RayBan Sun Optics India Ltd., Gurgaon V. DCIT, New Delhi

ITA 5933/DEL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1258 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2008-2009
• Appeal Filed On: 29-11-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PEEYUSH JAIN
• Assessee Lawyers: G C SRIVASTAVA; HENONEET DALAL
• Keywords: Depreciation; Transfer pricing; Opportunity of being heard; Principle of natural justice; International transaction; Application of stay
• Section: 92C; 143(3); 92B; 234B; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I: NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER & SH. I.C. SUDHIR, JUDICIAL MEMBER ITA NO. 5933/DEL/2012 ASSESSMENT YEAR: 2008-09 RAYBAN SUN OPTICS INDIA LIMITED, 7 TH FLOOR, TOWER 9B, DLF CYBERGREEN, GURGAON. PAN NO. AABCR8209G VS. DCIT, INCOME-TAX, CIRCLE 15(1), NEW DELHI. (APPELLANT) (RESPONDENT) & STAY APPLICATION NO. 291/DEL/2012 (IN ITA NO. 5933/D/2012) ASSESSMENT YEAR: 2008-09 RAYBAN SUN OPTICS INDIA LIMITED, 7 TH FLOOR, TOWER 9B, DLF CYBERGREEN, GURGAON. PAN NO. AABCR8209G VS. DCIT, INCOME-TAX, CIRCLE 15(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI G.C. SRIVASTAVA, ADV. & SH. HENONEET DALAL, ADV. RESPONDENT BY: SHRI PEEYUSH JAIN, CIT(DR) O R D E R PER S.V. MEHROTRA, A.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER DATED 31/10/2012 PASSED U/S 143(3) READ WITH SECTION 144C OF THE INCOME TAX ACT IN PURSUANCE TO THE DIRECTIONS OF TH E DISPUTE RESOLUTION ITA NO. 5933/D/2012 & STAY NO.291/D/2012 2 PANEL U/S 144C(5) DATED 28/09/2012. THIS APPEAL IS LISTED FOR HEARING ALONG WITH STAY NO. 291/D/2012 FILED BY THE ASSESSEE. WE FIRST PROCEED TO DECIDE THE APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IN THE RELEVANT ASSESSMENT YEAR WAS ENGAGED IN THE BUSINESS OF MANU FACTURING, IMPORTING AND SELLING OF SUN GLASSES/METALLIC FRAMES IN INDIA BESIDES EXPORTING RAW, SEMI FINISHED SUNGLASS FRAMES, SUN GLASSES TO LUXOT TICA GROUP. THE ASSESSEE COMPANY IS HELD 70.54% BY RAY BAN HOLDINGS INC., USA, WHICH IN TURN IS INDIRECTLY HELD 100% BY LUXOTTICA GROUP SPA, ITALY. LUXOTTICA GROUP IS WORLD LEADER IN DESIGN, MANUFACTURE AND DI STRIBUTION OF SUNGLASSES AND PRESCRIPTION FRAMES IN MID AND PREMI UM PRICE CATEGORIES. THE ASSESSEE HAD DECLARED TOTAL INCOME OF RS. 29,93 ,34,424/-. THE ASSESSEE HAD REPORTED VARIOUS INTERNATIONAL TRANSAC TIONS AND, THEREFORE, THE MATTER WAS REFERRED BY AO TO TRANSFER PRICING O FFICER FOR COMPUTING ARMS LENGTH PRICE OF INTERNATIONAL TRANSACTION WHO RECOMMENDED ADJUSTMENTS AS DETAILED BELOW: COMPUTATION OF TP ADJUSTMENT (IN RS.) VALUE OF GROSS SALES 95,27,35,250 AMP/SALES OF THE COMPARABLES 0.84% AMOUNT THAT REPRESENTS BRIGHT LINE 79,71,218 EXPENDITURE ON AMP BY ASSESSEE 11,16,14,373 EXPENDITURE IN EXCESS