TMI Blog2019 (5) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... Addition of travelling expenses reimbursed to the assessee s parent company, M/s DIC Corporation, Japan - HELD THAT:- Once the assessee established business connection with the visits undertaken by the executives of the foreign parent then the conditions prescribed u/s 37(1) for allowing deduction for expenditure were fulfilled. In such case it was not open for the AO to decide whether or not incurring of such expenditure was necessary for the assessee s business. All that the assessee was required to show was that the expenditure was incurred or laid out wholly and exclusively for its business purposes. On the facts of the present case we find that the assessee had established that the expenditure was incurred for it s business purposes and therefore the Ld. CIT(A) was justified in allowing the relief to the assessee. Ground No. 3 is therefore dismissed. Additional depreciation disallowed - addition on the ground that the depreciation did not pertain to plant machinery but in respect of furniture fixtures - HELD THAT:- Tribunal in its order [ 2019 (2) TMI 1619 - ITAT KOLKATA] directed the AO to follow the directions of DRP and pass a speaking order. The Ld. AR for the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y i.e. the assessee company, being OP/OR after excluding the foreign exchange gain. Ground No. 5(iii)(a) of the Revenue s appeal therefore stand allowed. Comparability analysis - grounds of the Revenue is that the CIT(A) had undertaken exact product comparability instead of a broader product comparability which is otherwise permitted under the TNMM - HELD THAT:- We do not see any merit in the Ld. DR s submission that the entire issue should be restored to the file of TPO for consideration afresh because the Ld. DR could not pin point any glaring factual mistake or legal infirmity in the Ld. CIT(A) s findings nor any fresh material was brought to our attention on the basis of which we could be persuaded to hold that the entire issue needs to be de novo examined by the TPO. However from the facts as discussed above, it is evident that the Ld. CIT(A) himself adopted broader product comparability criteria and not exact product comparability by adopting the broader segment of specialty chemicals as opposed to only printing inks. The Ld. DR could not controvert this fact.We therefore do not find any in-principle merit in the grievance raised by the Revenue. Application of TNMM - As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 43B of the Act. If the assessee had made the payment of sales tax then the debtor of the assessee has to pay back the said amount to the assessee and therefore it will assume the character of a debt in the hands of the assessee. If ultimately the customer does not pay this amount to the assessee, it has to be regarded as bad debt written off and allowed as deduction u/s 36(1)(vii) of the Act. In any event the deduction has to be allowed u/s 28 of the Act as a loss incidental to the business. We therefore direct the claim of the assessee to be allowed. 3. Before us both the parties agreed that this issue is squarely covered by the ITAT s order for the AY 2012-13. Following the appellate order forthe AY 2012-13, we hold that the sales tax component of the debts written off, was allowable as business loss under Section 28 of the Act being in the nature of loss incidental to business. Ground No. 1 is accordingly dismissed. 4. In Ground No. 2, Revenue has objected to the relief allowed by the Ld. CIT(A) in respect of interest disallowance of ₹ 14,37,394/- under Section 14A of the Act read with Rule 8D(2)(ii) of the Income-tax Rules, 1962. The Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cordingly, grounds raised by the revenue are dismissed. 6. Before us both the parties fairly agreed that the issue involved in Ground No. 2 is covered by the orders of the coordinate Bench of this Tribunal in the assessee s own case for the earlier years. Since factual matrix of the case remained unchanged during the relevant year, following the appellate orders for the earlier years, we uphold the Ld. CIT(A) s order on this issue and dismiss ground No. 2 of the appeal. 7. Ground No. 3 is against the relief allowed by the Ld. CIT(A) in respect of travelling expenses of ₹ 16,44,313/- reimbursed to the assessee s parent company, M/s DIC Corporation, Japan. Briefly stated the facts of the case are that the assessee belongs to Dainippon Inks Corporation Group of Japan, which is a leader in speciality and printing ink business worldwide. Being member of the DIC Group, the assessee stands to benefit by the technological advancement achieved by the group companies worldwide. As is the practice followed in MNC groups, senior personnel of Group holding company pay visits to promote business interests of the Group affiliates in their respective territori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fitability of the affiliate and consequently the growth of the Group in overall terms. Since the visit of the technical team from DIC, Japan; was undertaken for reviewing the business operations of the assessee, the travelling expenses of the personnel visiting India were incurred by the assessee company and claimed as