IT/ILT : Where while computing ALP of transaction of purchase of books by assessee from its AEs, TPO had not adopted profit margin of distributors on basis of actual figures or undisputed discount policies on cover prices but based on certain hypothesis which was based on misconception of facts, impugned ALP adjustment is unsustainable in law
IT/ILT: Expenditure incurred for upgrading of software that assessee was using would be revenue expenditure
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[2015] 54 taxmann.com 14 (Delhi - Trib.)
IN THE ITAT DELHI BENCH 'I'
Assistant Commissioner of Income-tax, Circle 12 (1), New Delhi
v.
Harper Collins Publishers India Ltd.*
PRAMOD KUMAR, ACCOUNTANT MEMBER
AND C.M. GARG, JUDICIAL MEMBER
IT APPEAL NO. 4790 (DELHI) OF 2010
[ASSESSMENT YEAR 2004-05]
OCTOBER 13, 2014
I - Section 92C of the Income-tax Act, 1961 - Transfer pricing - Computation of arm's length price (Comparables and Adjustments/RPM) - Assessment year 2004-05 - Assessee was engaged in import of books primarily from its AEs and distribution of same in India - It used resale price method for benchmarking its international transactions of purchase of books and claimed that its purchase was at arm's length - TPO noted that assessee had received 75.15 per cent discount on UK cover price from AE, whereas it gave 30 per cent discount on its India cover price to wholesale distributor - TPO, using wholesale distributor's margin as a valid comparable for application of RPM, and treating UK published price and Indian MRP as same, recomputed ALP - It was uncontroverted claim of assessee that UK cover price of book and Indian cover price was not same - Whether since TPO had not adopted profit margin by wholesale distributors on basis of actual figures or undisputed discount policies on cover prices but based on certain hypothesis which turned out to be based on misconception of facts, impugned ALP adjustment was unsustainable in law - Held, yes [Para 16][[In favour of assessee]
II - Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of (Software expenses) - Assessment year 2004-05 - Whether expenditure incurred for upgrading of software, that assessee was using, would be revenue expenditure - Held, yes [Para 6][In favour of assessee]
IT/ILT: Expenditure incurred for upgrading of software that assessee was using would be revenue expenditure
■■■
[2015] 54 taxmann.com 14 (Delhi - Trib.)
IN THE ITAT DELHI BENCH 'I'
Assistant Commissioner of Income-tax, Circle 12 (1), New Delhi
v.
Harper Collins Publishers India Ltd.*
PRAMOD KUMAR, ACCOUNTANT MEMBER
AND C.M. GARG, JUDICIAL MEMBER
IT APPEAL NO. 4790 (DELHI) OF 2010
[ASSESSMENT YEAR 2004-05]
OCTOBER 13, 2014
I - Section 92C of the Income-tax Act, 1961 - Transfer pricing - Computation of arm's length price (Comparables and Adjustments/RPM) - Assessment year 2004-05 - Assessee was engaged in import of books primarily from its AEs and distribution of same in India - It used resale price method for benchmarking its international transactions of purchase of books and claimed that its purchase was at arm's length - TPO noted that assessee had received 75.15 per cent discount on UK cover price from AE, whereas it gave 30 per cent discount on its India cover price to wholesale distributor - TPO, using wholesale distributor's margin as a valid comparable for application of RPM, and treating UK published price and Indian MRP as same, recomputed ALP - It was uncontroverted claim of assessee that UK cover price of book and Indian cover price was not same - Whether since TPO had not adopted profit margin by wholesale distributors on basis of actual figures or undisputed discount policies on cover prices but based on certain hypothesis which turned out to be based on misconception of facts, impugned ALP adjustment was unsustainable in law - Held, yes [Para 16][[In favour of assessee]
II - Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of (Software expenses) - Assessment year 2004-05 - Whether expenditure incurred for upgrading of software, that assessee was using, would be revenue expenditure - Held, yes [Para 6][In favour of assessee]
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