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2014 (1) TMI 921 - AT - Income TaxIssue of royalty payment – Held that:- On perusal of the order of the DRP, prima-facie, it gives an impression that they have not considered the submissions of the assessee or the documentary evidences while rejecting the claim of the assessee - The order has been passed in a rather mechanical manner on more than one issues by merely observing that the assessee has not been able to advance any fresh argument or analysis – thus, the finding of the TPO has to be accepted - the order of the DRP to be rather cryptic, bereft of reasons and mechanical - Excepting observing that there is no reason to disagree with the position taken by the TPO, the DRP has not expressed any reasons for coming to such a conclusion with regard to the arrangements or materials placed before it by the assessee – the contention of the assessee that there is violation of rules of principles of natural justice by not considering the submissions of the assessee and documentary evidences produced to be acceptable - matter remitted back to the DRP for fresh consideration – Decided in favour of Assessee. Computation of operating margin – Adjustment towards cost of repairs and plant & machinery and incremental depreciation not considered – Held that:- Various issues raised by the assessee before the DRP in relation to the ground have not at all been considered by the DRP – matter remitted back to the DRP for fresh adjudication. Disallowance of depreciation of non-compete fees and marketing network rights – Held that:- As decided in assessee’s own case that the payment towards non-compete fees and marketing networth rights falls within the definition of intangible assets as per section 32(1)(ii) of the Act - the payment made towards non-compete fees would come within the scope and ambit of intangible asset as defined in section 32(1)(ii) of the Act – also, the payment made towards acquiring market network rights have also to be treated as payments made for acquiring commercial/business rights akin to know-how, patent, trade mark, license, franchises, etc., which are eligible for depreciation and accordingly directed for allowing depreciation on non-compete fees and marketing network rights - the AO is directed to allow the claim of deprecation on payments made towards non-compete fees and market network rights – Decided in favour of Assessee.
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