OF BRIGHT LINE 11,16,43,155 MARK-UP AT 15% 1,67,46,473 REIMBURSEMENT THAT ASSESSEE SHOULD HAVE RECEIVED 12,83,89,628 REIMBURSEMENT ACTUALLY RECEIVED NIL ADJUSTMENT TO ASSESSEES INCOME 12,83,89,628 ITA NO. 5933/D/2012 & STAY NO.291/D/2012 3 3. THE ASSESSEE FILED OBJECTIONS TO THE DRAFT ASSES SMENT ORDER BEFORE LD. DRP-II WHICH DIRECTED THE TPO TO RECOMPUTE THE TP A DJUSTMENT. TPO COMPUTED THE ADJUSTMENT AT RS. 8,78,66,465/- AS AGA INST THE EARLIER ADJUSTMENT OF RS. 12,83,89,628/-. ACCORDINGLY, THE ASSESSING OFFICER MADE AN ADDITION OF RS. 8,78,66,465/-. 4. BEING AGGRIEVED WITH THE ORDER OF AO, THE ASSESS EE IS IN APPEAL BEFORE US AND HAS TAKEN FOLLOWING GROUNDS OF APPEAL : - 1. THAT, THE IMPUGNED ORDER OF ASSESSMENT FRAMED BY THE LD. DCIT, CIRCLE 15(1), NEW DELHI (HEREINAFTER REFERRED TO AS THE LD. AO) IN PURSUANCE TO THE DIRECTIONS OF THE HONBLE DISPUTE RESOLUTION PANEL II (HEREINAFTER REFERRED TO AS THE HONBLE DRP) UNDER SECTION 143(3) READ WITH SECTION 144C OF THE INCOME-TAX ACT, 1961 (ACT), IS A VITIATED ORDER HAVING BEEN PASSED IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND IS OTHERWISE ARBITRARY AND IS THUS BAD IN LAW AND VOID AB-INITIO. 2. THAT WITHOUT PREJUDICE, THE LD. AO HAS GROSSLY ERRED IN COMPUTING THE INCOME OF THE ASSESSEE COMPANY AT RS. 387,416,762 AGAINST THE RETURNED TOTAL INCOME AT RS. 299,334,424. THUS, THE ADDITION OF RS. 80,082,338 MADE TO THE RETURNED TOTAL INCOME IS HIGHLY UNJUSTIFIED AND IS ITA NO. 5933/D/2012 & STAY NO.291/D/2012 4 APPARENTLY A CASE OF HIGH PITCHED ASSESSMENT. 3. THAT THE HONBLE DRP HAS COMMITTED GROSS ERRORS WHEN IT CONFIRMED THE ADJUSTMENTS AGGREGATING TO RS. 87,866,465 OUT OF THE TRANSFER PRICING ADJUSTMENT OF RS. 128,389,628 INITIALLY PROPOSED BY THE LD. TPO UNDER SECTION 92CA OF THE ACT AND ONLY GRANTING A PARTIAL RELIEF OF RS. 40,523,163. 3.1THAT THE HONBLE DRP/LD. TPO HAVE ERRED IN HOLDING THAT THE ASSESSEE COMPANY WAS ONLY CARRYING OUT ITS BUSINESS BY USING THE WELL ESTABLISHED BRAND NAME OF RAYBAN AND OTHER BRANDS. 3.2THAT THE HONBLE DRP HAS FURTHER FAILED TO COMPREHEND THAT, THE ASSESSEE COMPANY HAD NOT INCURRED ANY EXPENDITURE TO PROMOTE THE BRANDS OWNED BY LUXOTTICA GROUP AND THAT THE ENTIRE AMOUNT OF ADVERTISEMENT EXPENDITURE INCURRED BY HAD BEEN INCURRED ONLY FOR THE PURPOSE OF SELLING ITS PRODUCTS IN INDIA AND NO SUCH EXPENDITURE HAD ANY IMPACT IN RESPECT OF ANY OF ITS INTERNATIONAL TRANSACTIONS IN ANY MANNER WHATSOEVER. 3.3 THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE LD. DRP/TPO HAS FAILED TO APPRECIATE THE FACT THAT ASSESSEE COMPANY HAS INCURRED THE SUBJECT ADVERTISEMENT EXPENDITURE AT ITS OWN BEHEST AND THE RISK OF ITA NO. 5933/D/2012 & STAY NO.291/D/2012 5 FAILURE OF SUCH ADVERTISEMENT EXPENDITURE IS BORNE BY THE ASSESSEE COMPANY ALONE AND BENEFIT TO ANY OTHER ENTITY IS PURELY INCIDENTAL IN NATURE. 