business expenditure u/s 37(1) of the Act. Merely because the persons visiting Indian operations of the assessee were employees of DIC, Japan did not ipso facto lead to conclusion that expenditure reimbursed on their visit to India were not for the purposes of assessee's own business. In my considered opinion the expression incurred or laid down wholly exclusively for the business purposes as used in section 37(1) is much wider in its connotation and the said expression cannot be given any restrictive meaning. Whether or not the expenditure is incurred or laid out for business purposes must be viewed from the perspective of a businessman and not that of the Tax Authority 15.3 In the impugned order the Ld. AO has opted to make disallowance on the ground that there was no necessity on the assessee's part to bear the expenses of foreign emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no locus to incur the expenditure and the assessee also failed to establish the business purpose which was served by incurring such expenditure in respect of visits undertaken by employees of the foreign company. 9. Per contra the Ld. AR of the appellant fully relied on the order of the Ld. CIT(A). He submitted that the senior employees of DIC Japan had visited the manufacturing sites of the assessee at assesseee s request and as a result of these visits, assessee had received useful advice for improving its business operations. The Ld. AR further submitted that it was wholly at the discretion of the assessee to decide as to the terms on which it could deal with its foreign associates and the AO could not decide the issue of allowability of the expenditure from the view point of the tax gatherer. The Ld. AR submitted that it was never disputed by the AO or TPO that the assessee had merely reimbursed the travelling costs actually incurred and no further payment was made. He therefore urged to uphold the order of the Ld. CIT(A). 10. After giving a thoughtful consideration to the submissions of the rival parties, we find force in the submissions of the Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machinery block but these were in the nature of furniture fixtures qualifying for lower depreciation rate of 10%. The AO also disallowed the assessee s claim for additional depreciation in respect of electrical installations added during the relevant year. On appeal the Ld. CIT(A) allowed the relief on appreciation of the facts and evidences brought on record and also having regard to the nature of assets and the places at which these electrical installations were commissioned. The Ld. CIT(A) also adverted to the judgments of the Hon ble Punjab Haryana High Court in the cases of CIT vsOswalWollen Mills Ltd (289 ITR 261), CIT VsMetalman Auto Pvt Ltd (11 taxmann.com 51) and CIT VsSubrataDuttaChoudhury (197 Taxman 71) and recorded the following findings : From the details of the additions made, I find that the appellant had made additions on account of air compressor, piping, filter housing, fire protection systems, chilled water lines, fabrication of structures, storage tanks, weighing scales flame proof fittings for fire safety. It is also appeared from the locational details enumerated in the assessment order by the AO that he never questioned the fact ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowed the assessee s claim for additional depreciation u/s 32(1)(iia) of the Act. On appeal the DRP had set aside this issue to the file of the AO with the following directions: Findings: Ground No. 13 was also carefully considered by us. The arguments were also taken into account by us. It was noted by us that additional depreciation was claimed by the A on multi gas detector model selection model PGM-6228 12KL GD Storage Tank. The said object cannot be regarded by us as an office equipment or furniture. The AO shall verify from records whether additional depreciation is pressed against the above plant or against some office equipment. If it is in respect of the former the claim shall be allowed. 13. Since the directions of the DRP were not acted upon, the matter was taken up in appeal before the Tribunal. The coordinate Bench of this Tribunal in its order dated14.02.2018 in ITA No.552/Kol/2017 directed the AO to follow the directions of DRP and pass a speaking order. The Ld. AR for the assessee pointed out that in the order u/s 254 the AO accepted the assessee s contention that the electrical installations were installed at factory premis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of manufacture of printing inks. The printings inks are mixtures of pigments and chemical additives. In order to manufacture specialized printing inks, the assessee has entered into two technical collaboration agreements with M/s DIC Corporation, Japan ( DIC ) and DIC Asia Pacific Pte Ltd, Singapore ( DICAP). In terms of the agreement with DICAP, the assessee company was licensed intangibles which consisted of technical information concerning manufacturing, formulation and application along with plant designs, production process, quality control etc. in relation to manufacture of offset inks, gravure inks, web offset inks, conventional black and color inks, varnishes of all types including flush varnish, metal decorating inks, adhesives including packaging adhesives. The assessee has also been granted limited right to use the trademarks and brand names vis- -vis such products. The assessee is permitted to non-exclusively use these licensed IPRs to manufacture and sell the products as aforesaid in any country except where DIC or DICAP has their plants. In terms of the said technical collaboration agreement, the assessee is also entitled to use the improvements in the licensed intan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid as a percentage of sales. The mean rate of royalty paid under the comparable agreements was worked out at 8.55% and hence the royalty payments to the AEs were reported to be at arm s length. 