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2017 (7) TMI 1263 - AT - Income TaxNature of expenditure - allowability of expenditure on maintenance and upgradation of ERP systems, wherein the assessee was using ERP system and expenditure was incurred on upgradation of the said system - Disallowance of Prime Project expenses and other software development charges net of depreciation - AO had disallowed the said expenses to be capital in nature - HELD THAT:- Issue arose before the Tribunal in assessee’s own case in assessment year 2009-10 and the Tribunal had directed the Assessing Officer to verify the claim of assessee. Following the same parity of reasoning, we direct the Assessing Officer to verify the claim of assessee in this regard that the expenditure has been incurred on upgradation of ERP system and allow the same in accordance with the ratio laid down by the jurisdictional High Court in UHDE INDIA P. LTD. [2013 (12) TMI 309 - BOMBAY HIGH COURT]. Thus, the grounds of appeal raised by the assessee allowed. TPA - MAM selection - application of CPM method adopted by the TPO - Whether domestic market segment and the export market segment were distinct and not comparable? - plea of assessee before us is that TNNM method should be applied as the most appropriate method after aggregation approach applied by the assessee in the equipment division - HELD THAT:- Tribunal in assessee’s own case in assessment year 2008-09 held that CPM method should not be applied and TNNM method is to be applied as most appropriate method. We apply the parity of reasoning as in assessment year 2009-10 to decide the issue in favour of the assessee. The TPO is thus, directed to exclude five concerns i.e. Axtel Industries Ltd., Anup Engineering Ltd., Thermax Ltd., Walchandnagar Industries Ltd. and GMM Pfaudler Ltd. and after excluding the said comparables, the average margin of balance comparables work to 14.01% against which, the assessee has shown the margins of 25.27%. Hence, no adjustment is to be made on account of arm's length price of international transactions. The ground of appeal No.1 raised by the Revenue is thus, dismissed. Addition u/s 14A - CIT(A) deleted the said addition accepting the plea of assessee that no satisfaction was recorded by the Assessing Officer before making the aforesaid addition - HELD THAT:- In the facts of the present case, the Assessing Officer has failed to record any satisfaction before making the aforesaid disallowance and in the absence of recording of satisfaction, the provisions of section 14A of the Act cannot be invoked as the Assessing Officer has failed to come to a finding as to why the disallowance made by the assessee under section 14A of the Act at ₹ 3 lakhs is incorrect. Accordingly, we uphold the order of CIT(A). See KALYANI STEELS LTD. VERSUS ADDL. COMMISSIONER OF INCOME TAX [2014 (2) TMI 661 - ITAT PUNE] - Decided in favour of assessee
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