TMI Blog2015 (11) TMI 1365X X X X Extracts X X X X X X X X Extracts X X X X ..... f the AO for verification considering the above discussion. Granting of the depreciation u/s 32 on the goodwill being an intangible asset - Held that:- The additional ground is legal in nature and the same is required to be adjudicated as per the ratio of Supreme Court laid down in the case of Smifs Securities Limited [2012 (8) TMI 713 - SUPREME COURT (SC)] wherein it was held that the Goodwill constitutes an “asset” under Explanation 3(b) to section 32(1) of the Act. - Decided in favour of the assessee. Depreciation in respect of the capitalized software expenditure - Held that:- AO is directed to grant depreciation as per the relevant rules in respect of the software expenditure capitalized by the Revenue which is the subject matter of dispute raised in ground no.9. - Decided in favour of the assessee. - I.T.A. No. 7399/M/2012 (AY: 2008-2009) - - - Dated:- 28-10-2015 - Shri D. Karunakara Rao, Accountant Member And Shri Pawan Singh, Judicial Member For the Appellant : Shri M.P. Lohia and Mr. Nimesh Vora For the Respondent : Shri K. B. Shukla, CIT-DR ORDER Per D. Karunakara Rao, AM This appeal filed by the assessee on 13.12.2012 is against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was also known as Unify Enterprise Communications 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 depreciation of plant and machinery. After adjustments, arithmetic mean of the rest of the 4 comparables with the said adjustment to Arraycom India Ltd is determined at 11.06%. During the proceedings before the DRP, assessee tried to explain the requirement of considering the said Arraycom Limited after including the claim of depreciation. Ld Counsel for the assessee argued that the provisions of depreciati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w has to be adopted in the case of comparables including Arraycom. If no depreciation has been provided in that case, the TPO is directed to take the depreciation into account for the purpose of calculation. 7. Considering the above, we are of the opinion that the AO should consider the said comparable (Arraycom Ltd) without any adjustments. Accordingly, this part of the ground is allowed in favour of the assessee. 8. Further, Ld Counsels for the assessee demonstrated that if the order of the DRP for the AY 2009-2010 is considered (in connection with Arraycom Ltd), Shyam Telecom Limited should also be considered in favour of the assessee, then the PLI of the assessee is in safe zone. Therefore, no other adjustments by TPO are warranted. Accordingly, we picked up the issues relating to the inclusion of Shyam Telecom Limited for adjudication as to decide if this comparable constitutes good comparable. In this regard, Ld Counsel for the assessee 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, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 above discussion. 10. Considering the relief granted by us to the assessee, we are of the opinion that the adjudication of the rest of the grounds relating to the TP adjustments becomes academic exercise. Accordingly, they are dismissed as academic. Corporate issues 11. Ground nos.11 and 12 raised by the assessee are relates to the Corporate Issues. Ground no.11 relates to the granting of the depreciation u/s 32 of the Act on the goodwill, being an intangible asset. In this regard, at the outset, Ld Representatives of both the parties agreed to the proposition that the said additional ground is legal in nature and the same is required to be adjudicated as per the ratio of Supreme Court laid down in the case of Smifs Securities Limited [348 ITR 302 (SC)] wherein it was held that the Goodwill constitutes an asset und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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