Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (6) TMI 660 - AT - Income TaxDisallowance of depreciation on equipment leased under financial lease arrangement - assessee was asked to produce copies of agreements and that the assessee had only produced a few of them - HELD THAT:- We set aside the issue to the file of the AO for fresh adjudication in accordance with law. The assessee is directed to produce copies of those agreements which the AO may call for. The AO shall examine these agreements and if the terms & conditions mentioned in these agreements are similar to the terms and conditions mentioned in the agreements considered by in the case of ICDS Ltd. [2013 (1) TMI 344 - SUPREME COURT] and if there are no material variations in the contracts, then depreciation has to be granted to the assessee as claimed. TP adjustment - payments made for “administrative support services” - HELD THAT:- Admittedly, this issue is covered in favour of the assessee by an order of the Tribunal in the assessee’s own case for the AY 2008-09, AY 2009-10 and AY 2010-11 [2014 (12) TMI 890 - ITAT BANGALORE] where this very same issue was examined. The Tribunal has set aside the matter to the file of the TPO with certain directions. Consistent with the view taken therein, we restore the matter to the file of the TPO for fresh adjudication in accordance with the law. Determination of ALP of international transactions for “Purchase of equipment for financial lease from AE” - MAM selection - HELD THAT:- We find strength in the argument of the assessee that the purchase price of the equipment cannot be determined based on “ROCE” adopting TNMM as the MAM. This does not appear to be a correct method. CUP is a more direct method and when internal CUP is available for determination of ALP, it would be the most direct method and this, in our view, has to be adopted as the MAM. As submitted cost of imported equipment is the basis on which the assessee determines the rate of return to be charged from the ultimate customer and that if the price of the purchase is inflated, then the rate of return would also be high. Only adjustments that could be made is on account of depreciation on these assets, as this is the only item of expenditure that affects the profit & loss account. We would not express any view on this argument. We set aside the matter to the file of the AO for fresh adjudication in accordance with the law. The AO shall, without being influenced with the methodology adopted by the assessee in its TP study, independently decide as to what is the MAM for determination of ALP for the international transaction of purchase of equipment for financial lease from AE. - set aside the matter to the file of AO for fresh adjudication in accordance with the law.
|