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2019 (7) TMI 1765 - AT - Income TaxTP Adjustment - selection of MAM - most appropriate method for benchmarking import of Crystal goods and Crystal components - In respect of the Assessment Years 2007-08 to 2009-10, Ld. CIT(A) held that RPM is the most appropriate method for benchmarking the activities of the assessee in the import of Crystal and Crystal components - Bright Line Test (BLT) is sought to be applied - HELD THAT:- This Tribunal in assessee’s own case for the Assessment Year 2004-05 [2017 (2) TMI 691 - ITAT DELHI] direct the AO/TPO to determine the ALP of the transaction of Import of Crystal goods and Crystal components, firstly, by applying the RPM. It is hereby clarified that the manner of application of RPM is open at large before the TPO who will decide it in the way he thinks expedient. Contention of the ld. AR that the comparables should be restricted to the ten companies which it cited before the ld. CIT(A) or twenty companies which the ld. CIT(A) suomotu chose for making TP adjustment on account of AMP expenses, cannot be accepted. We do not intend to eclipse the power of the TPO by restricting the exercise, which he has yet to undertake for the first time. It is further clarified that if due to one reason or the other as discussed above, such a method cannot be applied, then, resort should be made to the TNMM in the way enshrined in rule 10B(1)(e) of IT Rules, 1962, taking care of the infirmities discussed above in the earlier calculation made by the TPO Addition made on account of Software and Electronic Data Processing (“EDP”) charges - assessee incurred expenses towards IT support services which were categorised under Software and Electronic Data Processing (“EDP”) charges - HELD THAT:- We find that the expenditure being incurred in nature year after year, and cannot be placed in the category of capital expenditure - services are basic business operations of the company through the organised and maintained IT support systems. Further the sample copies of the invoices show that these services are charged on the basis of uses at a predefined hourly usage rates and these expenses are incurred for the services in the nature of operational IT services such as browsing charges, usage of Swarovski distribution system software for facilitating the activities such as customer invoicing, inventory management etc services of laptops and PCs etc which are helpful to the assessee to perform the basic business operations. It is not the case of the Revenue that these expenses were made for purchase of any software for the purpose of making enhancement to any profit-making operations of the company constituting the capital asset. It could further be found from the record that no fixed amount expenses are incurred. As relying on M/S ASAHI INDIA SAFETY GLASS LTD. [2011 (11) TMI 2 - DELHI HIGH COURT] Software and Electronic Data Processing (“EDP”) charges incurred by the assessee are Revenue in nature and the assessee is entitled to claim the same as allowable deduction. We, therefore, delete the addition made on this account. Nature of expenditure - Expenditure on media advertisements, PR agency fees, communication material and others - HELD THAT:- This Tribunal in assessee’s own case for the Assessment Year 2004-05 [2017 (2) TMI 691 - ITAT DELHI]held that the entire expenditure on publicity and advertisement is allowable fully in the year in which it is incurred and a similar view is adopted for the Assessment Year 2002-03, 2004-05 [2017 (2) TMI 1388 - ITAT DELHI] - Thus assessee had rightly claimed deduction of advertisement and publicity expenditure as Revenue expenditure.
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