3.4THAT THE LD. DRP HAS ERRED IN CONCLUDING THAT IN LIGHT OF THE EXPLANATION ADDED TO SECTION 92B(2) BY FINANCE ACT, 2012, ADVERTISEMENT EXPENDITURE INCURRED BY THE ASSESSEE COMPANY QUALIFIES AS INTERNATIONAL TRANSACTION UNDER SECTION 92B OF THE ACT. THE LD. DRP HAS FAILED TO TAKE COGNIZANCE OF THE FACT THAT SECTION 92B READ WITH SECTION 92F(V), WHICH TOGETHER DEFINE AN INTERNATIONAL TRANSACTION, DO NOT APPLY IN THE ABSENCE OF ANY ARRANGEMENT/UNDERSTANDING/ACTION IN CONCERT BETWEEN THE ASSESEE COMPANY AND ITS OVERSEAS ASSOCIATED ENTERPRISE. 3.5THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASER AND IN LAW, THE LD. TPO/DRP HAS ERRED IN IGNORING THE FACT THAT THE ADVERTISEMENT EXPENSES INCURRED BY THE ASSESSEE COMPANY REPRESENTS ONLY DOMESTIC TRANSACTIONS UNDERTAKEN WITH THIRD PARTIES, NOT COVERED UNDER THE PURVIEW OF SECTION 92B OF THE ACT AND IS THUS IN EXCESS OF HIS JURISDICTION. 3.6THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. DRP/TPO HAS ITA NO. 5933/D/2012 & STAY NO.291/D/2012 6 ERRED IN IGNORING THAT BRIGHT LINE LIMIT IS NOT A PRESCRIBED METHOD UNDER THE PURVIEW OF SECTION 92C OF THE ACT FOR DETERMINING ALP NOR IS THE SAME NOTIFIED BY THE CENTRAL BOARD OF DIRECT TAXES U/S 92C(1)(F) OF THE ACT. 3.7THAT THE LD. TPO/DRP HAS INCORRECTLY HELD, BOTH ON FACTS AND IN LAW, THAT THE ADVERTISEMENT EXPENSES INCURRED BY THE ASSESSEE COMPANY ARE EXCESSIVE ON THE BASIS OF A BRIGHT LINE LIMIT ARRIVED AT BY CONSIDERING INAPPROPRIATE COMPARABLES, NOT HAVING SIMILAR PRODUCT/BRAND PROFILE AS THE ASSESSEE COMPANY. 3.8THAT THE LD. TPO/DRP HAS ERRED IN CONCLUDING THAT TRADE AND CHANNEL DISCOUNTS OFFERED BY THE ASSESSEE COMPANY TO DEALERS RESULTS IN PROMOTION OF BRANDS OWNED BY LUXOTTICA GROUP. FURTHERMORE, THE LD. TPO HAS IN THIS REGARD, IGNORED THE FACT THAT IN THE PRECEDING ASSESSMENT YEAR I.E., AY 2007- 08, THE LD. TPO HAD ACCEPTED THE ASSESSEE COMPANYS PLEA OF EXCLUDING TRADE AND CHANNEL DISCOUNTS FROM ADVERTISEMENT EXPENSES FOR COMPUTING THE BRIGHT LINE LIMIT. 3.9THAT THE HONBLE DRP HAS FAILED TO APPRECIATE THAT ONCE THE LD. TPO HAD ACCEPTED THAT THE INTERNATIONAL TRANSACTIONS ITA NO. 5933/D/2012 & STAY NO.291/D/2012 7 ENTERED INTO BY THE ASSESSEE COMPANY WERE AT ARMS LENGTH ON THE BASIS OF TRANSACTIONAL NET MARGIN METHOD (TNMM) AS THE MOST APPROPRIATE METHOD, HE COULD NOT HAVE UNDERTAKEN AN ANALYSIS OF THE INDIVIDUAL ELEMENTS OF COST AND THE SAME IS INCONSISTENT WITH THE TENETS OF APPLICATION OF TNMM. 3.10THAT THE LD. DRP HAS ERRED IN LAW AND IN FACT BY ENDORSING THE LD. TPOS APPROACH OF RE-CHARACTERIZING THE ASSESSEE COMPANY AS A LIMITED RISK DISTRIBUTOR AND REQUIRING THE ASSESSEE COMPANY TO EARN ITS REMUNERATION IN ACCORDANCE WITH SUCH RE-CHARACTERIZED BUSINESS MODEL. 