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2017 (8) TMI 281 - AT - Income TaxTransfer pricing adjustment - Addition in relation to the international transaction of ‘Software development services.’ - Comparability - Held that:- it is abundantly patent that the segmental results taken by the TPO of this company have been influenced by the mergers and acquisitions taking place during the year, thereby making such financial results as incomparable - the same is directed to be excluded from the final list of comparables. Transfer pricing adjustment in relation to intra-group services - Held that:- Fortifying the incurring of actual expenses which are not duplicate in nature, the ld. AR contended that the additional evidence will prove the factum of having availed such services. In view of the fact that such additional evidence could not be considered by the TPO/Assessing Officer, we consider it expedient to set aside the impugned order on this score and remit the matter to the file of Assessing Officer/TPO for re-deciding it, after considering the additional evidence filed by the assessee. Depreciation on Computer peripherals at 15% instead of 60% claimed by the assessee - Held that:- The items of computer peripherals, which work in tandem with computers, can be rightly classified as computer for the purpose of granting depreciation at the enhanced rate. The items taken note of by the Assessing Officer for not granting higher rate of depreciation are Printers, Scanners and NT servers. These items too do not have any stand alone application de hors computers. Going by the ratio decidendi in in CIT vs. BSES Yamuna Powers Ltd. [2010 (8) TMI 58 - DELHI HIGH COURT] we hold that these items are also eligible for depreciation @ 60%. Addition towards Licence expenses - Held that:- Since the intellectual property rights relating to ENTERPRISE suite vest in Aircom, UK, the assessee entered into contract with Aircom, UK to sell this Product directly in the domestic market. As a quid pro quo, the assessee agreed to share a percentage of sale price to Aircom, UK. Clause (1) of the Agreement provides that: “ITP charges to be paid by the subsidiary to the parent company @ 45% of the total sale value of software and support and maintenance charge.” Pursuant to this Agreement, the assessee raised invoices on certain customers in India including Idea Cellular Ltd. for upgradation of Aircom Tools. Copies of some of the invoices placed. The invoice value has been shown as its income and the amount paid to its AE has been shown as Licence fee in its Annual accounts. We are at loss to appreciate as to how the assessee can be said to have created an ‘Intangible asset’ by paying the Licence fee to its AE in respect of sales made. Such payment @ 45% of the invoice value was the obligation of the assessee ab initio without which it could not have procured the licnence of ENTERPRISE suite for sale in India. This amount can be loosely characterized as cost of goods transferred to the customers in India, which has necessarily to be allowed as a revenue expenditure. We, therefore, overturn the impugned order on this score and direct the deletion of addition
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