TMI Blog2016 (2) TMI 1364X X X X Extracts X X X X X X X X Extracts X X X X ..... plant and machinery - Ground no.1 2 of the assessee are treated as allowed for statistical purposes. Set off of brought forward depreciation of loss - claim denied despite being made in the return of income - HELD THAT:- We find that the claim of brought forward loss was not considered by the AO. The AO is directed to verify such claim and to give a set off of brought forward loss as allowed under law. Ground no.3 is allowed for statistical purposes. TP Adjustment - treatment given by the lower authorities to the international transactions pertaining to payments made by it for administrative support services received by it from its associated enterprises - Lower authorities have considered the value of the benefit if any received by the assessee from its AE as nil due to failure of the assessee to produce evidence in this regard - Similar failures were there in the earlier years also - HELD THAT:- As per the learned DR, assessee ought to have brought all the evidence in support of its claim that it had received benefits from its AE, due to the services rendered before the DRP, in view of the Tribunal s order for assessment year 2008-09. However, it is also possible that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eligible for depreciation at 60%. The AO had held the claim of the assessee to be farfetched. According to him, the devices had long period of effective use and were not amenable to virus attacks or redundancy. Learned CIT(A) also approved such view, taken by the AO and held that such equipment would be eligible for only 15% depreciation as available for general plant machinery. In this regard, we find that the similar issue had come up before this Tribunal both for the assessment year 2008-09 2009-10 in assessee s own case. Relevant para no.5 of the order of this Tribunal in IT(TP)A No.116(B)/2014 dated 10-10-2013, for assessment year 2009-10 is re-produced hereunder; 5. As regards the first issue i.e. depreciation on networking equipment allowed at 15% as against 60% as claimed by the assessee, we find that the issue is covered in favour of the assessee by the decision of this Tribunal, to which one of us i.e. the Judicial Member is the signatory, in assessee s own case for assessment year 2008-09 in IT(TP)A No.1558/Bang/2012 dated 19/9/2014. The Tribunal in para.6 to 8.3 of its order has considered this issue at length and has held as under: 6. Having heard both the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Conferencing systems make use of various end points in a system such as video input consisting of camera, video output in the form of microphones and speakers etc. The data transmission happens in a number of ways depending on the technology being used including digital technologies as well as analog technologies, broadband internet connection and radio frequencies which can include satellite transmission and Wifi. Therefore, according to the learned counsel for the assessee, computer system is extremely important to conferencing process and therefore the audio visual transmission equipment should be considered as part of a computer. 8.2 Regarding the video streaming equipment, it was submitted that the video streaming allows user to begin viewing the video clips stored in a server without first downloading the entire file and after a brief period of initiating and buffering, the file will begin to stream or play in real time. Video streaming involves a series of steps involving the use of media content, a computer that runs encoding software, servers for upholding the streamed media format and access to such media through various devices. From the above submissions, it is cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fulfillment of the objective of the audio-visual conferencing and video streaming. Some of the components may exist independently and may also be functioning independently but in the assessee s business they are only performing the functions as input and output devices. The assessee can also use this equipment independent of the computer system used in the audio visual conferencing and video streaming activity. But did the assessee use them independently is the question. In view of the same, we are of the opinion that the AO, instead of classifying the entire equipment as plant and machinery and not computer, is required to examine each item in detail as regards its functional dependency on the computer and its independent existence. The items which are functionally dependent on computers are definitely part of computer and the items with independent existence may not be computers but wherever it is found that the device is not used independent of the computer system and the purpose of audio visual conferencing and video streaming, the same shall be treated as computers and wherever it is used independently for any other purpose it shall be treated as plant and machinery. The AO, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... give a set off of brought forward loss as allowed under law. Ground no.3 is allowed for statistical purposes. 8. In its ground nos.4 to 8 assessee assails the treatment given by the lower authorities to the international transactions pertaining to payments made by it for administrative support services received by it from its associated enterprises namely M/s Cisco Systems Capital Asia Pte Ltd. Singapore and M/s Cisco Systems Capital Pte Ltd. Australia. 9. Learned AR submitted that the AO/TPO had substituted CUP method to the TNM method adopted by the assessee for evaluating the international transactions relating to the payments made by the assessee to its associated enterprises (AE) for administrative support services received from them. As per the learned AR, lower authorities wrongly took nil amount as the benefit received by the assessee from such services rendered by the Associated Enterprises. Learned AR also submitted that the very same issue had come up in assessee s own case for assessment years 2008- 09 as well as 2009-10 before this Tribunal. Reliance was placed on the order dated 10-10-2014 in IT(TP)A No.116/B/21014 (Supra). Further, as per the learned AR it ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced before us to substantiate the claim. The assessee has filed copies of agreement with the associated enterprises in support of its contentions that services were rendered pursuant to the said agreement and the payment for such services is allowable. The assessee has further submitted that the assessee has paid the administrative services fee at 5% of cost which was less than the average margin of 13 comparables companies. A chart displaying the margins of comparable cases as well as the assessee-company is also filed before us. We find that the TPO has held that the assessee has failed to produce any evidence to substantiate its claim of receiving services, but has not compared the margins declared by the assessee with the margins of the comparable companies for similar services. In order to substantiate the claim, the assessee not only has to file the copies of agreement with the associated enterprise to show that there is a liability of the assessee to pay, but that it is also essential to prove that the associated enterprise has rendered services to the assessee for which management fee is being paid. When this was put to the learned counsel for the assessee, he submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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