TMI Blog2015 (4) TMI 179X X X X Extracts X X X X X X X X Extracts X X X X ..... was made and to conclude that the payment was made as per the extended grace period of due date as discussed by the Ld. CIT(A),we hereby confirm the said factual findings and uphold the deletion - Decided against revenue. Transfer pricing adjustment - CIT(A) deleted the addition - selection of most appropriate method - Held that:- The certain points were not dealt with by learned CIT(A). If the Assessee is insisting upon CUP method then the procedure prescribed to verify the correctness of that method was required to be followed by learned CIT(A). The comparable instances have not been discussed so as to arrive at the correct Arms Length Price. It is also not on record that whether the units which were purchased from non AE were identical with the units purchased from AE. Since, the order of learned CIT(A) is silent on those points and the procedure as prescribed under Rule 10B(1)(a) has not been discussed; therefore, we deem it proper to restore this issue back to him to be decided needless to say after providing adequate opportunity of hearing to both the sides. - Decided in favour of revenue for statistical purposes. - ITA Nos. 917 to 919/Ahd/2011 - - - Dated:- 26-3-201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to Universal Comforts Products Pvt. Ltd (UCPL) as per joint venture agreement. However payments were to be made subject to approval by UCPL Board of Directors. Earlier UCPL had financial year form September to August, UCPL continued with the said financial period for (a) Oct 01- Aug 02 (b) Sept 02-Aug 03 and provided in Books of Account $ 2,50,000/- for each years. During the financial year 2003-04, it was decided by UCPL Board to change financial year from Sept-August to April-March. In view of that UCPL had 7 months short period financial year from Sept 03 to March 04. In said short period financial year, UCPL has provided in books of Accounts, technical Support Service Fees payable to Fedders-USA for proportionate 7 months i.e. for $ 1,45,833/-. During the financial year 04-05 UCPL has made payment for Technical Support service fees payable for financial year 02-03 (Sept 02-August 03 period) after making deduction therefrom for TDS and R D Cess. At the time of making payment we have approached RBI for giving approval of said payment but we have been informed that the same is not required now and it is pre approved. Bank also made said payment after verifying all c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(A) is as under:- 5.3.3 As pointed by the ld. AR the issue of Depreciation with regards to TSS Fees paid to M/s. Fedders International Airconditioning Pvt. Ltd (FIAPL) aroused in the A.Y. 2002-03. Here, it is important to mention that the effective date for the payment (means the date of approval of this agreement by the Competent Authority) of TSS Fees as per the Agreement was 14-01-2002. The payments schedule as per the Agreement was, a. The 1st installment of US $ 90,000/- shall be paid to (FIAPL) on sign of the Agreement. b. The 2nd installment of US $ 90,000/- shall be paid to (FIAPL) within 180 days after the 1st installment. c. The 3rd Installment of US $ 70,000/- shall be paid to (FIAPL) within 12 months from the date of receipt of the 1st Installment. 5.3.4 The RBI (the Competent Authority) gave the approval on 14.01.2002 for the payments. The appellant paid the 1st installment of US $ 1,04,167/- (= ₹ 47,47,185/- on January 2005 (F.Y. 2004- 05) after deduction of TDS and R D Cess. The appellant made claim of depreciation in the A.Ys. 2002-03, 2003-04, 2004-05 on the basis of Provisions made in the books of a/c. and not on actual payment of T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed depreciation claimed by the appellant for the A.Y. 2002-03 2003-04. Thus, depreciation for the A.Y. 2004-05 has to be computed on the W.D.V of TSS Fees paid of ₹ 47,47,185/- being the actual value and the initial period to be from A.Y. 2002-03. The AO is directed to re-work the Depreciation accordingly and allow the eligible depreciation to the appellant. These grounds of appeal are allowed partly. 5. From the side of Revenue, Ld. DR, Shri Dinesh Singh, appeared and mentioned that a written submission is furnished by the TPO-I, Ahmedabad, relevant portion reproduced below:- 1.2 On perusing of the order of the Hon ble CIT(A) for A.Y. 2004- 05, it can be seen that the Hon ble CIT(A) did not address this issue properly (para 5.3.5 to the order). In this para, the CIT(A) bifurcated the whole amount ₹ 1,13,93,207/- in two parts. The payment amounting to ₹ 47.47.185/- (which was paid in January, 2005), the CIT(A) allowed depreciation to the assessee and on the rest of the amount (unpaid TSS fee), he disallowed the assessee's claim for depreciation as the amount had been reversed in subsequent years. Now, it is brought to the kind notice of your hono ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee has not submitted any document to evidence that such service requiring the payment were rendered in the year under reference. The learned CIT (A) did not make any comment on this finding of the TPO. Since this year, the assessee has not provided any details of the laboratory time performed under the technical support services it cannot be concluded that the part payment (out of ₹ 1,13,93,207/-) made was genuine. Without any basis of measurement of rendering of services, the stand taken by the CIT (A) cannot be accepted and it is reiterated that on the basis of facts and circumstances of the case that the TPO was right in holding ALP of the entire technical support services fee at 'NIL . Therefore, the action of AO was right in withdrawing the claim of the depreciation on WDV of the entire technical support services fees. 6. On the other hand, from the side of the assessee, Ld. A.R. Shri Hardik Vora, has informed that for A.Y. 2002-03 an order u/s. 143(3) was passed by the AO dated 24-03-2005, wherein a query was raised that why an amount of ₹ 60,79,943/- paid to Fedders International INC, USA should not be capitalized. The assessee s reply was that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeal before us is entirely different. We have noted that the Ld. CIT(A) has given a categorical finding that the expenditure being capitalized and thereupon the deprecation was allowed in the past, therefore, on the same lines, assessee was held as entitled for the deprecation. Thus, under the totality of the facts and circumstances of the case as discussed hereinabove, we are of the considered opinion that there was no fallacy in the direction of Ld. CIT(A) to re-compute the depreciation and allow the same as per law. Since part relief granted by Ld. CIT(A) is not disturbed hence this ground of the revenue is hereby dismissed. Ground No. 2 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of ₹ 2,95,802/- on account of belated payment of PF in respect of employees contribution, without considering the fact that assessee made such payments into the government account, beyond the due date as prescribed in the relevant Act. 8. It was noted by the AO that there was delay in payment of provident fund hence applying the provisions of section 43B, a disallowance of ₹ 2,95,802/- was made. When the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereafter directed to make an adjustment and fix the Arms Length Price is as under: Quantity purchase from AE 3025 Total Value 68,96,157 Avg. Price from AE 2,280 Avg. Price from purchase from Non-AE(Import) 2,056 ALP of transaction taking avg.purchase from Non-AE 62,19,400 ALP + 5% 65,30,370 Adjustment 6,76,757 10.1 Against the said adjustment an appeal was preferred and the Assessee has pleaded to apply CUP method. A detailed note was furnished by the Assessee and mainly contested as under: '5.14 In the case of the appellant, the appellant has already submitted that he should be granted the benefit of variation of 5% as available as per the provisions of proviso to section 92C(2) of the Act. Hence, arm's length price can be ₹ 2.210 (i.e. arithmetical mean of ₹ 2.364 and ₹ 2.056) or ₹ 2.321 (i.e. 5% higher to arithmetical mean of Rs: 2210 per unit). As appellant has alr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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