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2018 (10) TMI 731

Claim of depreciation u/s 32 - acquisition of trade mark - disallowance on the ground that the cost of acquisition of trademark has been determined at Nil and consequently depreciation claimed by the assessee at the prescribed rate was disallowed - Held that:- disallowance of depreciation claim by the assessee u/s 32 of the Act qua trademark acquired in FY 2006-07 is not sustainable as the TPO is not to decide the business expediency of any intangible assets purchased by the assessee by sitting on the armchair of a businessman. Moreover, when the decision rendered by the TPO for AY 2007-08 has been set aside by the coordinate Bench of the Tribunal to the TPO, the present assessment order passed by following the said order is also not sustai .....

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of the case and the submission made by the appellant. The Assessing Officer has disallowed the depreciation of ₹ 39,55,078/- claimed on the trademark. The C/T(A)-XIII New Delhi vide order dated 31.03.2013 ITA No. 48/2011-12 for the A. Y. 2007-08 held that the transactions of purchase of trademark was not at arm's length and the order passed by the Transfer Pricing Officer with regard to the purchase of the trademark was upheld. The appellant had capitalized the purchase of the trademark and claimed the depreciation. The value of the international transaction involving the purchase of the trademark was held at "Nil". In view of this, the Assessing Officer is justified in rejecting the claim of the depreciation during the .....

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sputedly, reference was not made by the AO to the TPO to determine the arm s length price qua the international transactions entered into by the assessee rather passed the assessment order by following TPO order dated 15.10.2010 passed in AY 2007-08. It is also not in dispute that the assessee has claimed depreciation @ 25% @ WDV of the trademark amounting to ₹ 5,29,82,100/-. 6. At the very outset, it is brought to our notice by the ld. AR for the assessee that the issue in controversy has already been decided in favour of the assessee by the coordinate Bench of the Tribunal vide order dated 13.06.2016 passed in its own case ITA Nos.2244/Del/2013 & 2245/Del/2013 for AYs 2007-08 & 2009-10 and drew our attention towards para 23 .....

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ra}. Therefore, rejecting the entire payment without there being any analysis on the CUP method cannot be accepted. In the guise of analyzing the transactions in the CUP method, the TPO has not brought any evidence on record to reject the payment made to Fab India Inc. In the instant case, the TPO did not examine the arms length price of the impugned royalty payment in accordance with the provisions of Sec.92C of the Act. Accordingly, we are of the opinion that the ALP of the impugned payment for trademark and the issue relating to the depreciation on trade mark need to be examined afresh. Accordingly we set aside the order of Assessing Officer/TPO/CIT (A) on this issue and restore the same to the file of the TPO for examination of the same .....

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