3.11THAT WITHOUT PREJUDICE TO ABOVE GROUNDS, EVEN IF ASSESSEE COMPANY IS TO BE RE- CHARACTERIZED AS LIMITED RISK DISTRIBUTOR/AGENT ENTITLED TO REIMBURSEMENT FOR ITS ADVERTISEMENT ACTIVITIES, THE ASSESSEE COMPANY HAS EARNED ARMS LENGTH RETURN OF A LIMITED RISK DISTRIBUTOR ALONG WITH REMUNERATION FOR ITS ALLEGED EXCESSIVE ADVERTISEMENT EXPENDITURE. 3.12THAT, THE LD. TPO HAS ERRONEOUSLY HELD THAT THE ASSESSEE COMPANY HAS RENDERED A SERVICE TO THE ASSOCIATED ENTERPRISES BY INCURRING ADVERTISEMENT EXPENSE AND BY HOLDING THAT A MARKUP HAS TO BE EARNED BY ITA NO. 5933/D/2012 & STAY NO.291/D/2012 8 THE ASSESSEE COMPANY IN RESPECT OF THE ALLEGED EXCESSIVE ADVERTISEMENT EXPENSES. 3.13THAT WITHOUT PREJUDICE AND IN THE ALTERNATIVE, THE LD. TPO WITHOUT ANY BASIS HAS APPLIED A MARKUP OF 12.50% IN RESPECT OF ASSESSEE COMPANYS ALLEGED EXCESSIVE ADVERTISEMENT EXPENSES. THE AFORESAID FINDINGS AND OBSERVATIONS RESULTING INTO ENHANCEMENT OF INCOME IS HIGHLY ARBITRARY AND WHOLLY UNJUSTIFIED BEING WITHOUT ANY BASIS. 3.14THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, WITHOUT PREJUDICE, IF AT ALL A MARKUP OF 12.50% WAS TO BE APPLIED, THE SAME SHOULD HAVE BEEN APPLIED ON THE VALUE ADDED EXPENSES (EXCLUDING THIRD PARTY COSTS) INCURRED BY THE ASSESSEE COMPANY FOR PROVIDING THE ALLEGED SERVICE IN THE NATURE OF BRAND PROMOTION AS CONTENDED BY THE LD. TPO. 4. THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO HAS ERRED IN REDUCING THE RATE OF DEPRECIATION ON UPS AND PRINTER FROM 60 PERCENT TO 15 PERCENT, BY TREATING THE SAME AS PLANT AND MACHINERY WITHOUT APPRECIATING THAT UPS AND PRINTER IS INTEGRAL PART OF THE COMPUTER SYSTEM AND HAVE BEEN HELD TO BE IN THE NATURE OF COMPUTERS BY THE HONBLE ITA NO. 5933/D/2012 & STAY NO.291/D/2012 9 JURISDICTIONAL HIGH COURT IN THE CASE OF BSES RAJDHANI POWERS LTD. (ITA NO. 1266/2010) AND BY THE HONBLE SPECIAL BENCH OF MUMBAI TRIBUNAL IN THE CASE OF DATACRAFT INDIA LIMITED (133 TTJ 377). 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO HAS ERRED IN LEVYING CONSEQUENTIAL INTEREST U/S 234B OF THE ACT. 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO HAS ERRED IN INITIATING PENALTY PROCEEDINGS U/S 271(1)(C ) OF THE ACT. 5. AT THE OUTSET, LD. SR. COUNSEL, SHRI G.C. SRIVAS TAVA SUBMITTED THAT GROUND NOS. 1 TO 3 ARE GENERAL AND, THEREFORE, DO N OT REQUIRE ANY SPECIFIC ADJUDICATION. HE FURTHER POINTED OUT THAT AS FAR A S GROUND NOS. 3.1 TO 3.14 ARE CONCERNED, THEY ARE IN REGARD TO TP ADJUSTMENTS RELATING TO EXPENDITURE INCURRED BY ASSESSEE IN REGARD TO ADVERTISEMENT, MA RKETING AND BUSINESS PROMOTION (AMP EXPENSES). LD. SR. COUNSEL FURTHER SUBMITTED THAT IN VIEW OF THE DECISION OF SPECIAL BENCH IN THE CASE OF M/S L.G. ELECTRONICS INDIA PVT. LTD. VS. ASSTT. CIT THE MATTER NEEDS TO BE ADJ UDICATED IN THE LIGHT OF OBSERVATIONS OF TRIBUNAL PARTICULARLY IN PARA 17.4 OF ITS ORDER. LD. COUNSEL FOR THE ASSESSEE FURTHER POINTED OUT THAT IN A.Y. 2 007-08 ALSO THIS ISSUE HAS BEEN RESTORED TO AO BY TRIBUNAL VIDE ITS ORDER DATE D 9 TH AUGUST, 2012 IN ITA NO. 5282/DEL/2011. ITA NO. 5933/D/2012 & STAY NO.291/D/2012 10 6. LD. DR RELIED ON THE ORDER OF AO. