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2016 (11) TMI 946 - AT - Income TaxTransfer pricing adjustment - MAM selection - adoption of written down value as the arm's length price under the comparable uncontrolled price method - Held that:- When the price was determined by comparing the uncontrolled transaction, the difference between the price paid by the assessee and the price so determined in a comparable uncontrolled transaction has to be worked out and the difference between the two shall be taken as the arm's length price. Unfortunately, the Transfer Pricing Officer has not taken any pain either to identify the comparable transaction or to identify the price paid by the third party company in the uncontrolled transaction. The Transfer Pricing Officer has simply compared the written down value of the machinery. As rightly submitted by the assessee, depreciation is provided for all machineries used for production of an article or thing and other capital asset under the Income-tax Act. In view of the specific provision in rule 10B(1)(a) of the Income-tax Rules, the written down value cannot be a determining factor to decide the arm's length price. The value of the machinery has to be compared with identified transaction in the uncontrolled market. Since such an exercise was not done by the Transfer Pricing Officer, this Tribunal is of the considered opinion that the Dispute Resolution Panel has rightly found that the sale price between the two parties cannot be merely on the basis of the written down value. Therefore, the Dispute Resolution Panel has rightly found that adopting the written down value as the arm's length price under the comparable uncontrolled price method is not justified. Hence, this Tribunal do not find any reason to interfere with the order of the lower authority. Accordingly, the same is confirmed. - Decided in favour of assessee.
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