TMI Blog2021 (11) TMI 1155X X X X Extracts X X X X X X X X Extracts X X X X ..... O has provided carry forward of cumulative losses. Further the same has also been utilized against the total income in the draft OGE to Tribunal order passed for the AYs 2011-12 [ 2019 (6) TMI 660 - ITAT BANGALORE] In view of the above, the assessee is eligible as per the Order giving effect passed for earlier years to claim the set off of brought forward depreciation loss from prior years. Accordingly the AO is directed to allow the brought forward depreciation loss. TP Adjustment - payment of fees for administrative support services - as submitted bundled approach for benchmarking should be accepted - HELD THAT:- This issue came up for consideration in assessee s own case in AY 2015-16 [ 2021 (4) TMI 1361 - ITAT BANGALORE] we hold that payment of administrative and marketing support services is part of the operating cost, no separate adjustment is warranted. This ground of the assessee is partly allowed. - IT(TP)A No. 309/Bang/2021 - - - Dated:- 8-11-2021 - Shri N.V. Vasudevan, Vice President And Shri Chandra Poojari, Accountant Member For the Appellant : Shri Rajan Vora, CA. For the Respondent : Shri Muzaffar Hussain, CIT(DR)(ITAT), Bengaluru. ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Cisco Systems Capital (India) Private Limited (hereinafter referred to as the Appellant or Cisco Capital or the Company ), respectfully craves leave to prefer an appeal against the order passed by the Additional / Joint / Deputy / Assistant Commissioner of Income Tax/ Income-tax Officer, National e- Assessment Centre, Delhi [hereinafter referred to as the learned Assessing Officer or the learned AO ] under section 143(3) read with section 144C(13) and 144C(13) read with sections 143(3A) and 143(3B) of the Act ( impugned order ) for Assessment Year ( AY ) 2016-17 dated 31 March 2021, in pursuance of the directions issued by Dispute Resolution Panel (hereinafter referred to as the Hon'ble DRP ), Bangalore dated 19 February 2021 under section 144C(5) of the Act inter-alia on the following grounds which are without prejudice to each other: That on the facts and circumstances of the case and in law: A. Grounds of appeal relating to corporate tax matters Disallowance of depreciation on assets given under finance lease: 1. The learned AO has erred in law and in fact by disregarding the ownership status of Cisco Capital India in relation to the assets leased out by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein marketing, sales and administrative support services (which was in the nature of outsourcing of services to Cisco India or deputation services by Cisco India to Cisco Capital) are allegedly rendered by Cisco Capital and reIT( characterizing the payment made for these services to Cisco India as a transaction entered into pursuant to an understanding/ arrangement between Cisco Capital, Cisco India and CSI BV. 8. The learned TPO/AO has erred in law and fact by ignoring that in absence of an arrangement/ understanding between Cisco Capital, Cisco India and CSI BV, the adjustment is outside the purview of the jurisdiction of learned AO/ TPO, as the alleged Advertising Marketing Promotion (AMP') transaction and further determining a mark-up though it is not an 'international transaction' Bundled Approach for benchmarking should be accepted 9. Without prejudice, the learned TPO/AO has erred, in law and in fact, by not appreciating that once the net margin is tested for arm's length price under Transactional Net Margin Method ( TNMM ) method (including administrative fees paid to Cisco India), it pr-supposes that the various items of income and expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 271(1)(c) of the Act for various proposed disallowances / additions. The Appellant submits that each of the above grounds is independent and without prejudice to one another. The Appellant craves leave to add, alter, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal, so as to enable the Hon'ble Tribunal to decide on the appeal in accordance with the law. 6. Grounds No.1 2 are regarding disallowance of depreciation on assets under finance lease. In the return of income filed for AY 2016-17, Cisco Capital India has claimed depreciation under the Act on the networking equipment leased out under finance lease arrangement. Given that section 32 of the Act would require satisfaction of twin conditions (viz. ownership and put to use for business purpose) for allowance of depreciation under the Act, the AO referring to the decision of the Hon'ble Supreme Court in the case of Asea Brown Boveri Ltd. Vs. Industrial Finance Corporation of India Ors. in CA 3574 of 1998 dated October 27, 2004 was of the view that Cisco Capital India being the lessor of such equipment given out on finance leas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scanned the entire record and clauses of agreement in the case before the Supreme Court in M/s ICDS Ltd (supra) as well as in the case of Hewlett Packard India Sales Pvt Ltd (supra) and in the case of the assessee, in the present case, with regard to ownership, inspection, repossession of the equipment on default, delivery of equipment on expiry of lease and ownership at the end of the lease period, are similar and therefore it is the assessee alone who can claim depreciation, as rightly held by the assessing officer. The clauses relating to lease have already been interpreted by the Supreme Court in the case of M/s ICDS Ltd(Supra) and it has been held that the assessee is entitled to the benefit of depreciation on leased assets under section 32 or the Act of 1961 and therefore, the substantial question of law involved in the present appeal is no longer res integra and is squarely covered by the decision of the Hon'ble Supreme Court in M/s ICDS Ltd (Supra) as well as the judgement delivered by the Division bench of this court in case of Hewlett Packard India Sales Pvt Ltd (Supra). 9. The ld. AR further submitted that the Tribunal in Assessee's own case for AY 2011-12 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance may be deleted. 13. After hearing both the parties, we find that similar issue came up for consideration before the Tribunal in assessee s own case for AYs 2011-12 2013-14 in IT(TP)A No.291/Bang/2018 688/Bang/2016 and the Tribunal vide order dated 7.6.2019 held as follows:- Disallowance of claim of depreciation on equipment leased by the assessee under financial lease arrangement 6. The AO in this case has not followed the binding judgment of Hon ble Supreme Court in the case of ICDS Ltd. V CIT [Civil Appeal No.3282 of 2008). He has from page 6 onwards in his order recorded views contrary to the ratio laid down by the Hon ble Supreme Court. This cannot be approved. He relied on the judgment of Hon ble Supreme Court in the case of M/s. Asea Brown Boveri Ltd. v. Industrial Finance Corporation of India Ors. in CA 3574 of 1998 dated October 27, ,2004. This judgment is not on the issue of claim of depreciation of assets given on financial lease under the Income-Tax Act, 1961 [ the Act ]. This judgment was rendered in an appeal under section 10 of the Special Courts (Trials of Offences relating to Transactions in Securities) Act, 1992. In fact, the judgment of Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2014-15, the income has resulted in positive and therefore no set off of brought forward losses is available to the assessee for the said years. 16. We have heard both the parties and perused the material on record on this issue. The AO has passed the Order giving effect to the Tribunal Order for the AYs 2008-09 2009-10 wherein the AO has provided carry forward of cumulative losses up to INR 102,00,76,634. Further the same has also been utilized against the total income in the draft OGE to Tribunal order passed for the AYs 2011-12 amounting to INR 38,54,91,246. In view of the above, the assessee is eligible as per the Order giving effect passed for earlier years to claim the set off of brought forward depreciation loss from prior years. Accordingly the AO is directed to allow the brought forward depreciation loss. 17. With regard to ground Nos. 4 to 8 and 10 to 16, the ld. AR fairly conceded that these grounds are only academic and does not require any adjudication. Accordingly, these grounds are dismissed. 18. By ground No.9, the assessee grievance is bundled approach for benchmarking should be accepted. At the outset, the ld. AR submitted that the TPO has accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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