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TMI Blog2022 (10) TMI 1149X X X X Extracts X X X X X X X X Extracts X X X X ..... afresh in the light of the APA already entered into by providing opportunity of being heard to the tax payer. So aforesaid grounds are determined in favour of the assessee for statistical purposes. Nature of expenses - computer software expenses - revenue or capital expenditure - HELD THAT:- This issue has already been decided in assessee s own case by the co-ordinate Bench of the Tribunal which has since been confirmed by the Hon ble Bombay High Court [ 2020 (7) TMI 648 - BOMBAY HIGH COURT] by treating the software expenses as revenue expenditure. The AO is directed to treat the computer software expenses claimed by the assessee as revenue expenses. - ITA No. 2213/MUM/2017 - - - Dated:- 31-10-2022 - SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER For the Assessee : Shri Ketan Ved, A.R., Shri Ninad A Patade, A.R., Ms. Shraddha Jain, A.R. For the Revenue : Ms. Samruddhi Dhananjay Hande, D.R. ORDER Per : Kuldip Singh, Judicial Member: Appellant M/s. Aker Powergas Pvt. Ltd. (hereinafter referred to as tax payer) by filing the present appeal sought to set aside the impugned order dated 31.01.2012 passed by the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s length price as NIL. 1.7 The learned DCIT / DRP has erred in not considering the cost allocation certificate provided by external auditor in correct perspective. 1.8 The learned DRP has erred in upholding the action of the TPO to verify the existence-? of se-vices rendered and the benefits derived from the same, which was the prerogative of the DCIT end which was beyond the authority of the TPO. 1.9 Without prejudice to the above ground, the learned DCIT / DRP, based on documentary evidences submitted, failed to understand and appreciate that services were rendered and benefits were derived by the appellant which were primarily intangible in nature. 1.10 The learned DCIT / DRP did not take into account appellant's submissions regarding reliance placed on Indian and international jurisprudence for justification on payment for availing management services. 2. Disallowance of software expenses 2.1 The learned DCIT/DRP erred in disallowing computer software expenses of Rs.14,74,19,626 which are revenue expenses, by treating the same as capital in nature. 2.2 The learned DCIT/DRP erred in observing that since the usage of software is for more than two years it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of detailed drawings and designs provided by the tax payer company. 3. During the year under consideration the tax payer entered into international transaction with its Associated Enterprises (AEs) exceeding Rs.15,00,00,000/- and as such transactions referred in form No.3CEB to the TPO to determine the arms length price. The Ld. TPO passed the order under section 92CA(3) dated 28.01.2016 by making adjustment to the arms length price by Rs.7,60,41,287/- qua the international transactions entered into between the tax payer company and its AEs. AO also made addition of Rs.5,89,67,850/- by way of disallowance on account of software expenses claimed by the tax payer. The AO also made addition of Rs.78,62,075/- under section 14A read with rule 8D and thereby framed the assessment at the total income of Rs.1,14,24,12,474/- and book profit under section 115JB of the Act at Rs.1,14,24,12,470/- under section 143(3) read with section 144C(13) of the Act. Pursuant to the order passed by the Ld. TPO/Ld. DRP, AO made addition of Rs.76,04,127/- on account of transfer pricing adjustment. Feeling aggrieved with the order passed by the AO/TPO/DRP tax payer has come up before the Tribunal by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing findings: 22. We are of the considered view that contention raised by the ld. DR is not tenable for the reason that when undisputedly there is no change in the FAR of the taxpayer in the year under assessment vis- -vis years covered under APA and consolidated margin (OP/OC) computed as per APA at 19.26% is much more than the consolidated margin agreed upon between the taxpayer and the CBDT for the years covered under APA at 16.60% for both the segments, APA though not specifically applicable to the year under assessment, is having persuasive value to the dispute between the parties for other years. 23. Hon ble Delhi High Court in the case of PCIT vs. Ameriprise India Pvt. Ltd. (supra) held that when under the APA entered into between the taxpayer and the CBDT under section 92CC aforementioned cost plus pricing methodology has been implicitly accepted, the APA has persuasive value to the dispute in question for other years. 24. Coordinate Bench of the Tribunal in the case of 3I India Private Ltd. vs. DCIT (supra) also relied upon APA entered into between the taxpayer and the CBDT for the subsequent years and has held as under:- 18 Whence, on similar functions and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d subsequent years, application of most appropriate transfer pricing method and arm s length price of these transactions have already been agreed upon between the taxpayer and CBDT and there is no change in the FAR and nature of international transactions entered into during the year under consideration vis- -vis earlier years and subsequent years, principle laid down in the APA for benchmarking the international transactions in question shall have a guidance value. Moreso these days, it is endevour of the Union of India to stop avoidable litigations and this case falls in the category of cases where litigation can be minimized. 9. The Ld. A.R. for the tax payer also relied upon the decision rendered by Hon ble Delhi High Court in case of PCIT vs. Ameriprise India Pvt. Ltd. in ITA No.206/2016 and the order passed by the co-ordinate Bench of the Tribunal in case of coordinate Bench of the Tribunal in case of Spenser Staurt (India) Pvt. Ltd. vs. ACIT in ITA Nos.7117/M/2012, 1680/M/2014, 922/M/2015 1832/M/2016 and 31 India Pvt. Ltd. vs. DCIT in ITA No.581/M/2015. 10. In view of the matter, we are of the considered view that when in the APA entered into between the tax payer a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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