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2015 (3) TMI 111 - AT - Income TaxTransfer pricing adjustment - computation of ALP - DRP considering Interest Receivable from AE Company at ₹ 28,627,089/- instead of ₹ 29,182,060/- (as per 3CEB) - Held that:- Where the assessee had entered into a transaction with its associated enterprises in foreign currency, and the transactions were international transactions, then the same had to be looked into by applying commercial principle in regard to international transactions. In the facts of present case, the assessee had borrowed the loan from Citi Bank and advanced the same on LIBOR+ rates to its associated enterprises, then the said transaction with its associated enterprises is within arm's length price. The TPO / AO thus, directed to re-compute the arm's length price of the international transactions. Another aspect to be kept in mind is the plea of the assessee with regard to the interest receivable. The assessee had also raised the issue that the TPO had adopted the interest receivable from associated enterprise company at ₹ 2,86,27,089/- instead of ₹ 2,91,82,060/- which is disclosed in the audit report in Form No.3CEB. The Assessing Officer is also directed to verify the claim of the assessee in this regard and compute the arm's length price of the international transactions. Reasonable opportunity of being heard shall be afforded to the assessee by the Assessing Officer / Transfer Pricing Officer. - Decided in favour of assessee for statistical purposes. Disallowance of additional depreciation under section 32(1)(ii)(a) - Held that:- Racks cannot be considered as part of block of Plant & Machinery and no additional depreciation is allowable on the same. Further, depreciation @ 10% is to be allowed on such Racks being Furniture & Fixtures. Depreciation on Trolley which as per the Assessing Officer is part of the Furniture & Fixtures as the same is used for transferring material and goods from one place to another. The value of the Trolley is ₹ 16.01 lakhs and ₹ 20.78 lakhs. Keeping in mind the nature of asset and functional test, we find no merit in the order of Assessing Officer in this regard and direct the Assessing Officer to consider the same within block of Plant & Machinery and allow the depreciation and additional depreciation on the same. Depreciation on Air-conditioner which is Plant & Machinery on which the depreciation at higher rate is allowable. However, no additional depreciation on the same is allowable since the same cannot part take the machinery used for manufacturing activities. Further, TV Music System is an electronic item on which higher rate of depreciation is allowable. However, no additional depreciation is allowable on such TV Music System. The Industrial Fan being utilized as part of the manufacturing activity, was entitled to the claim of higher depreciation and also additional depreciation on Plant & Machinery. Depreciation on Water Cooler, Dispenser, Refrigerator, Handicam, Projector and Scanner are all electronic items and are to be considered under the said head. However, the assessee is not entitled to claim of additional depreciation as the same were not part and parcel of manufacturing activity carried on by the assessee. Depreciation on UPS, Inverter, Attendance Card Reader, EPBX System and Energy Saver, which are electronic items but are not part and parcel of Plant & Machinery utilized for manufacturing activity. The assessee was not entitled to the claim of additional depreciation on the same. - Decided partly in favour of assessee. Discount on pre-payment of Sales Tax Deferral liability - treating Discount as remission / cessation of liability chargeable to tax under section 41(1) of the Act - Held that:- As reying on Sulzer India Ltd. Vs. JCIT [2010 (11) TMI 728 - ITAT, MUMBAI] the deffered sales tax liability i.e. the difference between the payments of the net present value against future liability credited by the assessee under the capital reserve account in its books of account, was a capital receipt and the same could not be termed as remission / cessation of liability, consequently, no addition could be made under the provisions of section 41(1) of the Act. Reversing the order of authorities below, we allow the claim of the assessee. - Decided in favour of assessee. Re-calculation of book profit under section 115JB - whether AO can consider the disallowance under section 14A of the Act and add the same to the profits of the business in order to compute the book profits under section 115JB of the Act - Held that:- Direct the Assessing Officer to exclude the disallowance made under section 14A of the Act, while computing the book profits u/s 115JB of the Act. Accordingly, we direct the Assessing Officer to re-compute the book profits under section 115JB of the Act. - Decided in favour of assessee.
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