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TMI Blog2021 (11) TMI 1155X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Tribunal Order for the AYs 2008-09 [ 2014 (12) TMI 890 - ITAT BANGALORE] wherein the AO has provided carry forward of cumulative losses. Further the same has also been utilized against the total income in the draft OGE to Tribunal order passed for the AYs 2011-12 [ 2019 (6) TMI 660 - ITAT BANGALORE] In view of the above, the assessee is eligible as per the Order giving effect passed for earlier years to claim the set off of brought forward depreciation loss from prior years. Accordingly the AO is directed to allow the brought forward depreciation loss. TP Adjustment - payment of fees for administrative support services - as submitted bundled approach for benchmarking should be accepted - HELD THAT:- This issue came up for consideration in assessee s own case in AY 2015-16 [ 2021 (4) TMI 1361 - ITAT BANGALORE] we hold that payment of administrative and marketing support services is part of the operating cost, no separate adjustment is warranted. This ground of the assessee is partly allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... nal e- Assessment Centre, Delhi [hereinafter referred to as the "learned Assessing Officer" or the "learned AO"] under section 143(3) read with section 144C(13) and 144C(13) read with sections 143(3A) and 143(3B) of the Act ("impugned order") for Assessment Year ("AY") 2016-17 dated 31 March 2021, in pursuance of the directions issued by Dispute Resolution Panel (hereinafter referred to as the "Hon'ble DRP"), Bangalore dated 19 February 2021 under section 144C(5) of the Act inter-alia on the following grounds which are without prejudice to each other: That on the facts and circumstances of the case and in law: A. Grounds of appeal relating to corporate tax matters Disallowance of depreciation on assets given under finance lease: 1. The learned AO has erred in law and in fact by disregarding the ownership status of Cisco Capital India in relation to the assets leased out by it under finance lease, thereby disallowing the claim for depreciation made by Cisco Capital India in the return of income. 2. Without prejudice to the above grounds, the learned AO has erred in law and in fact, by not allowing depreciation on the open ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment made for these services to Cisco India as a transaction entered into pursuant to an understanding/ arrangement between Cisco Capital, Cisco India and CSI BV. 8. The learned TPO/AO has erred in law and fact by ignoring that in absence of an arrangement/ understanding between Cisco Capital, Cisco India and CSI BV, the adjustment is outside the purview of the jurisdiction of learned AO/ TPO, as the alleged Advertising Marketing Promotion (AMP') transaction and further determining a mark-up though it is not an 'international transaction' Bundled Approach for benchmarking should be accepted 9. Without prejudice, the learned TPO/AO has erred, in law and in fact, by not appreciating that once the net margin is tested for arm's length price under Transactional Net Margin Method ("TNMM") method (including administrative fees paid to Cisco India), it pr-supposes that the various items of income and expenditure considered in the process of arriving at the net profit are also at arm's length and therefore no separate adjustment in respect of particular item of expenditure. Considering Administrative/ Selling expenses as part of AMP expenses 10. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid grounds of appeal at any time before or at the time of hearing of the appeal, so as to enable the Hon'ble Tribunal to decide on the appeal in accordance with the law." 6. Grounds No.1 & 2 are regarding disallowance of depreciation on assets under finance lease. In the return of income filed for AY 2016-17, Cisco Capital India has claimed depreciation under the Act on the networking equipment leased out under finance lease arrangement. Given that section 32 of the Act would require satisfaction of twin conditions (viz. ownership and put to use for business purpose) for allowance of depreciation under the Act, the AO referring to the decision of the Hon'ble Supreme Court in the case of Asea Brown Boveri Ltd. Vs. Industrial Finance Corporation of India & Ors. in CA 3574 of 1998 dated October 27, 2004 was of the view that Cisco Capital India being the lessor of such equipment given out on finance lease arrangement could not be regarded as owner of such assets. Accordingly, the AO without calling for any relevant information concluded that Cisco Capital India could not be regarded as the owner of the assets given out on finance lease transaction, and accordingly, has di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssession of the equipment on default, delivery of equipment on expiry of lease and ownership at the end of the lease period, are similar and therefore it is the assessee alone who can claim depreciation, as rightly held by the assessing officer. The clauses relating to lease have already been interpreted by the Supreme Court in the case of M/s ICDS Ltd(Supra) and it has been held that the assessee is entitled to the benefit of depreciation on leased assets under section 32 or the Act of 1961 and therefore, the substantial question of law involved in the present appeal is no longer res integra and is squarely covered by the decision of the Hon'ble Supreme Court in M/s ICDS Ltd (Supra) as well as the judgement delivered by the Division bench of this court in case of Hewlett Packard India Sales Pvt Ltd (Supra)." 9. The ld. AR further submitted that the Tribunal in Assessee's own case for AY 2011-12 and AY 2013-14 dated June 7, 2019 has held that the decision in the case of M/s Asea Brown Boveri Ltd Vs. Industrial Finance Corporation of India & Ors in CA 3574 of 1998 dated October 27, 2004 as relied on by the Department is not on the issue of claim of depreciation of assets gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - "Disallowance of claim of depreciation on equipment leased by the assessee under financial lease arrangement 6. The AO in this case has not followed the binding judgment of Hon'ble Supreme Court in the case of ICDS Ltd. V CIT [Civil Appeal No.3282 of 2008). He has from page 6 onwards in his order recorded views contrary to the ratio laid down by the Hon'ble Supreme Court. This cannot be approved. He relied on the judgment of Hon'ble Supreme Court in the case of M/s. Asea Brown Boveri Ltd. v. Industrial Finance Corporation of India & Ors. in CA 3574 of 1998 dated October 27, ,2004. This judgment is not on the issue of claim of depreciation of assets given on financial lease under the Income-Tax Act, 1961 ["the Act"]. This judgment was rendered in an appeal under section 10 of the Special Courts (Trials of Offences relating to Transactions in Securities) Act, 1992. In fact, the judgment of Hon'ble Supreme Court in the case of ICDS Ltd. (supra) has been delivered much after the judgment in the case of Asea Brown Boveri Ltd (supra). Hence, these findings of the ld. AO, which were approved by the DRP are hereby reversed as these are not in accordance with law. 7. Be it as it may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AYs 2008-09 & 2009-10 wherein the AO has provided carry forward of cumulative losses up to INR 102,00,76,634. Further the same has also been utilized against the total income in the draft OGE to Tribunal order passed for the AYs 2011-12 amounting to INR 38,54,91,246. In view of the above, the assessee is eligible as per the Order giving effect passed for earlier years to claim the set off of brought forward depreciation loss from prior years. Accordingly the AO is directed to allow the brought forward depreciation loss. 17. With regard to ground Nos. 4 to 8 and 10 to 16, the ld. AR fairly conceded that these grounds are only academic and does not require any adjudication. Accordingly, these grounds are dismissed. 18. By ground No.9, the assessee grievance is bundled approach for benchmarking should be accepted. At the outset, the ld. AR submitted that the TPO has accepted the bundled approach of aggregation of payment of fees for administrative support services in the preceding years (i.e. from the incorporation year to AY 2015-16). Also, the Tribunal in its order passed for the AY 2015-16 dated April 8, 2021 has accepted the bundled transaction approach adopted by the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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