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2023 (5) TMI 875 - AT - Income TaxTP Adjustment - international transaction of receipt of commission fee, client coordinate fees, advisory services and client creative fees - comparable selection - HELD THAT:- There is an inherent contradiction in the comparability analysis by the learned Transfer Pricing Officer. He accepted one comparable i.e. quadrant communications limited, admittedly i.e. not the KPO and introduced four new comparables which are said to be the KPO. Furthermore, the learned Dispute Resolution Panel held that Transactional Net Margin Method is fairly tolerant about the comparability analysis. It is not so tolerant to include KPO companies with assessee company providing advertisement services of marketing communications and coordination etc. Due to this inherent inconsistency in the comparability analysis, we direct the assessee to first substantiate the comparability analysis by selecting the comparables first in advertisement industry itself providing similar functions. If such comparables are not available, then broader search of comparables may be carried out. Transfer Pricing Officer may examine the same and then decide about computation of Arm's Length Price of the international transaction after giving assessee opportunity of hearing. Accordingly, ground no.1 of the appeal is restored to the file of TPO. Adjustment on account of recovery and reimbursement of expenses - assessee did not produce details of the complete expenses but only on sample basis - DRP directed the TPO to give opportunity to assessee to produce complete invoices, verify the same and then decide the adjustment - HELD THAT:- We find that there is no such opportunity given by the learned TPO. We direct the learned TPO to give effect to the direction no. 12 of the DRP. Assessee is directed to produce the complete details of the reimbursement of expenditure before the learned TPO. Accordingly, ground no.2 of the appeal is also resorted to the file of the learned Transfer Pricing Officer. Depreciation on goodwill - disallowances on protective assessment manner - HELD THAT:- The assessee company entered into business transfer agreement with M/s. Ambience Advertisement Pvt. Ltd. - This sum was capitalized by the assessee as goodwill and claimed deprecation there on at the rate of 25%. The first claim of deprecation was made in A.Y. 2000-01. For that assessment year the assessee approached ITAT and ITAT, has set aside the issue to the file of the learned AO. Therefore, unless the issue of depreciation decided in that year, this ground of appeal cannot be decided. Accordingly, ground of the appeal are also restored back to the file of the learned Assessing Officer to decide it in accordance with the decision for A.Y. 2000-01. Short grant of TDS - HELD THAT:- As we direct the learned Assessing Officer to examine the claim of the assessee and grant appropriate credit for tax deduction at source certificates in accordance with law. Goodwill - difference between the total considerations paid in excess of net tangible asset - assessee has taken over the business including all the assets and liabilities of one company - AO disallowed the claim of the depreciation at the rate of 25% thereon - DRP also confirmed the same - HELD THAT:- AO made the addition/disallowance in the draft assessment order. No reason for the revenue to be aggrieved with the above direction of the learned dispute resolution panel when the learned dispute resolution panel confirms the addition proposed by the learned assessing officer. In view of this we find that the cross objection filed by the learned assessing officer is infructuous, hence dismissed.
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