The assessee, M/s Microsoft Corporation (India) Pvt Ltd is a wholly-owned subsidiary of Microsoft Corporation, US. The assessee creates awareness of Microsoft products in India in general through seminars, conferences, advertisements in public media, promotional campaigns. For such services, the assessee is remunerated by its AEs on a cost-plus basis.
The grievance of the assessee is twofold. Firstly, the assessee is aggrieved by the Transfer Pricing adjustment made in the marketing support service segment and secondly, the assessee is aggrieved by allowing depreciation at the rate of 10% instead of 15% as claimed by the assessee.
The assessee has objected to the inclusion of six comparable companies, namely WAPCO Ltd; CRISIL Ltd; ICRA Ltd; RITES Ltd; VIMTA Lab; and Engineers India Ltd. The assessee contended that the six comparable companies are functionally dissimilar. And these companies have been excluded by the Tribunal in assessee’s own case in earlier and subsequent Assessment Years i.e. Assessment Years 2003-04, 2006-07 and 2007-08.
The assessee further contended that the expenditure incurred by the assessee is towards the furniture and fixtures and therefore, the rate of depreciation applied for blocks of furniture and fixtures must be allowed.
The Tribunal consists of the Judicial Member, Suchitra Kamble, and Accountant Member, N.K. Billaiya in the light of the earlier findings by the Coordinate Bench of the tribunal has directed the AO to exclude the six comparable companies.
The tribunal while affirming 10% as the rate of depreciation on furniture and fixtures, instead of 15% observed that considering the nature of expenditure, it can be safely concluded that the entire expenditure has been made for the improvement of civil supply altering building by civil work and such civil work definitely gives a benefit of enduring nature.Subscribe Taxscan AdFree to view the Judgment