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2015 (7) TMI 79 - AT - Income TaxAddition on account of transfer pricing adjustment towards Advertising, Marketing and Promotion (AMP) expenses - Held that:- No detail of the AMP functions performed by the assessee is available on record. Similarly, there is no reference in the order of the TPO to any AMP functions performed by comparables. In fact, no such analysis or comparison has been undertaken by the TPO because of his applying the bright line test for determining the value of the international transaction of AMP expense and then applying the cost plus method for determining its ALP. The ld. AR also failed to draw our attention towards any material divulging the AMP functions performed by the assessee as well as comparables. As such, we are handicapped to determine the ALP of AMP expenses at our end, either in a combined or a separate approach. Under such circumstances, we set aside the impugned order and send the matter back to the file of the TPO/AO for determining the ALP of the international transaction of AMP spend afresh in accordance with the manner laid down by the Hon’ble High Court in Sony Ericson Mobile (2015 (3) TMI 580 - DELHI HIGH COURT). It is, however, made clear that the TPO/AO, while computing adjustment, if any, on account of AMP expenses will not include Selling expenses directly incurred in connection with sales in the overall base of AMP expenses. With the above observations, we send the matter back to the TPO/AO for redetermination of the ALP of AMP expenses in accordance with the above guidelines. Needless to say, the assessee will be allowed a fresh opportunity of hearing in such fresh proceedings. Ex consequenti, the issue raised about the TPO having no jurisdiction to determine the ALP of AMP expenses, is dismissed following the judgment in the case of Sony Ericsson Mobile (supra). Reduction in the amount of deduction u/s 10A - apportionment of certain STP unit specific expenses - Held that:- On a specific query, it was fairly admitted that there were certain non-STP unit specific expenses as well, but the AO aggregated all the specific and non-specific expenses and allocated them in the ratio of turnover of STP and non-STP units. In our considered opinion, this approach adopted by the AO is not correct. We, therefore, set aside the impugned order on this issue and remit the matter to the file of AO for a fresh determination of net profit eligible for deduction u/s 10A of the Act. In such a computation of net profit, the STP unit specific expenses should be considered in the computation of STP unit profit as such and the non-STP unit specific expenses should be considered in the computation of profit of non-STP unit. The remaining common expenses which are not specifically allocable either to the STP or the non-STP units should be bifurcated in the ratio of turnover. Depreciation on computer peripherals - @ 15% as against 60% claimed by the assessee - Held that:- This issue is no more res integra in view of the judgment of the Hon’ble jurisdictional High Court in CIT vs. BSES Yamuna Powers Ltd. [2010 (8) TMI 58 - DELHI HIGH COURT] in which it has been held that the depreciation on computer peripherals should be allowed at 60% instead of 15%. - Decided in favour of assessee.
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