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE PERUSED THE RECORD OF THE CASE. 8. THE TPO VIDE ITS ORDER DATED OCTOBER 12, 2011 HE LD THAT AMP EXPENDITURE INCURRED IN EXCESS OF THE MEAN EXPENDI TURE INCURRED ON AMP UPON SALES OF COMPARABLE COMPANIES (I.E. BRIGHT LI GHT) CAN BE CONSIDERED TOWARDS PROMOTING THE BRAND/TRADE NAME (OWNED BY TH E AE) AND THUS, NEEDS TO BE SUITABLY COMPENSATED BY THE AE TO THE A SSESSEE. THE TPO DETERMINED THE BRIGHT LIGHT AMP EXPENSE AT .84% ON THE BASIS OF COMPARABLES SELECTED FOR THE PURPOSE OF BENCH MARKI NG THE AMP EXPENDITURE INCURRED BY THE ASSESSEE VIZ-A-VIZ 12.5 5% AMP EXPENSES OF THE ASSESSEE. THE ASSESSEES CONTENTION IS THAT TH E TPO HAD SELECTED ROUTINE DISTRIBUTORS NOT OWNING ANY BRAND. 9. WE FIND THAT DETAILED GUIDELINES HAVE BEEN LAID DOWN BY THE SPL. BENCH IN THE CASE OF M/S L.G. ELECTRONICS (SUPRA) P ARTICULARLY IN PARA 17.1 TO 18.6 OF THE SAID ORDER AND THEREAFTER IN PARA 19 TRIBUNAL HAS OBSERVED AS UNDER: - 19. IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, IT IS FOUND THAT THE TPO RESTRICTED THE ITA NO. 5933/D/2012 & STAY NO.291/D/2012 11 COMPARABLE CASES TO ONLY TWO WITHOUT DISCUSSING AS TO HOW OTHER CASES CITED BY THE ASSESSEE WERE NOT COMPARABLE. FURTHER IT CAN BE SEEN THAT THE TPO HA S NOT CONSIDERED THE EFFECT OF ANY OF THE RELEVANT FA CTORS AS DISCUSSED ABOVE. A BALD COMPARISON WITH THE RAT IO OF AMP EXPENSES TO SALES OF THE COMPARABLES CASES WITHOUT GIVING EFFECT TO THE RELEVANT FACTORS AS DISCUSSED ABOVE, CANNOT PRODUCE CORRECT RESULT. IT CAN BE ILLUSTRATED BY A SIMPLE EXAMPLE. IF THERE I S NO SUBSIDY IN A COMPARABLE CASE BUT THE ASSESSEE HAS RECEIVED SOME AMOUNT OF SUBSIDY FROM ITS FOREIGN AE ON IMPORTS OR IN ANY OTHER MANNER, WHICH FACT OTHERWISE NEEDS TO BE SPECIFICALLY ESTABLISHED BY T HE ASSESSEE, THEN THE INITIAL AMOUNT SO COMPUTED WOULD REQUIRE REDUCTION TO THE EXTENT OF SUCH SUBSIDY OR VICE VERSA. AS THE TPO HAS NEITHER PROPERLY CONSIDERED THE REQUEST OF THE ASSESSEE FOR INCLUSION OF SOME O THER COMPARABLE CASES NOR EXAMINED THE EFFECT OF THE ABOVE DISCUSSED RELEVANT FACTORS ON THE QUESTION OF DETERMINATION OF THE COST/VALUE OF INTERNATIONAL TRANSACTION, IN OUR CONSIDERED OPINION THE ENDS OF JUSTICE WILL MEET ADEQUATELY IF THE ORDER OF THE TP O AND THAT OF THE AO GIVING EFFECT TO SUCH ORDER IS S ET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE TPO