TMI Blog2018 (6) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... on No.286/Del/2015 - - - Dated:- 2-4-2018 - SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER For The Assessee : Shri Hari Om Jindal For The Department : Shri H.K. Choudhary, CIT-DR Shri Sanjay Kumar Yadav, Sr. DR ORDER PER K.Narasimha Chary, JM Aggrieved by the directions dated 10.11.2014 of the Disputed Resolution Panel-III, New Delhi ( DRP ), in Objection No 34, revenue preferred this appeal. 2. Brief facts of the case are that the assessee is a wholly-owned subsidiary of Sarens NV, Belgium and is in the business of hiring and leasing heavy cranes. Sarens group is stated to be one of the global leaders in transport and handling of heavy equipments. Apart from transport and handling, Sarens group is also engaged in retail and the operation of cranes and the problem solving linked with the crane work, rendering services with heavy cranes and equipments for erection jobs in big industrial and the civil projects in the field of petrochemicals, steel plants and major civil works. 3. The assessee filed their return of income on 15/10/2010 declaring an income of ₹ 2,67,60,419/-. During the scrutiny, Ld. AO fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken by the custom authorities. 7. Before the DRP assessee furnished the details under the DCF method. They have also submitted the chart depicting the value of cranes as per invoice and also as computed by the customs authorities and the chartered engineers. Further, assessee placed reliance on a decision of the Hyderabad Bench of the Tribunal in Tecumseh Products India (P) Ltd versus ACIT (2014) 41 taxmann.com 385 (Hyderabad-trib). 8. DRP considered the contentions of the assessee in the light of the material available with them and observed that as against the valuation report furnished by the assessee, TPO has not carried out any exercise for the valuation of the machinery by any approved valuer/chartered engineer. DRP further observed that out of 9 cranes, one crane was of the year 1987, another of 1992 and all other of 2007 with the residual life expectancy of at least 10 years. 9. Basing on these facts DRP observed that the written down value of cranes in the books of the AE cannot be considered as ALP as it is not derived from the transactions between enterprises other than associated enterprises. They have also considered the submission of the assessee that ALP wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sociated enterprise, inasmuch as such written down value could be taken as internal CUP. He submits that ld. DRP committed an error in not considering this aspect and by proceeding with an exemption that CUP always requires the comparison of transactions between unrelated parties. He submits that consequently the addition made by the ld. AO has to be sustained. 14. Per contra, it is the argument of the ld. Authorised Representative that the written down value of cranes in the books of the associated enterprise of the assessee cannot be considered as ALP as it is not derived from the transaction between enterprises other than associated enterprises. Basing on the decisions reported in CIT v. Ajax Products Limited [1965] 55 ITR 741 (Supreme Court), DCIT, Circle 3(1), New Delhi v. C-Dot Alcatel-Lucent Research Centre (P.) Ltd, 66 taxmann.com 281 ( Delhi-Trib.) [2016], Social Media India Ltd. vs. Asstt. CIT [2013] 40 taxmann.com 37 (Hyderabad -; Trib.)/[2013] 28 ITR(T) 212 (Hyderabad - Trib.)/[2014] 148 ITD 222 (Hyderabad - Trib.), Intel Asia Electronics Inc., India, Branch Office v. Asstt. DIT [2011] 9 taxmann.com 197 (Bang. - IT AT), ACIT v. Koch Chemical Technology Group (India) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts the total income. 18. We have considered these submissions on either side in the light of the record. There is no dispute that the actual price paid by the assessee for 9 cranes is ₹ 34,32,73,475/-. The cranes were valued by an independent chartered engineer according to whom the price would be ₹ 34,15,84,450/-, whereas the valuation as per custom authorities was ₹ 34,46,69,670/-. The fair market value by following the DCF method comes to ₹ 43,92,65,295/-. All the relevant details were made available to the authorities below and considered by them. 19. However, the Assessing Officer ignored this material available on record and proceeded to determine the ALP basing on the written down value of the cranes as recorded in the books of the seller by applying the CUP method. Ld.DRP accepted the contention of the assessee that the written down value of cranes in the books of the associated enterprise of the assessee cannot be considered as ALP and is not derived from the transaction between enterprises other than associated enterprises. Further ld. DRP observed that it is nobody s case that an old asset cannot be sold at a price exceeding net book value. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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