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2023 (3) TMI 1300 - AT - Income TaxDepreciation on editing equipment - Depreciation on the additions to plant and machinery made during the year - HELD THAT:- We find that this issue is recurring in nature since the assessment year 2004–05. We further find that assessee is claiming depreciation on computer-based editing equipment, part of which was acquired in preceding years and part was purchased during the year under consideration. As noted addition during the year mainly consist of processors, hard disk and hard drives, software, workstation platforms, drivers, monitors, servers, display, and control panels with different types of software. In assessee’s own case in the immediately preceding assessment year, in DCIT vs Prime Focus Ltd [2017 (4) TMI 1614 - ITAT MUMBAI] following the judicial precedent in assessee’s own case decided a similar issue in favour of the assessee. Decided against revenue. TP adjustment - assessee raised an amount in the UK via FCCB at a compound rate of 7.375% - AO made a reference under section 92CA(1) to TPO to determine the arm’s length price of the international transactions entered into - HELD THAT:- Since the funds are borrowed in USD and advanced in USD the learned CIT(A) came to the conclusion that the question of currency and exchange risks is minimal and therefore, only risk that needs to be factored in was the lending risks by the assessee to its AE. Accordingly, CIT(A) computed the arm’s length rate of interest on loan granted to AE at 8.375% i.e. rate of FCCB borrowings of 7.375% + markup of 1% for other lending rates. Since it is undisputed that advance was made by the assessee to its AE out of the funds generated from FCCB, therefore, we are of the considered view that the learned CIT(A) was right in considering the FCCB compound rate of 7.375% as the base rate. Since the funds have been borrowed in USD and also advanced in USD, the currency and exchange risks are minimised and the only risk to be considered is the lending risk for determining the markup. The learned CIT(A) considered 1% markup as an appropriate markup in the above circumstances. No infirmity in the impugned order in treating 7.375% plus markup of 1% as the arm’s length rate of interest in respect of loan advanced by the assessee to its AE. Accordingly, ground No. 3 raised in Revenue’s appeal is dismissed.
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