18. The Ld. DR submitted that the benchmarking exercise conducted by the assessee was not appropriate and he relied upon the order of the TPO. He submitted that the royalty rates notified by the SIA / FIPB in respect of technical collaboration agreements under the automatic route was only an indicator and therefore could not be taken as a benchmark to arrive at the ALP of the transaction in question. He further submitted that the assessee never submitted the details of the search process conducted in the Royalty Stat Database before the TPO and therefore the TPO was justified in rejecting the application of CUP Method. He submitted that the Ld. CIT(A) was unjustified in benchmarking the royalty transaction himself instead of setting it aside to the file of the AO and therefore urged us that the matter should be restored to the file of the AO. 19. Per contra the Ld. AR strongly relied on the appellate order of the Ld. CIT(A). He pointed out that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. We note that the agreements in terms of which royalty was paid to AEs were in force in the past years as well. The technical collaboration agreement with DIC, which was entered into in the year 2000, was originally approved by the Dept. of Industrial Policy Promotion, Ministry of Commerce Industry. The same agreement was renewed in 2007 in terms of which royalty was consistently paid at the rate of 3% of the net sales. Similarly the technical collaboration agreement with DICAP under which royalty was paid at 2% of the net sales was entered into in the year 2008. The income-tax assessments of the assessee for the preceding years were completed u/s 143(3) after obtaining orders u/s 92CA(3) from the TPO. We note that in none of the past assessments the TPOs had questioned the ALP of royalty payments nor any material was brought on record in these orders to suggest that the payment of royalty was excessive. We therefore find force in the submissions of the Ld. AR that on the principle of judicial consistency the TPO as well as AO were not permitted to depart from the accepted position permeating through the years when neither of the authorities poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the case, no ALP adjustments were directed by the Ld TPO in respect of international transactions involving payments made by the assessee under the Cost Contribution Agreement (CCA) for receiving purchase services, order handling services and sales services for last three assessment years i.e. AY 2009-10, AY 2010-11 and AY 2011-12. Though there was no change in the facts and circumstances of the case for the previous year relevant to the assessment year 2012-13, the TPO/DRP determined the arm's length price of the said transactions at NIL value thereby violating the rule of consistency enunciated by the Hon'ble Supreme Court in the matter of Dalmia Promoters Devels. (P.) Ltd. (supra). In the aforesaid decision, the Hon'ble Supreme Court has held that: We are not going into this issue in as much as this appeal can be disposed of on the ground that consistency does demand that there being no change in circumstances, the income for the year 1993-94 would also have to be treated business income as for the previous three years. Accordingly, the appeal is dismissed. We note that the Department has been consistently a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s at which the royalty was paid was pursuant to the agreement approved by the Dept. of Industrial Policy Promotion, Ministry of Commerce Industry. Such rates were also within the rates prescribed by SIA FIPB in respect of the technical collaboration agreements between residents of India and the nonresidents under the automatic route i.e. 5% 8% in respect of domestic sales export sales respectively. In view of the foregoing facts we hold that the rate of royalty adopted by the assessee for making royalty payments were within the prescribed parameters and therefore at arm s length. In the circumstances therefore we do not find any infirmity in the Ld. CIT(A) s order in granting relief. In this regard, we find support from the decision of the coordinate Bench of this Tribunal in the case of ACIT Vs Dow Agrosciences India Pvt Ltd (76 taxmann.com 124) wherein on analogous facts the Tribunal had held as follows: 7.1 In order to appreciate the aforesaid, the following discussion is relevant. The royalty paid by the assessee to its associated enterprise i.e. Dow Netherlands has been approved by the Secretariat of Industrial Approval (SIA), Ministry of Industry (G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer Pricing Officer i.e. payment of royalty by Dow UK to Dow Netherlands was a wrong approach inasmuch as comparison could be made only with an uncontrolled transaction, whereas in the case of Dow UK and Dow Netherlands, both were associate enterprises and, therefore, payment of royalty by DOW UK to DOW Netherlands was a controlled transaction and accordingly, the same could not be considered as a valid CUP data. In so far as the latter plea of adoption of controlled transaction was concerned, the CIT(A) in assessment year 2002-03 has accepted the plea of the assessee. However, with regard to the plea of the assessee based on the rate of royalty approved by the Central Government is concerned, the CIT(A) rejected the same as according to him, such rates could not be considered as valid CUP data. The CIT(A) had however, allowed relief by benchmarking royalty payment under the TNMM whereby, the margins from the manufacturing activities of the assessee were found to be favourable vis- -vis those of the comparables concerns. The Tribunal in assessment year 2003-04 upheld the ultimate conclusion of the CIT(A) to delete the addition on the ground that the basis on which the royalty was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the royalties paid by the assessee are in terms of the approval granted by SIA as also in terms of Circular No.5 dated 21/7/2003 (supra) of the Reserve Bank of India and, therefore, the royalties paid @ 8% on export and 5% on domestic sales are to be considered at arm's length rate. 7.4 Although the Ld. Departmental Representative did not dispute the factual matrix, but he has merely relied upon the order of the TPO in support of the case of the Revenue. 7.5 In our considered opinion, following the judgment of the Hon'ble Bombay High Court in the case of SGS India Ltd. (supra), the payment of royalty by the assessee to its associated enterprise, Dow Netherlands @ 5% on domestic sales and 8% on export sales is liable to be considered as at an arm's length rate in view of the Circular No.5 dated 21/7/2003 (supra). Therefore, the addition made by the Assessing Officer on this count is unsustainable. In the ultimate analysis, we uphold the action of the CIT(A) in deleting the addition, albeit, on a different ground. 23. Similar view has been endorsed by another coordinate Bench of this Tribunal in the case of ACIT Vs. Ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leting the downward adjustment made by the TPO in respect of royalty payments. Ground No. 5(i) (ii) of the Revenue s appeal therefore stand dismissed. 25. Now we proceed to deal with the issue concerning the adjustment made by the TPO in respect of international transactions involving purchase/sale of materials/goods. Briefly stated facts of the case are that the assessee had benchmarked the transactions involving purchase of finished goods applying Resale Price Method ( RPM ) and the transactions involving import of raw materials and export of finished goods by applying Transactional Net Margin Method ( TNMM ). For applying the TNMM, the assessee conducted a search and thereafter identified seven comparables whose mean PLI, being OP/OR worked out to 5.74%. The assessee was taken as the tested party and its PLI was worked out at 5.33%. Since the PLI fell within the range of +/-5% prescribed in the proviso to Section 92C; the transaction was reported in the TPSR to be at arm s length. The TPO rejected the application of RPM vis- -vis the import of finished goods in absence of reliable data and sought to benchmark it under TNMM Method. The TPO also did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainers, discount received, management fees and foreign exchange gain was to be considered as part of the operating revenue to arrive at the correct PLI of the tested party. The Ld. CIT(A) also agreed with the TPO s broader product comparability search of manufacture of specialty chemicals including printing inks as opposed to the appellant s claim for considering companies only engaged in manufacture of printing inks. He however noted that some of the comparables adopted by the TPO as well as the assessee were not functionally similar even under this broader product comparability test. After analyzing the functional profile of each of the comparable; the Ld.CIT(A) identified seven companies, which in his opinion fitted the broader product comparability and rejected companies which according to the Ld. CIT(A) did not fit even in the broader functional comparability. With these findings, the Ld. CIT(A) directed the AO to re-work the transfer pricing adjustment in the facts of the present case. Aggrieved by this order of the Ld. CIT(A), the Revenue is in appeal before us only on two specific issues; (a) whether foreign exchange gain can be considered to be operating i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ively submitted that even if the Ld. CIT(A) s order adopting the broader product comparability criteria and thereby selecting companies engaged in manufacture of specialty chemicals inter alia including printing inks is accepted at its face value, even then the facts demonstrated that the assessee s transactions with AEs involving import of material and import export of finished goods were on arm s length requiring no transfer pricing adjustment. In this regard he drew our attention to the order passed by the TPO while giving effect to the Ld. CIT(A) s order wherein the TPO worked out mean PLI of the comparables at 4.11% whereas the PLI of the assessee was 5.51%. He therefore urged that the order of the Ld. CIT(A) on this issue be upheld. 