Microsoft Corporation (India) Pvt Ltd Vs DCIT (ITAT Delhi)
The issue under consideration is whether expenditure on account of civil and interior works liable for depreciation at 10% or at 15%?
ITAT states that, they have perused the items of the expenditure which has been reproduced by the assessing officer in the assessment order and also reproduced earlier. Majority of the expenditure are on account of Civil and interior works paid to M/s M. S. Decorators Pvt. Ltd. similarly for interior designing has paid and other main expenditure are retable to electric fitting and air-conditioning work, the rest is architect fee and sliding portion. From pattern of expenditure which is clear that there is improvement of civil supply in the expending/altering the building by a civil work, interior design coupled with electric fitting and air-conditioning work. Pattern of expenditure reveals that though there is lease hold assets there is improvement in the expending building which is of enduring life. Therefore, ITAT confirmed the decision of the assessing officer to all depreciation @ 10% treating them as part of building in respect of furniture and fixture. Accordingly, expenditure incurred by the assessee are towards furniture and fixtures and, therefore, rate of depreciation applied for block of furniture and fixtures should be allowed.
FULL TEXT OF THE ITAT JUDGEMENT
These two appeals by the assessee are preferred against the order of the CIT(A) – 44, New Delhi dated 14.02.2016 pertaining to assessment years 2004-05 and 2005-06. Since in both these appeals, common grounds are involved, both these appeals were heard together and are disposed of by this common order for the sake of convenience and brevity.
2. The grievance of the assessee is two fold – 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 of depreciation @ 10% instead of 15% as claimed by the assessee.
3. The assessee is a wholly owned subsidiary of Microsoft Corporation, US. The assessee creates awareness of Microsoft products in India in general through seminars, conferences, advertisement in public media, promotional campaigns. For such services, the assessee is remunerated by its AEs on a cost plus
4. International transactions of the assessee with its AEs reported in form 3CEB are as under:
Assessment Year 2004-05
