M/s. Omniglobe Information Technologies (India) Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 5265/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0425 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 26-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANGEETA GUPTA
• Keywords: Depreciation; Transfer pricing; International transaction; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH E DELHI ] BEFORE SHRI C. L. SETHI, JM AND SHRI K. D. RAN JAN, AM I. T. A. NO. 5265 (DEL) OF 2010 ASSESSMENT YEAR : 2006-07. OMNIGLOBE INFORMATION TECHNOLOGIES THE INCOME-TAX OFFI CER, ( INDIA ) PVT. LTD., VS. W A R D : 13 (4), E 11. RAJOURI GARDEN, N E W D E L H I. N E W D E L H I 110 027. P A N / G I R NO. AAA CO 6606 M. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI ANIL BHALLA, C . A.; DEPARTMENT BY : MS. SANGEETA GUPTA [ CIT] D. R.; O R D E R. PER K. D. RANJAN, AM : THIS APPEAL IS FILED BY THE ASSESSEE AND PERTAINS TO THE ASSESSMENT YEAR 2006-07. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE REPRODUCED AS UNDER :- ' 1. THE LEARNED ASSESSING OFFICER AND THE HON BLE DISPUTE RESOLUTION PANEL HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING TH E UNJUST AND ILLEGAL ORDER OF THE TRANSFER PRICING OFFICER AND MAKING AN ADDITION OF RS.3,22,23,917/- ON ACCOUNT OF ADJUSTMENT IN ARMS LENGTH PRICE; 2. THE LEARNED ASSESSING OFFICER AND THE HO NBLE DISPUTE RESOLUTION PANEL HAS ERRED BOTH ON FACTS AND IN LAW IN HOLDING THAT DEPRECIATION ON COMPUTER AND ACCESSORIES VIZ. UPS ETC. IS NOT ENTITLED TO DEDUCT ION OF DEPRECIATION @ 60 PER 2 I. T. A. NO. 5265 (DEL) OF 2010 CENT AS APPLICABLE TO THE BLOCK OF COMPUTER AND PER IPHERALS, THEREBY DISALLOWING DEPRECIATION TO THE EXTENT OF RS.3,94,706/-. 3. IN THIS CASE THE ASSESSING OFFICER REFERRED THE MATTER TO THE TRANSFER PRICING OFFICER FOR DETERMINATION OF ARMS LENGTH PRICE OF ASSESSEES I NTERNATIONAL TRANSACTIONS. ON RECEIPT OF DRAFT ORDER THE ASSESSEE FILED OBJECTIONS BEFORE DRP-II, NEW DELHI. THE FIRST OBJECTION RELATED TO PROPOSED ADDITION OF RS.3,22,23,917/- ON THE BASIS OF TRANSFER PRICING OFFICERS ORDER DETERMINING THE ARMS LENGTH PRICE OF INTERNATIONAL TRANSACTIONS. THE SECOND OBJECTION RELATED TO TPO IN REJECTING THE COMPARABLES M/S. NIPUNA SERVIC ES LTDE., M/S. NIIT SMART SERVA LTD. AND M/S. GODREJ UPSTREAM LTD. THE FIRST OBJECTION WAS REJECTED BY DRP ON THE GROUND THAT THE ASSESSEE HAD NOT ESTABLISHED THAT THE DATA OF THE T WO PRECEDING FINANCIAL YEARS HAVE REVEALED FACTS THAT HAVE INFLUENCED THE RESULTS OF THE RELEVANT FI NANCIAL YEAR. THE DRP HAS REJECTED THE SECOND OBJECTION RAISED BY THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS NOT ESTABLISHED THAT THE FINDINGS OF THE ASSESSING OFFICER THAT THE COMPARAB LES HAD MADE LOSSES, WERE WRONG. 4. BEFORE US THE LD. AR OF THE ASSESSEE SUBMITTED T HAT DRP HAS NOT PASSED SPEAKING ORDER. THEREFORE, THE ISSUE HAS TO GO BACK TO THE DRP FOR DECIDING THE ISSUE ON MERITS AFTER PASSING THE SPEAKING ORDER. HE PLACED RELIANCE ON THE DECISION OF HONBLE DELHI HIGH COURT IN CIVIL WRIT PETITION NO. 14079 DATED 22 ND DECEMBER, 2009 WHEREIN THE WRIT PETITION FILED BY THE ASSESSEE WAS DISMISSED. WE FIND THAT HONBLE DELHI HIGH COU RT WHILE DISMISSING THE WRIT PETITION HAS HELD THAT THE DISPUTES RESOLUTION PENAL SHALL POSIT IVELY DEAL WITH THE OBJECTIONS FILED BY THE PETITIONER ALONG WITH SUPPORTING EVIDENCE FURNISHED BY HIM TO REBUT THE BASIS ADOPTED BY TRANSFER PRICING OFFICER TO ARRIVE AT ARMS LENGTH PRICE AND THEREAFTER ONLY PASS A SPEAKING ORDER. IN THE CASE BEFORE US THE ASSESSEE HAS TAKEN TWO OB JECTIONS. THE DRP HAS NOT DECIDED THE OBJECTIONS RAISED BY THE ASSESSEE AGAINST THE ORDER OF TRANSFER PRICING FOR DETERMINATION OF ARMS LENGTH PRICE AS WELL AS REJECTION OF COMPARABLES. HE, THEREFORE, SET ASIDE THE MATTER TO THE FILE OF THE DRP TO DECIDE THE OBJECTION RAISED BY THE ASSES SEE IN RESPECT OF BASIS ADOPTED BY TRANSFER PRICING OFFICER TO ARRIVE AT ARMS LENGTH PRICE AND THEREAFTER DRP WILL PASS A SPEAKING ORDER. WE ORDER ACCORDINGLY. 3 I. T. A. NO. 5265 (DEL) OF 2010 5. THE SECOND ISSUE RELATES TO AOS ACTION IN NOT G RANTING HIGHER RATE OF DEPRECIATION ON UPS FOR THE COMPUTERS. WE FIND THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF A COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S EXPEDITORS INTERNATIONAL FOR AY 2001-02 DATED 29.08.2008 IN I.T.A.NO.2684/ DEL/2005 WHEREIN IT WAS HELD THAT THE PERIPHERALS SUCH AS PRINTERS, SCANNERS, NT SERVER E TC. FORM INTEGRAL PART OF THE COMPUTER AND THE SAME, THEREFORE, ARE ELIGIBLE FOR DEPRECIATION AT A HIGHER RATE AS APPLICABLE TO A COMPUTER. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE TRI BUNAL IN WE DIRECT THE AO TO ALLOW THE DEPRECIATION ON THE COMPUTER UPS AT A HIGHER RATE O F 60% AS CLAIMED BY THE ASSESSEE COMPANY. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED, FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 18 TH FEBRUARY, 2011. SD/- SD/-. [ C. L. SETHI ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 18 TH FEBRUARY, 2011. *MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT. 4 I. T. A. NO. 5265 (DEL) OF 2010