TMI Blog2018 (4) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... been diverted for the purpose of investment, therefore, ld. CIT(A) has rightly deleted the disallowance of interest Disallowance of claim of depreciation @ 60% on UPS - Held that:- CIT(A) has deleted the addition, following the judgment of Hon'ble Delhi High Court in the case of CIT vs. BSES Rajdhani Powers Ltd. [2010 (8) TMI 58 - DELHI HIGH COURT], wherein computer accessories/peripherals like printers, scanners, server, UPS, etc., have been held to be integral part of computer system, and therefore, entitled to depreciation @60%. - Appeal of revenue dismissed. - I.T.A. No.6838/DEL/2014 - - - Dated:- 22-2-2018 - Shri Amit Shukla, Judicial Member and Shri Prashant Maharishi, Accountant Member Appellant by: None Respondent by: Shri Sanjay Kumar Yadav, Sr.D.R. ORDER Per Amit Shukla, J.M.: The aforesaid appeal has been filed by the Revenue against the impugned order dated 12.09.2014, passed by the Ld. CIT(Appeals)-XX, New Delhi for the quantum of assessment passed u/s.144C(3) for the Assessment Year 2007-08. In the grounds of appeal, following grounds have been raised. 1. On the facts and circumstances of the case and in law, the Ld. CIT (Appeals) h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee stated that the same certificate provides the value of machines which was equal to fair market value of the machines which was accepted by the custom authorities. Thus, it constitutes a kind of a CUP for ascertaining the ALP, and therefore, transaction is at arm s length. 4. The TPO however did not accept the FMV as certified by the Chartered Engineer and observed that even if such value has been accepted by the custom authorities, it would not fulfill the transfer pricing principles. The relevant observation of the TPO in this regard reads as under:- the question before the undersigned is not the determination of Fair Market Value of machines under transfer but determination of arm s length price of the transaction of purchase of machines. For this purpose, the assessee has used comparable uncontrolled price method. Rule 10B(1) (a) of the Income Tax Rules, 1962 where procedure for determination of ALP under CUP method is given, nowhere mentions the fair value for the property transferred. However, it does mentions the price charged or paid in a comparable uncontrolled transaction. Purpose of valuation under Customs Act and determination of ALP under the Transfer P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so imported at ₹ 4,18,50,851/- as against the FOB value of ₹ 9,27,62,960/- and the difference amounting to ₹ 5,09,12,109/- has been added as TP Adjustment. 6. Before the ld. CIT (A), detailed submissions were made which has been dealt and incorporated in the appellate order from pages 5 to 7. Ld. CIT (A) noted that similar issue had arisen in the succeeding year also, i.e., in A.Y. 2008-09, wherein the TPO has accepted the same method of valuation done by the Chartered Engineer and no adjustment was made. He further observed that the method adopted by the TPO is not recognized anyway and it is not prescribed under any provision of law, because the TPO has taken the original cost, estimated life and residual life as given by the Chartered Engineer hired by the assessee, but, the current estimate value as prescribed by the same Chartered Engineer has been rejected by him. Moreover, the TPO has not carried out any valuation for the machinery by the any approved valuer. Further, the ld. CIT (A) relying upon the decision of ITAT Hyderabad Bench in the case of Tecumseh Products India (P.) Ltd. vs. ACIT (2014) 41 Taxmann.com 385 (Hyd-Trib), deleted the said adjustment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AE. The fair market value is the price which is to be paid under comparable uncontrolled transaction by any independent entity in the open market. The valuation by an independent qualified expert for determining the fair market price or the FMV of the machinery has to be treated as the arm s length price for the value of such products or services, which could be reckoned as the price paid by any independent party in the open market for such product or goods. 10. The assessee in the present case, to determine the fair market value of the said machine has got the valuation done by a Chartered Engineer who has certified the cost of the machinery taking into account various factors for determining the fair market value. In case of used machinery, ostensibly the purchase price of a new product cannot be taken as the comparable uncontrolled price, because the cost of used/ old machinery depends upon number of various factors like:- Usage: a lot is dependent upon the capacity utilization of the machinery; Maintenance: secondly during its usage, how the same has been maintained; Obsolescence: despite the fast changing life, some items do not get its value and gets reduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 2007-08. 12. Before the ld. CIT(A), the detailed submissions on behalf of the assessee has been made and also reliance was placed upon the decision of the ld. CIT(A) in the Assessment Year 2009-10, wherein the Assessing Officer was directed to delete the addition made u/s.14A read with Rule 8D. It was also brought on record before the ld. CIT (A) that the company has used its own equity money for investment in mutual fund units and no interest bearing funds have been used for such purpose, and therefore, no disallowance of interest could be made. Ld. CIT(A) held that though interest expenditure of ₹ 7,65,524/- could not have been disallowed by the Assessing Officer under Rule 8D, because admittedly no interest bearing fund have been used for the purpose of investment. However, he has confirmed the disallowance on account of indirect expenditure incurred under the head administrative expenses which has been worked out as per Rule 8D at ₹ 1,21,854/-. 13. After considering the submission of the learned Sr. DR who was strongly relied upon the order of the Assessing Officer and the relevant findings given in the impugned order, we find that, it is an undisputed f ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
