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2013 (11) TMI 521 - AT - Income TaxAdjustment of arm's length price - Uncontrolled transaction - Held that:- when the Associate Enterprise had sold the items to the assessee at the same price at which it had purchased it, there cannot be any arm's length price adjustment done, unless and until the original vendor was also an Associate Enterprise. Here, admittedly, M/s Intel Semiconductor Limited was not an Associate Enterprise of assessee or its Associate Enterprise in Singapore. Therefore, we cannot say that the price at which M/s Intel Semiconductor Limited sold to Redington Distribution Pvt. Ltd., Singapore, was not at arm's length price - when Redington Distribution Pvt. Ltd. sold the items to assessee at very same price at which it had purchased from M/s Intel Semiconductor Limited, there cannot be any question of under pricing or over pricing - adjustment carried out by the lower authorities, based on list price, on the purchase of 1250 Pentium IV processors from Associate Enterprise was not called for. Such adjustment, therefore, stands deleted - Decided in favour of assessee. Disallowance of depreciation - claim of 100% depreciation - Held that:- Nothing has been brought on record by the assessee to show that erection of office cabins, partitions, installation charges, flooring charges, waterproofing treatment, etc. were in the nature of pure temporary erections which alone qualified for 100% depreciation. In such circumstances, we are of the opinion that Assessing Officer was justified in making a disallowance to the extent of Rs. 1,06,25,793/-. No interference is required - Decided against assessee. Disallowance of royalty - Non-deduction of tax - Held that:- assessee was obliged to deduct tax at source at the time when credit was given to M/s Microsoft Corporation Inc. No doubt, Hon'ble Apex Court in the case of GE India Technology Centre (P.) Ltd. (2010 (9) TMI 7 - SUPREME COURT OF INDIA) has clearly held that a person is bound to deduct tax at source only when the sum paid is assessable to tax in India. Here, there is no dispute that the sum paid to M/s Microsoft Corporation Inc. was taxable in India. In such a situation, in our opinion, contention of the assessee that only the net amount actually paid could be considered for effecting deduction of tax at source, cannot be accepted. Assessee was obliged to deduct tax at source when credit entries were passed in its books based on invoices or demands raised by M/s Microsoft Corporation Inc. In our opinion, lower authorities were justified in applying Section 40(a)(i) of the Act, to the extent assessee failed to make such deduction. No interference is required - Decided against assessee.
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