TMI Blog2014 (4) TMI 475X X X X Extracts X X X X X X X X Extracts X X X X ..... perly evaluated by TPO and DRP - Proper justifications for applying TNMM method have not been assigned by lower authorities - No objective justifications are provided by lower authorities as to why and how, PSM method applied by assessee in the above peculiarities of business was not an appropriate method – Relying upon DCIT vs. Indo American Jewellery Ltd [2010 (5) TMI 530 - ITAT, MUMBAI] and CIT Vs. KRMTT Thiagaraja Chetty & Co. [1953 (10) TMI 7 - SUPREME Court] – the TP adjustments added to the income of the assessee are set aside – Decided in favour of Assessee. Disallowance of depreciation on computer peripherals – Held that:- The decision in COMMISSIONER OF INCOME TAX Versus BSES YAMUNA POWERS LLD. / BSES RAJDHANI POWERS LTD. [201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drive of assessee and subsequently, uploaded in the HQ US tool. Assessee's employees evaluate these calls and submit the evaluation form in HQ US tool, which in turn generates the final evaluation report to be delivered to the customer. During the relevant assessment year the appellant company was having two operating units located at 6th Floor, MPD Tower, Building-II, Phase-V, Gurgaon and 34, Phase-IV, Udyog Vihar. The appellant company is entitled to exemption of its business Income under section 10A for the profits it earns from the above two units. 3. For the year under consideration, the assessee filed its return of income at Rs. 482,739/- which was processed under section 143(1) of the Act, and thereafter, taken up for scrutin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustification of ALP. The appellant in its reply dated 18th January, 2010 provided the consolidated financials and the justification of the ALP adopted by it. Ignoring the same ld. TPO erred in ignoring the appellant appropriate method and adopting Transactional Net Margin Method without valid reasons. 7. Ld. TPO erred in evaluating FAR (Functions performed, Assets employed and Risk assumed) analysis which has been summarily confirmed by DRP. To support its case, assessee furnished split financials of the appellant and its AE. Whereas the appellant has been able to earn profit in India its counterpart the AE has continuously sustained losses. There being no element of profit in the hands of the AE, there is no case of shifting of profits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also find merit in the submission of the learned counsel for the assessee that since the tax rates were higher in USA compared with those of India, therefore, there would not be any incentive to transfer the profits to higher tax chargeable regions especially when the company enjoys deduction u/s. 80HHC of the Act. Further the AEs have earned meagre profit or incurred losses as compared to the profit of the assessee and, therefore, the submission of the assessee that there was no transfer of profit by the assessee out side India finds merit. It has been held by various judicial pronouncements that unless proper method is followed, comparables are chosen and selected after doing a proper FAR study as well as adjustments are made to the exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a 10A exempt company has resulted in futile exercise and arbitrary TP adjustments. The Transactional Net Margin Method, which warrants external benchmarking at net profit level will not be an appropriate method given consider to the fact that there is no other company in India which are into the line of business of the appellant company. Besides the new line of business involves unique intangibles used by the AE such that independent evaluation of performance is not possible. Since the service of the appellant and its AE are coined together as a service delivery to end clients. In such a situation the net outcome should be a subject matter of tax apportionment in India. Rule 10B of the Income Tax rule is very clear in this regard. 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 4). The UPS alleged to be plant and machinery by the LD. AO is exclusively used by the appellant company to ensure uninterrupted power supply to the computer. The appellant company being an IT enabled service provider, the UPS is an integral part of the computer system for the appellant to run its business. Reliance is placed on Hon ble Delhi High Court judgment in the case of BSES Yamuna Powers 358 ITR 47 allowing depreciation @ 60% on UPS and other computer peripherals and accessories. 16. Ld counsel contends that assessee filed its of Income on 31st October, 2007 i.e. within the due date mandated under section 139(1) of the Income Tax Act. The Ld. AO has thus erred in levying interest under section 234A of the Income Tax Act, 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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