FOR DETERMINING THE COST/VALUE OF THE INTERNATIONAL TRANSACTION AND THE CONSEQUENT ALP AFRESH AS PER LA W AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ITA NO. 5933/D/2012 & STAY NO.291/D/2012 12 10. IN VIEW OF THE GUIDELINES LAID DOWN BY SPECIAL BENCH FOR BENCH MARKING AMP EXPENDITURE, WE RESTORE THE MATTER TO T HE FILE OF THE TPO FOR DETERMINING THE COST/VALUE OF THE INTERNATIONAL TRA NSACTION AND THE CONSEQUENT ARMS LENGTH PRICE AFRESH AS PER LAW AFT ER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 11. IN THE RESULT, GROUND NOS. 3.1 TO 3.14 ARE ALLO WED FOR STATISTICAL PURPOSES. 12. GROUND NO. 4 READS AS UNDER: - 4. THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO HAS ERRED IN REDUCING THE RATE OF DEPRECIATION ON UPS AND PRINTER FROM 60 PERCENT TO 15 PERCENT, BY TREATING THE SAME AS PLANT AND MACHINERY WITHOUT APPRECIATING THAT UPS AND PRINTER IS INTEGRAL PART OF THE COMPUTER SYSTEM AND HAVE BEEN HELD TO BE IN THE NATURE OF COMPUTERS BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF BSES RAJDHANI POWERS LTD. (ITA NO. 1266/2010) AND BY THE HONBLE SPECIAL BENCH OF MUMBAI TRIBUNAL IN THE CASE OF DATACRAFT INDIA LIMITED (133 TTJ 377). ITA NO. 5933/D/2012 & STAY NO.291/D/2012 13 13. BRIEF FACTS APROPOS THIS ISSUE ARE THAT AO NOTI CED THAT ASSESSEE HAD CLAIMED DEPRECIATION @ 60% AFTER CONSIDERING THE AS SESSEES SUBMISSIONS. HE ALLOWED DEPRECIATION @ 15% AND MADE AN ADDITION OF RS. 2,15,873/-. 14. HAVING HEARD BOTH THE PARTIES, WE FIND THIS ISS UE IS COVERED BY THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF ORIENT CERAMICS AND INDS. LTD., WHEREIN IN PARA 13 IT HAS BEEN HELD AS UNDER: - 13. THE THIRD ISSUE PERTAINING TO DEPRECIATION ON UPS ARISES ONLY IN THE ASSESSMENT YEAR 2005-06. THE ASSESSEE HAD CLAIMED DEPRECIATION ON UPS @ 60% WHEREAS THE AO HAD ALLOWED IT @ 25% AND ON THIS BASIS, DISALLOWANCE OF 1,470 WAS MADE. THE ISSUE NOW STANDS COVERED BY THE JUDGMENT OF THIS COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. BSES YAMUNA POWERS LTD. (IN ITA NO. 1267 DECIDED ON 31/08/2010) WHEREIN IT WAS HELD THAT THE DEPRECIATION @ 60% ON SUCH ITEMS SHALL BE ALLOWED. 15. RESPECTFULLY FOLLOWING THE DECISION OF HONBLE DELHI HIGH COURT, THIS GROUND IS ALLOWED. 16. GROUND NO. 5 IS CONSEQUENTIAL AND GROUND NO. 6 IS MISCONCEIVED. ITA NO. 5933/D/2012 & STAY NO.291/D/2012 14 17. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. AS WE HAVE DECIDED THE ASSESSEES APPEAL , THE STAY PETITION FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS AND, A CCORDINGLY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/02/2013 SD/- SD/- (I.C. SUDHIR) JUDICIAL MEMBER (S.V. MEHROTRA) ACCOUNTANT MEMBER DATED: 28/02/2013 *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER ASSISTANT REGISTRAR