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TMI Blog2015 (11) TMI 1365X X X X Extracts X X X X X X X X Extracts X X X X ..... n nature. Considering the general nature of the said ground nos.1 and 2, they are dismissed. Further, Ld Counsel submitted that Ground nos.3 & 9 are not pressed and Ground no.10 is premature. Therefore, the said ground nos.3 and 9 are dismissed as not pressed and ground no.10 is also dismissed as premature in nature. Thus, the rest of the grounds left for our adjudication are Ground no.4, 5, 6, 7, and 8, which read as under: "4. The Ld DRP / AO / TPO erred in not considering depreciation on commercial rights as an extraordinary / non-operating expense and thus, erred in not excluding the same while computing the operating profit margin of the appellant. 5. the Ld DRP /AO / TPO erred in not considering the total depreciation while calcul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cations Private Limited. Assessee had international transactions involving purchase and sale of EPBAX Accessories and office equipment. Assessee benchmarked these transactions using TNMM method at the entity level adopting the PLI of OP/OR @ 8.07%. Assessee conducted the TP study considering the 6 comparables, whose average arithmetic mean of PLI of 8.55%, is within the range of (+) or (-) 5%. Accordingly, assessee filed the return of income. During the proceedings before the TPO, assessee attempted to justify the 8.07% as ALP. The TPO rejected a couple of comparables ie Shyam Telecom Ltd and Spanco Telesystems of the assessee. Further, TPO noticed that Arraycom India Ltd, a comparable of the assessee, was to be adjusted to exclude the depr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no further appeal on this issue. In this regard, Ld Counsel for the assessee brought our attention to para 10 of the said DRP"s order for the AY 2009-2010, dated 27.12.2013. The said order of the DRP was not available before the DRP"s order dated 14.9.2012 for the AY 2008-2009. If the same is followed, in view of the principles of consistency, the Arraycom Ltd without adjustments by the TPO should be considered as a good comparable in favour of the assessee. 6. After hearing the Ld DR, we have perused the said para 10 of the DRP"s order for the AY 2009-2010 (supra) and find merit in the argument of the Ld Counsels for the assessee. For the sake of completeness of this order, the said para 10 of the DRP"s order for the AY 2009-10 is extrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee brought our attention to the financial statements relating to the Shyam Telecom Limited. Bringing our attention to page 281, 283 and 285 of the paper book, Ld Counsels for the assessee demonstrated that the OP/OR for the AYs 2006-07, 2007-08 and 2008-09 of the said company are (-) 2.89%; (+) 6.73% and (-) 1.53% respectively. With these parameters, the said company cannot be considered as the case of persistent losses. For excluding from the list of good comparables, merely the contemporaneous figures alone should not be considered in matters of benchmarking the loss cases. In this regard, Ld Counsel for the assessee relied on one of the orders of the Tribunal, wherein one of us (AM) is a party to the order, in the case of Sumitomo Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s decisions of the Tribunal........" 9. We have also perused the calculations furnished in Annexures 1A and 2A for the proposition that assessee is within the allowed margin of (+)/(-) 5% if the above issues are decided in assessee"s favour. We have held that Arraycom Limited should be allowed as comparable without adjustments and the case of Shyam Telecom Limited should be considered in favour of the assessee, therefore, in principle, both the arguments of the assessee are approved for the reasons given in the above paragraphs of this order. However, the figures given by the assessee in the said Annexures 1A and 2A are required to be verified. For this purpose, we remand this issue to the file of the AO for verification considering the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of similar nature." Explanation 3 states that the expression "asset" shall mean an intangible asset, being know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature. 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). In the circumstances, we are of the view that "goodwill" is an asset under Explanation 3(b) to section 32(1) of the Act." 12. Considering the above set ..... X X X X Extracts X X X X X X X X Extracts X X X X
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