneous calculation of working capital adjustment 4.1 The learned DCIT, pursuant to the directions of the Hon'ble DRP has erred on the facts and in circumstances of the case in not complying with the binding directions of the Hon ble DRP (para 3.6 on page 7) in computing the working capital adjustment. 4.2 Further, the learned DCIT/Transfer Pricing Officer ( TPO ) erred in not allowing working capital adjustment on the companies having segmental accounts, which was granted by the learned DCIT/TPO in the draft assessment order and no adverse directions were given by the Hon'ble DRP in this regard. 5. Non- consideration of Risk adjustment to the Appellant The learned DCIT, pursuant to the directions of the Hon'ble DRP has erred on the facts and in circumstances of the case in non-granting risk adjustment to the Appellant. 6. Disallowance of claim of depreciation on professional wireless devices The learned DCIT, pursuant to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly selected four concerns as comparables, which are as under:- Sr. No. Name of the Company PLI = OP/OC% 1 Excel Infoways Ltd. (Seg.) 41.48 2 Ninestar Information Technologies Ltd. 19.57 3 Microgenetics Systems Ltd. 20.43 4 Universal Print Systems Ltd. (Seg.) 59.40 7. Since the average mean margins of said comparables worked out to 29.84% as against margins of assessee at 15.25% and an upward adjustment of ₹ 37.81 crores was made in the hands of assessee. The Assessing Officer issued draft assessment order, against which the assessee filed objections before Dispute Resolution Panel (DRP), who gave certain directions to recompute working capital adjustment and also to correct the operating margins of one of the concerns finally selected. However, the plea of assessee is that directions of DRP were not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 47.75%, whereas the learned Authorized Representative for the assessee points out that the employee cost ratio of Excel Infoways Ltd. and also of Universal Print Systems Ltd. was less than 25% and hence, such concern could not be selected as comparable. 19. The learned Authorized Representative for the assessee fairly pointed out that low employee cost to sales ratio may be verified by the Assessing Officer in respect of both the concerns. Accordingly, we direct the Assessing Officer to verify the claim of assessee in this regard and in case the employee cost to sales ratio was less than 25%, then both the concerns have to be excluded from final set of comparables. In respect of Excel Infoways Ltd., we have already held the same to be not comparable on account of its fluctuating margins. However, in case, it fails the low employee cost filter, then also the said concern cannot be picked up as comparable. Similarly, the employee cost ratio vis- -vis sales ratio of Universal Print Systems Ltd. needs verification and in case it is less than 25%, then the said concern is not to be included in the final list of comparables. The Assessing Officer shall afford reasonable opp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer in turn, passed final assessment order. 13. The claim of assessee before us is that the said devices were multipurpose devices used in BPO industries and since it was supposed to be intelligent wireless systems, which were ideal for BPO office professionals and the said devices were compatible with certain types of PCs only, could be connected to computers via Bluetooth and similar technology, hence claim of depreciation @ 60%. We find no merit in the plea of assessee in this regard. The systems / devices are helping the assessee undoubtedly, but the same are to be connected with computers and mere connection with computers would not make it part of computers eligible for deduction under section 32 of the Act. Accordingly, we direct the Assessing Officer to allow depreciation on the said devices under the head plant machinery @ 25%. The plea of assessee is thus, partly allowed. 14. Now, coming to the last issue raised of disallowance of repairs maintenance expenses of ₹ 5,67,481/-. The said expenses were disallowed by the Assessing Officer on the ground that same were capital in nature. The DRP upheld the order of Assessing Officer. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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