SPECTRIS TECHNOLOGIES PVT. LTD.,GURGAON vs. ITO, NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “I”, NEW DELHI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No. 3424/Del/2016, Assessment Year: 2010-11 Spectris Technologies Pvt. Vs. Income Tax Officer, Ltd. Ward 9(1), Unit No. 560-562, 5th Floor New Delhi JMD Megapolis, Block C Sector 48, Gurgaon 122 001 Haryana �थायीलेखासं./जीआइआरसं./PAN/GIR No: AAGCS6654R Appellant .. Respondent

Appellant by : Shri Tarandeep Singh, CA Shri Sandeep Yadav, Advocate Respondent by : Shri Ravinder Singh Yadav, Sr. DR

Date of Hearing 13.05.2026 Date of Pronouncement 24.06.2026

O R D E R PER VIMAL KUMAR, JM: The appeal filed by the assessee is against the order dated 11.01.2016 of Ld. Commissioner of Income Tax (Appeals)-44, New Delhi (Hereinafter referred to as ‘the CIT(A)’) u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of Assessment order

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dated 25.04.2014 of the Ld. Assessing Officer/ Income Tax Officer, Ward 9(1), New Delhi u/s 143(3) of the Act for Assessment Year (‘AY’) 2010- 11. 2. Brief facts of the case are that the appellant/ assessee, filed return of income on 14.10.2010 declaring total income of Rs. Nil. The assessee had paid tax u/s 115JB of the Act to the tune of Rs. 27,33,052/-. The return was processed u/s 143(1) of the Act. The case was selected for scrutiny through CASS. Notices u/s 143(2) and 142(1) of the Act were issued. Shri Sanjay Bhargava, CA/ AR attended the proceedings, submitted the details, and produced books of accounts.

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Section 144C of the Act confirming additions made the draft assessment order dated 01.03.2014 was passed. Additions of Rs. 1,31,10,096/, Rs. 69,57,776/- and Rs. 77,79,121/- were made.

“1. That on the facts and circumstances of the case and in law, the order passed by the Hon'ble Commissioner of Income-tax (Appeals) New Delhi ("Hon’ble CIT(A)") is bad in law. 2. That on the facts and circumstances of the case and in law the Hon'ble CIT(A) erred in upholding the addition of INR 13,110,096/- to the returned income of the Appellant made by the Ld. AO/TPO by re-computing the arm's length price of the international transactions under section 92 of the Act. 3. Hon'ble CIT(A) erred in facts and in law by upholding the rejection of the transfer pricing methodology adopted by the Appellant in its transfer pricing report by: 3.1 Disregarding the segmental analysis carried out by the Appellant in its transfer pricing documentation and instead, considering entity wide approach by treating Indenting / Marketing support segment and Trading of spare parts (AMC) segment as single business segment.

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3.2 Rejecting the Resale Price Method adopted by the Appellant and instead adopting Transaction Net Margin Method (TNMM) as the most appropriate method for benchmarking the international transactions under Trading of spare parts (AMC) segment. 4. Hon'ble CIT(A) erred in facts and in law by: 4.1 Selecting inappropriate comparable set in application of the transfer pricing methodology adopted by him. 4.2 Not accepting comparable companies selected by the Appellant in its TP documentation. 5. Hon'ble CIT(A) erred in facts and in law by not providing the benefit of economic adjustment on account of difference in working capital in arriving at the arm's length mean margin under TNMM. 6. The Hon'ble CIT(A) erred in facts and in law in upholding the disallowance of Rs.3,75,831/-on account of depreciation on Non-Compete Fee. 6.1 The Hon'ble CIT(A) has erred in confirming the disallowance of depreciation on Non-Compete Fee holding the same to be purely personal in nature. 6.2 The Hon'ble CIT(A) has erred in law in placing reliance on the decision of Hon'ble Delhi High Court in the case of Sharp Business Systems v. CIT (2012). 6.3 The Hon'ble CIT(A) has erred in not following the order of preceding Hon'ble CIT(A) in appellant's case for previous years on this issue. 7. The Hon'ble CIT(A) erred on facts in dismissing the appellant's ground pertaining to claim of set off of brought forward unabsorbed depreciation of Rs.77,79,121 on the basis that the appellant has not pressed this ground and has submitted that the Hon'ble AO has passed the necessary rectification without appreciating that 7.1 the appellant had pleaded that since the brought forward loss pertains to prior assessment year ("AY") i.e., A.Y. 2004-05 which is already in appeal before this Hon'ble Tribunal, thus if the ground for prior year is allowed in favour of the assessee necessary effect of

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brought forward unabsorbed depreciation should be allowed in subject year i.e., A.Y. 2010-11. 7.2 the appellant has nowhere in this submission mentioned that the Id. AO has passed necessary rectification in respect of the above. 7.3 That the Hon'ble CIT(A) has erred in adding the brought forward losses to the Appellant's income thereby leading to a double addition. 8. The Hon'ble CIT(A) erred on facts in dismissing the appellant's ground pertaining to interest levied under section 234B, 2340 and 244A on the basis that the appellant not pressed this ground and submitted that the Ld. AO has passed the necessary rectification without appreciating that 8.1 appellant has nowhere in his submission mentioned that the necessary rectification has been passed. 8.2 the appellant merely submitted that rectification application has been filed order of which is awaited.”

