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2016 (10) TMI 423 - ITAT MUMBAIApplying most appropriate method for benchmarking royalty transactions - Held that:- We find that while passing the order for the last AY the TPO had held that TNMM was the most appropriate method for benchmarking, that he had made an adjustment of ₹ 1. 50 crores under the head royalty payment, that the Tribunal had decided the issue in favour of the assessee. We find that the TPO had not given any reasons for not following the TNMM as most appropriate method the year under consideration. No doubt the income tax authorities are not bound by the orders of the earlier years, but they have to pass a reasoned order for deviating from the stand taken from the earlier years. We find that the TPO has not brought on record the differences, if any, of the facts of the earlier AY. and the year under appeal. Secondly, the Tribunal has already decided the issue in favour of the assessee. Addition under the head provision for warranty (GOA-7-9) - Held that:- Since, the finding on the issue of warranty provision under normal computation of income will have bearing on the computation of book profit u/s 115JB, therefore, we remit this issue of adjustment u/s 115JB to the record of AO for decision the same as per law. Addition to the income of the assessee in respect of purchase of fixed assets - Held that:- We find that the machine purchased by the assessee was included in the WIP. In the case of Ciena India (P. )Ltd. (2015 (5) TMI 352 - ITAT DELHI) it has been clearly held that in case of purchase of fixed assets from AE it is amount of depreciation on purchase of fixed assets which will be considered for making addition and not difference between the transacted valued the ALP determined at Nil (Paragraphs 15. 1-15. 6). We hold that the FAA was not justified in making the addition of ₹ 17. 06 lakhs. He should have added only the depreciation-amont. It will affect the computation of depreciation for subsequent years. Therefore,we are of the opinion that matter should be restored back to the file of the AO for determine the depreciation and restrict the disallowance to that extent only. Effective ground of appeal, raised by the assessee,is decided in its favour, in part
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