29. After hearing the submissions of the rival parties; we do not see any merit in the Ld. DR s submission that the entire issue should be restored to the file of TPO for consideration afresh because the Ld. DR could not pin point any glaring factual mistake or legal infirmity in the Ld. CIT(A) s findings nor any fresh material was brought to our attention on the basis of which we could be persuaded to hold that the entire issue n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. AR appearing on behalf of the assessee drew our attention to the order passed by the TPO giving effect to the directions of the Ld. CIT(A), wherein the TPO even after following the broader approach as advocated by the Ld. CIT(A)and by taking into account functionally comparable companies engaged in manufacture of specialty chemicals, found the PLI of the tested party i.e. the assessee to be at arm s length. In this regard, we further note that even the Ld. DRP, Delhi while adjudicating the assessee s objections to transfer pricing adjustments carried out by the TPO in the immediately succeeding year i.e. AY 2012-13, in-principle upheld the inclusion of only those broadly comparable companies which were engaged in manufacture of specialty chemicals, in the list of comparables. Therefore in our considered opinion and having regard to the facts of the case, the approach of the Ld. CIT(A) in considering companies found to be functionally comparable under the broad segment of specialty chemicals cannot be faulted with. 31. Based on the reasons as discussed in the foregoing, we now proceed to examine the reasons as to why in the impugned order the Ld. CIT(A) rejecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w we proceed to deal with the Revenue's appeal in ITA No. 1363/Kol/2017 for AY 2011-12. Ground Nos. 1 2 of the appeal relate to the disallowance of royalty to the extent of ₹ 4,86,34,165/- paid by the assessee pursuant to the technical collaboration agreements with its holding company, M/s DIC Asia Pacific Pte Ltd and ultimate holding company, M/s DIC Corporation, Japan holding it to be capital in nature. At the outset the Ld. AR of the appellant pointed out that the royalty payments were made to these entities, pursuant to the agreements executed in the years 2000 2007 respectively and in all the past income-tax assessments, framed u/s 143(3), royalty paid as a specified percentage of the net sales was allowed as revenue deduction in computing business income of the respective years. The Ld. AR further submitted that in the assessment order for AY 2010-11 also the AO had allowed the deduction for royalty payment in the assessment completed u/s 143(3). Consequent to passing of the order u/s 143(3) for the relevant AY 2011-12, an order u/s 263 was passed by the Ld. Pr.CIT-4, Kolkata for AY 2010-11 holding that the assessment order was erroneous and prejudicial to the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct matter of challenge by the assessee before ITAT in ITA No.l26/Ko/20l7. This tribunal by its order dated 05.04.2017 quashed the order u/s 263 of the Act taking a view that the expenditure in question was a revenue expenditure. The following were the conclusions of the tribunal : 9. We have heard the rival submissions and perused the materials available on record including the paper book filed by the assessee. We find Coates of India Limited was the erstwhile name of DIC India Limited (assessee herein) . We find from the technical collaboration agreement entered into between assessee and DIC Corporation, Japan on 5.12.2000 that assessee is engaged in the business of manufacturing of printing inks and allied products in India in its various factories located at Calcutta, Delhi, Mumbai, Chennai, Noida and Ahmedabad. The assessee was desirous of upgrading its overall technology and introduction of new technology for manufacturing printing inks and allied products of all types viz., manufacturing of flushed pigments, sheetfed offset inks, gravure inks, web offset inks, news inks, screen printing inks, varnishes of all types including flush varnish, adhesives includin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time help COATES by purchasing the said products directly or through its group/associate companies at such prices as may be mutually agreed upon but not less than the actual cost plus reasonable profit margin. Provided however COATES shall be under no obligations to accept such orders from DIC or its associates and DIC shall not be entitled to any royalty on such transactions. .. 7. SECRECY 7.1. COATES agree to keep the Licensed Information provided hereunder by DIC as secret and confidential and agrees not to disclose it to any third party provided that the information of the following nature shall be excluded from these secrecy obligations: a. Information that is in public domain. b. Information that COATES has in its possession at the effective date which is not subject to an Agreement of Confidentiality. c. Information which COATES has received rightfully from other sources before or after at the effective date. 7.2. The obligation under this article shall survive any termination of this Agreement for ten (10) years. 