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TMI Blog2013 (12) TMI 1007X X X X Extracts X X X X X X X X Extracts X X X X ..... following grounds: Ground No. 1 - Transfer Pricing Adjustment: On the facts and circumstance of the case, the learned Assessing Officer pursuant to the order of the learned Transfer Pricing Officer: 1.1 erred in law in making an adjustment of Rs.1,792,322 to the total income of the Appellant under section 92CA(3) of the Act on account of adjustment in the arm's length price of the international transaction of catering services rendered by the assessee to its Associated Enterprise ('AE'). Ground No. 2 - Disallowance u/s 14A: 2.1 The learned AC erred in invoking provisions of section 14A and holding that the Appellant has incurred indirect expenditure in earning exempt income. 2.2 Without prejudice to the above, the learned Assessing Officer erred in disallowing Rs.247,521 under section 14A of the Act being 10% of remuneration paid to Chief Financial Officer of Taj Sats and salary of trainee assisting the Chief Financial Officer, by holding the same is attributable for earning exempt income. Ground No. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 006-07. It is an order dated 20/1/2012 in ITA 8500/Mum/2010. Copy of this order is placed at pages 18 to 36 of the paper book. It was submitted by the Ld. AR that facts and circumstances of the present case are similar when they are compared with A.Y 2006-07. 3. Ld. DR could not controvert such submission of the assessee. However, briefly stated, the facts as applicable for present assessment year are that TP adjustment of Rs.17,92,322/- is made by the AO on the basis of TPO's order in respect of arm's length price of international transaction of catering services rendered by the assessee to its associated enterprise, namely Singapore Airlines. The TPO while evaluating such transaction for the purpose of determining arm's length price has made comparison of individual items which go towards making a meal. As against such action of TPO, it is the case of the assessee that comparison should be made with the total price of the meal and for this purpose assessee had furnished following comparison: Airline Passenger Rate (Rupees) Air India 173.63 Cathay Pacific 157.44 Emirates 161.20 Malaysian Airlines 262.00 Air Mauritius 217.11 Virgin Atlantic 319.53 Singapore Airlines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as earned exempted dividend income of Rs.72,70,803/- of which a sum of Rs.2,47,521/- is disallowed. 6. We have heard both the parties and their contentions have carefully been considered. The disallowance is based on the percentage of remuneration paid to Chief Financial Advisor of the assessee company and it has not been related to the investment of the assessee. Therefore, after hearing both the parties, respectfully following the aforementioned decision of the Tribunal, we restrict the disallowance to a sum of Rs.1,50,000/-. The relevant observation of the Tribunal from the aforementioned order for assessment year 2006-07 is reproduced below: 6.4 We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the DRP and the paper book filed on behalf of the assessee. There is no dispute to the fact that the assessee has earned tax free dividend income of Rs.4,968,000 from Tata Mutual Fund which is claimed as exempt u/s 10(35) of the Act. In absence of any expenses disallowed by the assessee for earning such tax free dividend income the A.O. disallowed an amount of Rs. 2,05,950/- being 10% of the salary of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the Hon'ble High Court.: 1. This is an appeal under section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal dated 20.1.2012 in ITA No.8500/Mum/2010 pertaining to the assessment year 2006-2007. 2. The appeal is admitted on the following substantial question of law :- "(a) Whether the Hon'ble Appellate Tribunal is right in holding that depreciation is not allowable under section 32(1)(ii) of the Act on various "intangible assets" classified as "goodwill" on consolidated basis?" Questions (b) to (f) in paragraph 35 of appeal are only facets of the above question of law and are covered by the same. Mr. Shah, the learned counsel appearing on behalf of the appellant states that the appellant, without prejudice to its rights and contentions, does not press the issue raised in question (g) in view of the fact that the tax incidence in respect thereof is minimal. For this reason alone, the issue sought to be raised in paragraph 35(g) is not pressed. 3. On 1.10.2001, the assessee purchased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other than Goodwill. The assessee's additional evidence throws light on the valuation of each of the intangible assets. Such evidence goes into the root of the matter for the purpose of arriving at a decision as to whether the assessee is entitle for deduction u/s 32(1)(ii) of the Act and if so, the quantum of depreciation that he is entitled to. Thus, we admit this additional evidence and remit the matter back to the file of the assessing officer for fresh adjudication in accordance with law. Grounds 1 to 3 are disposed of accordingly." 5. This brings us to the assessment year in question in the present appeal viz. AY 2006-2007. The appellant relied upon the same reports. By the impugned order, the Tribunal refused to follow the earlier order of the Tribunal dated 28.5.2009, paragraph 5 whereof is quoted above. The impugned order quotes the above observations of the order of the Tribunal in respect of the AY 2003- 2004 and holds that no depreciation is allowable on goodwill. The Tribunal however, rejected the valuation reports relied upon by the appellant and observed that depreciation has neither been claimed nor allowed on intangible assets in the prece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax Appeal (Lodging) No. 1096 of 2012 dated 03.09.2012, the total income of the assessee is revised as under: Amount (Rs) Total Income as per order u/s. 143(3) r.w.s. 254 dt.26.10.2010 7,79,93,140 Less Relief allowed by Hon'ble High Court On account of depreciation on goodwill 18,43,62,336 Revised total income /(loss) (-)10,63,69,196 Computation of book profit u/s. 115JB Amount (Rs.) Book Profit as per order u/s. 143(3) r.w.s. 254 dt. 26.10.2010 16,37,79,005" 8. Referring to the aforementioned position it was submitted by Ld. AR that issue is now covered in favour of the assessee by the aforementioned order of Hon'ble High Court. 9. On the other hand, Ld. DR relied upon the order passed by the A.O. 10. We have heard both the parties and their contentions have carefully been considered. The issue is covered by the aforementioned decision of Hon'ble High Court. The AO will calculate depreciation as he will compute in respect of A.Y 2003-04 and 2006-07 as per aforementioned orders of Hon'ble High Court. The same course will follow in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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