TMI Blog2019 (5) TMI 1590X X X X Extracts X X X X X X X X Extracts X X X X ..... g TNMM. This contradiction needs to be examined once again. We restore this issue to the files of the AO/ TPO with a direction that the manufacturing activity should not be considered as part of international transaction. Expenses directly attributable to the manufacturing activity should be ignored and the comparables should be once again examined to decide whether RPM is the most appropriate method. The assessee is free to raise any other issue relating to the bench marking and the TPO is also free to decide the issue after giving a reasonable opportunity of being heard to the assessee. Ground treated as allowed for statistical purpose. - ITA No. 1376/DEL/2017, ITA No. 1525/DEL/2017 - - - Dated:- 2-4-2019 - SH. N. K. BILLAIYA, ACCOUNTANT MEMBER AND SH. SANDEEP GOSAIN,JUDICIAL MEMBER For The Assessee : Sh. Vishal Kalra, Advocate And Sh. Ankit Sahani, Advocate For The Revenue : Sh. Sanjay I. Bara, CIT DR ORDER PER N. K. BILLAIYA, AM: ITA No.1376/Del/2017 and 1525/Del/2017 are cross appeals by the revenue and the assessee preferred against the order of the CIT(A)-44, New Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness and its assets including exclusive business rights. Ld. CIT(A) further noticed that as per clause 4 of the agreement with Usha International Ltd. consideration for business right payable to Usha International Ltd. was ₹ 17300000/- and for other business and commercial rights of ₹ 27,00,000/- was capitalized as goodwill in the books of a/c. She noted that in A.Y. 2001-02 the Tribunal had allowed the assessee's claim and following the same she allowed the assessee's claim of ₹ 28,12,500/- 27. Having heard both the parties, we find that the issue relating to depreciation on WDV of goodwill paid to Usha International Ltd., is covered in favour of the assessee by earlier decisions of the Tribunal. We find that The ITAT Delhi Bench B' vide its order dated 23.12.2011 rendered in ITA no. 1346/Del/2010 1404/Del/2010 has decided the issue in favour of the assessee by observing as under: 4. In the ground no.2 of revenue's appeal, the issue involved is deleting the addition of ₹ 37,50,000/- made by the Assessing Officer claimed as 'Goodwill' by the assessee on account of depreciation on WDV paid to Us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erusal of the consideration also clearly shows that the agreement is for selling S items, first one being the business, second goodwill and third other assets. The purchase consideration also shows the computation of such 3 items being the exclusive business rights for a consideration of ₹ 1,73,00,000/-, 27,00,000/- Without any specifications and (c) the transferable deposits which vyould have to be considered as other assets. This being as the amount of ₹ 27,00,000/- as shown in the purchase price has not been shown to be in relation to either exclusive business rights or for transferable deposits. The same would have to be treated as being towards goodwill . This being so, we are of, the view that the amount of₹ 27,00,0001- as paid by the assessee would have to be treated as goodwill. In regard to the balance of 1.73 Crores, it is for the exclusive business rights. The ITAT vide Para 7 of their order held as under: In these circumstances, we are of the view that the Id. CIT(A) was right in holding that the assessee was entitled to the depreciation in regard to the purchase of the exclusive business r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. The assessee had relied on various judicial pronouncements wherein it was held that the registration of an asset in the name of purchaser was not necessary for the purpose of claiming depreciation. Following the Tribunal's decision for AY 2001-02 the Id. CIT(A) allowed the assessee's appeal. 30. Having heard both the parties we find that we find that the issue relating to depreciation on patents, trademarks and intellectual property rights acquired by the assessee from Siel Aircon Ltd. is covered in favour of the assessee by earlier decisions of the Tribunal. The ITAT Delhi Bench 'B' vide its order dated 23.12.2011 rendered in ITA no. 1346/Del/2010 1404/Del/2010 has decided the issue in favoaur of the assessee by observing as under: 8. The assessee company has purchased manufacturing business of M/s. SIEL Aircon Ltd. as a going concern vide agreement dated 08.08.2000. As a part of this agreement, the assessee company also acquired intellectual property rights which include patents, trademarks, etc. etc. and paid ₹ 10,93,00,000/-. The amount was capitalized in books as pat fit and trademark and the same is treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lier year, i.e., 2001-02, therefore, respectfully following the decision of ITAT, we dismiss this ground of revenue's appeal also. 31. There being no change in facts and circumstances of the case and the order of Id. CIT(A) being in conformity with the earlier order of the Tribunal in assessee's own case, we uphold the order of CIT(A) on the issue in question. Ground is dismissed. 6. Respectfully following the findings of the coordinate bench we decline to interference with the findings of the CIT(A), appeal filed by the revenue is accordingly dismissed. 7. ITA No.1525/Del/2017 assessee s appeal. 8. The substantive grievance of the assessee read :- 2. That on the facts and circumstances of the case and in law, the CIT(A) has erred in rejecting the benchmarking analysis conducted by the Appellant wherein Resale Price Method ( RPM ) was adopted as the most appropriate method ( MAM ) to benchmark the international transaction of purchase of finished goods for resale. The CIT(A) further erred in upholding Transactional Net Margin Method ( TNMM ) as the MAM in determining the ALP of the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for doubtful advances amounting to INR 26,51,567 and advances written off amounting to INR 60,00,000. 3.2 That on the facts and circumstances of the case and in law, the CIT(A) has erred in not appreciating that the losses incurred by the Appellant were due to extra ordinary commercial, unforeseen circumstances and were not in relation to import of finished goods from AEs. 9. Representatives of both the sides were heard at length. Case records carefully perused. Facts on record show that during the year the international transaction entered into by the assessee are as under :- S. No. Description of transaction Method Value (In Rs.) 1 Import of finished goods RPM 56,32,80,873 2 Commission received TNMM 1,12,24,717 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ccost of Matl 984,923,549 Man. Exp 47,030,905 Employee Cost 81,531,513 Admn Ors 125,041,751 Selling Dist 150,459,432 Intt on WC 45,469,460/- Depreciation 142,762,316 Misc. Exp 76,116,961 Total (A) 1,653,335,887 Less : Extraordinary Expenditure Goodwill w/ off ..... X X X X Extracts X X X X X X X X Extracts X X X X
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