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TPO to analyze the submissions of the assessee viz-à-viz the segmental accounts and the comparables and pass appropriate order after providing opportunities to the assessee. ITAT in ITA No. 3742/Del/2015, A.Y. 2009-10 titled as Spectris Technologies P. ltd. Vs. ITO order dated 07.01.2026 relied on above orders.

7.1 Ground of appeal No. 5 to 6.1, 6.3 are regarding Non-Compete Fees.

Hon’ble ITAT in order dated 07.01.2026 in assessee’s own case ITA No. 3742/Del/2015, A.Y. 2009-10 directed the AO to consider depreciation issue of non-compete fee in light of judgment of Delhi High Court in Sharp Business System case, 181 taxmann.com 657 Supreme Court order dated 19.12.2025.

7.2 Ground of appeal No. 6 being linked to above grounds is required to be sent to the AO.

7.3 Ground of Appeal No. 7 is consequential.

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9.1 The findings given in assessment year 2008-09 are as under:

“5. Since the Tribunal had accepted that the assessee is into two different business segments i.e. AMC service provider and agency market and support services provider the transfer pricing adjustment made by the TPO by considering both the segments as a single segment for the year under consideration is to be revisited. In the light of the order of the Tribunal for the A.Y. 2007-08 and the submissions of the Ld. Counsel for the Assessee, in principle we agree that the assessee is having two segments as observed by the Tribunal in assessee’s own case for the immediately preceding assessment year and, therefore, since the assessee is having segmental account the benchmarking has to be done segment wise separately and thus we direct the TPO to analyze the submissions of the assessee viz-a-viz the segmental accounts and the comparables and pass appropriate order after providing opportunities to the Assessee. 6. In case the PLI of the assessee as tested party as per the segmental accounts is 17.95% and average result of comparable companies is 19.63% and is within permissible tolerance range as per proviso to 92C(2), then no transfer pricing adjustment is called for by the TPO. With these observations we restore this issue to TPO for limited purpose of verification in the light of our above observations.” 9.2 The findings given in assessment year 2009-10 are as under:

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“4. We have considered the rival submissions and have gone through the documents before us. Right at the outset, it deserves to be mentioned that the issue of TP Adjustment on the impugned services is now settled through the findings given for two previous years by the ITAT. In this regard, the finding given for AY 2008-09 (supra) deserves to be extracted: - “5. Since the Tribunal had accepted that the assessee is into two different business segments i.e. AMC service provider and agency market and support services provider the transfer pricing adjustment made by the TPO by considering both the segments as a single segment for the year under consideration is to be revisited. In the light of the order of the Tribunal for the AY 2007-08 and the submissions of the Ld. Counsel for the Assessee, in principle we agree that the assessee s having two segments are observed by the Tribunal in assessee’s own case for the immediately preceding assessment year and, therefore, since the assessee is having segmental account the benchmarking has to be done segment wise separately and thus we direct the TPO to analyze the submissions of the assessee viz-a-viz the segmental accounts and the comparables and pass appropriate order after providing opportunities to the Assessee. 6. In case the PLI of the assessee as tested party as per the segmental accounts is 17.95% and average result of comparable companies is 19.63% and is within permissible tolerance range as per proviso to 92C(2), then no transfer pricing adjustment is called for by the TPO. With these observations we restore this issue to TPO for limited purpose of verification in the light of our above observations.” 4.1 Following this finding, we direct the Ld. AO/TPO to consider the two segments of the business as presented by the assessee. Thereafter, the Bench marking has to be done with respect to the two segments of business. The TPO would analyze and consider the submissions of the assessee, including the details of comparables provided by him, and thereafter pass an appropriate order on the segmental aspects of the assessee’s business. Secondly, the TPO would also test his conclusions on the parameters and conclusions arrived at by the assessee and see if the same are within the tolerance level provided in the proviso to section 92C(2) of the Act. Accordingly, with these directions the issue of working out ALP is restored to the file of the Ld.TPO/AO. Needless to say, adequate opportunity of

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being heard would be given to the assessee and the comparables etc. provided by him will be fairly examined in the light of extant provisions.” 9.3 In view of above facts and judicial precedents, the issue of working out ALP is restored to file of Ld. TPO/Ld. AO for decision afresh in accordance with law after affording fair opportunity of hearing to assessee.

“5. Regarding the issue of treatment being given to non-compete fees, we find that the Ld. CIT(A) was right at that point in time to follow the Hon’ble Delhi High Court in the Sharp Business System case (supra). However, with the latest judgment of the Hon’ble Supreme Court the issue is now settled regarding the treatment to be given to non-compete fees and respectfully following the same, we direct the Ld. AO as under: 1. The AO must follow the said judgment in treating non-compete fees as a revenue expenditure. 2. The Ld. AO must, with the help of the assessee, work out the treatment to be given to the said asset now in the light of the Apex Court’s judgment, with regard to the depreciation already claimed by the assessee. In this regard the portion pertaining to depreciation issue in the Delhi High Court’s judgment (supra) can also be utilized for giving effect to the Hon’ble Apex Court’s order.”

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10.1 In view of above facts by respectfully following the judicial precedents, the issue of treatment being given to Non-Compete Fees is restored to file of Ld. AO for following above direction of A.Y. 2009-10. Accordingly, All the Grounds of Appeal are accepted.

Order pronounced in the open court on 24.06.2026

Sd/- Sd/- (S. RIFAUR RAHMAN) (VIMAL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 24.06.2026 Binita, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI