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2022 (10) TMI 354 - AT - Income TaxNature of expenses - Repair & Maintenance Expenses - assessee treating the entire expenditure incurred on constructing a weather shed as revenue in nature as opposed to the Revenue treating it as capital in nature - HELD THAT:- Taking note of the fact that temporary structures are entitled to depreciation at the rate of 100% as per the depreciation rates under Income Tax Rules,1962, as per Rule 5, Appendix-I, as pointed by the for the assessee before us, and not controverted by the Revenue , we see no infirmity in the claim of the assessee to the entire amount of expenditure on construction of temporary weather shed as revenue in nature. Such claim of the assessee, we have noted, is in accordance with provisions of law, as prescribed under the Act read along with Rules made thereunder. Revenue has been unable to controvert the assesses claim either on facts or in law. Therefore, finding merit in the contentions of the ld.counsel for the assessee, we allow entire claim incurred on construction of temporary weather shed as revenue in nature, and accordingly direct deletion of addition of made by the Revenue by treating the same as capital in nature. Addition made to the income of the assessee on account of Transfer Pricing adjustment made to the transaction of purchases of components by the assessee entered into with its Associate Enterprise(AE) - HELD THAT:- The entire exercise of determining ALP of an international transaction by comparing profitability ratio of the assessee-company with that of a comparable entity indulging in the same type of transactions, requires the comparison of the correct profits of both the entities, after making all necessary adjustment to arrive at the correct profits. Now since the assessee has clearly demonstrated that it had booked excess purchases in the impugned yearthe same needed to be reduced for the purpose of arriving at the correct profit, and only thereafter profitability ratio of the assessee was required to be calculated. The contentions of the assessee in this regard, we find is correct. The authorities below i.e. both the AO and the CIT(A) have given no reason absolutely for dismissing this contentions of the assessee. We find merit in the contention of assessee and noting the working given by the assessee after making this adjustment to the profitability ratio of the assessee, resulting in the same being comparable with the comparable case, we hold that the assessee has fairly demonstrated its international transactions of purchases of parts/spare parts with its AE to be at ALP requiring no adjustment at all to be made to the same u/s 92 of the Act. We direct deletion of adjustment made to the international transactions of parts/spare parts and allow ground no.3 of the appeal.
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