AJAY KUMAR MITTAL, J. - (1.) THIS is Revenue's appeal filed under S. 260A of the IT Act, 1961 (for short "the Act") against the order dt. 27th Aug., 2010, passed by the Income-tax Appellate Tribunal Chandigarh Bench 'A', Chandigarh (in short "the Tribunal") in ITA No. 171/Chd/2010, relating to the asst. yr. 2005-06.
(2.) THE following substantial questions of law have been claimed for determination of this Court : "(i) Whether in the facts and circumstances of the case, the Tribunal was legally correct in directing the AO to recompute arm's length price (ALP) at 21.97 per cent even when the transfer pricing officer (TPO) had arrived at 35.26 per cent after due consideration of all the relevant factors. (ii) Whether in the facts and circumstances of the case, the Tribunal was justified in issuing direction to the AO to recompute ALP after adopting total cost at Rs. 1,70,84,964 instead of Rs. 2,02,67,550 and whether the adjustment for the depreciation on administrative assets, as directed by the Tribunal, is sustainable in the eyes of law. (iii) Whether in the facts and circumstances of the case, the Tribunal was legally correct in deleting the addition of Rs. 1,00,000 on account of disallowance of advertisement expenses, even when the same were inadmissible, being capital in nature." The facts, in brief, necessary for adjudication as narrated in the appeal, are that the assessee is engaged in the business of research and development of software/income-tax enabled services. For the asst. yr. 2005-06, the assessee filed its return on 31st Oct., 2005, declaring loss of Rs. 25,28,901. The return was processed under S. 143(1) of the Act. Assessment under S. 143(3) was completed vide order dt. 26th Dec., 2008 at an income of Rs. 61,29,390 whereby the AO made certain additions, i.e. Rs. 79,84,438 on account of difference in ALP; Rs. 1,00,000 on account of disallowance of advertisement and three more amounts of Rs. 4,80,000, 52,416, and 41,434 on account of disallowance of Diwali expenses, Refreshment expenses and printing and stationery expenses, respectively.
(3.) THE assessee filed appeal before the CIT(A). The CIT(A) partly accepted the appeal vide order dt. 8th Dec., 2009, deleting the addition of Rs. 41,06,206 out of the total amount of Rs. 79,84,438 on account of difference in ALP and all other remaining additions noticed above but sustaining the addition on account of disallowance of advertisement expenses amounting to Rs. 1,00,000.;