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2021 (2) TMI 857 - AT - Income TaxDisallowance of depreciation on intangible assets - Depreciation on Goodwill - depreciation on Customer Relationship (CR) & Vendor Relationship (VR) considering them to fall under Any other business or commercial rights of similar nature - treatment as asset under Explanation 3(b) to Section 32(1) - HELD THAT:- We notice that an identical issue has been considered in the assessee's own case by the coordinate bench in AY 2011-12 [2019 (7) TMI 25 - ITAT BANGALORE] a reading the words 'any other business or commercial rights of similar nature' in clause (b) of Explanation 3 indicates that goodwill would fall under the expression 'any other business or commercial right of a similar nature'. The principle of ejusdem generis would strictly apply while interpreting the said expression which finds place in Explanation 3(b). 'Goodwill' is an asset under Explanation 3(b) to Section 32(1) - Decided against revenue. TPA - question of bench marking the AMP expenses - Whether "Residual profit split method" is not appropriate method to bench mark AMP transactions? - HELD THAT:- The question of bench marking the AMP expenses has been examined and decided by Hon Tale Delhi High Court in the case of Sony Ericsson [2015 (3) TMI 580 - DELHI HIGH COURT] and Maruti Suzuki Ltd. [2015 (12) TMI 634 - DELHI HIGH COURT]. The bright line test adopted by the TPO has been specifically rejected in the case of Sony Ericsson (supra). The Hon'ble Delhi High Court has held in the case of Maruti Suzuki Ltd. (supra) that the revenue needs to establish the existence of international transaction before undertaking benchmarking of AMP expenses. Hence, the approach of the TPO cannot be upheld. Since the TPO has combined Royalty payments also along with AMP expenses while making Transfer pricing adjustments by adopting Residual Profit Split Method, since the existence of international transactions in AMP expenses is required to be shown separately, we are of the view that this issue requires fresh examination at the end of AO/TPO. Accordingly, we set aside the order passed by the AO on AMP expenses and restore the same to the file of AO/TPO for examining it afresh. After affording adequate opportunity of being heard, the AO/TPO may take appropriate decision in accordance with law. Appeal of the assessee is treated as allowed.
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