9. Period of Ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business venture was carried out by the assessee during the year under appeal for which the licensed information was used by the assessee. We find that the ld. CIT had one hand alleged that the assessee had acquired the business / commercial rights in Intellectual Property Rights (IPR) , but in the very same context , he had also stated that the business / commercial rights have been obtained for a period of seven years only. Admittedly the licensed information has been obtained for a period of seven years by the assessee and hence there cannot be any question of acquisition of such licensed information by the assessee. We have gone through the agreement entered into between the assessee and DIC Asia Paciftc Pte Ltd, Singapore and DIC Corporation, Japan and we find that nowhere it was mentioned that the assessee had acquired the business/ commercial rights of IPR so as to fall within the ambit of an asset having enduring nature in the capital field. On the contrary it is very clearly stated in both the agreements that DIC Asia Paciftc Pte Ltd, Singapore and DIC Corporation, Japan has granted license to use technology, knowhow and other license information for a specified period an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of the license under the agreement between the parties which are the same in the present AY also. The tribunal in the case of Bata India Ltd. Took the following view: 18. We have heard the rival submissions. A perusal of the agreement in respect of the technical know-how and the manufacturing process clearly shows that the assessee has derived no enduring benefit nor has assessee obtained any capital asset on the basis of the payment of the royalty as per the agreement, The technical know-how trade-marks denies drawings. notes etc. in respect of the agreement for which the assessee has paid the royalty belongs to the licensor being M/s. Wolverine World Wide, INC. Thus as the assessee has derived no enduring benefit the same cannot be treated as a capital expenditure but is clearly in the name of revenue expenditure and allowable. In the circumstances the AO is directed to allow the royalty paid by the assessee as revenue expenditure as claimed. 11. The Tribunal also placed reliance on the decision of the Hon ble Calcutta High Court in the case of Timken India Ltd. (2014) 51 Taxman 184 (Cal) in which the Hon ble Calcutta High Court took the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the cost of acquisition of such a right could, he taken to be capital expenditure. In the instant case, the assessee shall not be entitled to use the Licensed Information and it had to deliver up to its AE all such Licensed Information in tangible form which may then be in its possession and will keep no copies thereof. Moreover, assessee in the instant case was given by its AE only a non-exclusive and non-transferable license to use Licensed Information for manufacture of products. Assessee was not granted any right to sublicense to any third parties or make available any licensed information to any third parties and is also directed to maintain the secrecy and confidentiality or the licensed information by not disclosing to any third party and such secrecy confidentiality clause shall be binding even after termination of the agreement for ten years. Hence it is a restrictive usage privilege given to the assessee in the instant case and hence the facts before the Hon'ble Madras High Court are squarely distinguishable. 13. In view of the aforesaid decision on the same facts, we are of the view that the claim for deduction as made by the assessee ought t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(A). 37. Ground No. 4 of the appeal relates to the disallowance made on account of depreciation additional depreciation claimed in respect of electrical installations. After considering the rival submissions, it is observed that the issue involved in this ground is identical to Ground No.1 of department appeal in A.Y. 2010-11. The reasons for making the disallowance in the year under consideration are same as discussed in the assessment order for AY 2010-11. The order of the Ld. CIT(A) was also passed on identical lines on which the relief was allowed in the appellate order for AY 2010-11. Therefore, following our conclusions drawn in A.Y. 2010-11, we dismiss this Ground raised by the Revenue and uphold the order of Ld. CIT(A). 38. Ground No. 5 of the appeal relates to the transfer pricing adjustment made by the TPO in respect of the royalty and import/export of materials/ finished goods. After considering the rival submissions, it is observed that the issued involved in Ground No. 5(i) (ii) regarding TP adjustment of royalty is identical to Ground No.5(i) (ii) of department appeal in A.Y. 2010-11. The reasons given by the TPO for rejectin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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