TMI Blog2020 (1) TMI 1108X X X X Extracts X X X X X X X X Extracts X X X X ..... arable cases in the uncontrolled market. Therefore, we consider that ld. CIT(A) is not justified in sustaining upward adjustment made by the assessing officer by adopting written down value as ALP under the cup method and this ground of appeal of the assessee is allowed. Suppressed sale - difference in the quantity - unaccounted sale by taking average cost of batteries @ ₹ 4/- - HELD THAT:- The difference has arised only on account of action of the assessing officer for adding batteries distributed free of cost towards sales scheme. These submissions made by the assessee are placed at page no. 151 of the paper book and at para 5.21 of the submission it has been submitted that the batteries distributed towards sales schemes has already been considered in the excise record, therefore, further addition is not required to be made, the same are not excisable. Further these were distributed free to educational institutions and sales samples were not sold out of the books of account. As noticed that assessing officer himself has worked out the production as 23,95,42,769 pieces as against 23,83,38,363 pieces reported in the return filed with the Central Excise after duly excludi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3. The fact in brief is that return of income declaring income of ₹ 7,78,09,540/- was filed on 28th October, 2005. The case was selected for security by issuing of notice u/s. 143(2) of the act. The assessee company was mainly engaged in manufacturing of batteries of various types under the brand name Novino. The assessment order u/s. 143(3) of the act was passed on 31st December, 2008 after making various additions/disallowances and total income was assessed at ₹ 14,83,97,545/-. 4. The first ground of appeal of the assessee is against the decision of ld. CIT(A) in sustaining the action of the assessing officer of making upward adjustment u/s. 92C r.w.s. 92(1) in respect of sale price of plant and machinery amounting to ₹ 1,23,27,565/-. The TPO has stated in his order that the assessee has sold old plant and machinery to its associate concern at ₹ 7,30,40,500/- whereas its written down value as per books of account was at ₹ 8,53,68,065/-. It was also stated that the assessee had taken in his books of account cost of foreign exchange fluctuation and after capitalization the depreciation was also claimed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arms length price taken on the basis of written down value without identifying any comparable cases is not justified. On the other hand, the ld. departmental representative has supported the order of ld. CIT(A). 7. We have hard both the sides and perused the material on record. The assessee had sold plant and machinery to its associated enterprise at ₹ 7,30,40,500/- whereas its written down value as per books of account was at ₹ 8,53,68,065/-. On the basis of TPO s report, the assessing officer has taken written down value as arms length price and made upward adjustment of ₹ 1,23,27,565/-. After considering the material on record, it is noticed that TPO has computed arms length price of the sale of machinery on the basis of written down value of the asset and the TPO has not taken into consideration any other comparable to determine the uncontrolled price of the sold machine. In this regard, we have gone through the judicial pronouncements referred by the ld. counsel in the case of ACIT vs. M/s. Interpump Hydraulics India Pvt. Ltd. vide ITA No. 839/Mds/2015 dated 19- 05-2015 wherein it is held written down value cannot be a determining factor to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted a report from approved value indicating fair market value of machineries purchased, before rejecting such valuation report, TPO was duty bound to refer valuation of machineries to DVO as per procedure laid down under statute - Moreover, there being no other material brought on record by TPO demonstrating that he made enquiry of any kind to ascertain fair market value of machineries. In the light of the above facts and judicial findings, we observed that assessing officer is not justified in taking written down value without considering any comparable cases in the uncontrolled transaction and simply taken the arms length price on the basis of written down value of the machinery. Even, the TPO has not carried out any exercise to determine the arms length price of the machinery on the basis of comparable cases in the uncontrolled market. Therefore, we consider that ld. CIT(A) is not justified in sustaining upward adjustment made by the assessing officer by adopting written down value as ALP under the cup method and this ground of appeal of the assessee is allowed. 8. Second third grounds of appeal pertained to the issue of confirming the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 462.89 (+) Production of finished goods 238338363 pcs.* 10701.58 (-) Closing stock of finished goods 7672224 pcs. (incl. 5557424 pcs.- Of depot.) 329.83 *Finished goods sold at Depot. 241006637 pcs.* 11767.99 * 1. Excludes 1338 PCS. Of Education Centre (2) 1203068 pcs. Towards sales sales schemes/samples/free replacement damages and shortages during transit (duty paid goods). FINISHED GOODS 242363369 PCS. CLEARNACE ON PAYMENT OF DUTY FROM FACTORY. DATA provided on the base of ANNUAL REPORT as required by dept. 8.5.1. From the copy of excise return submitted by the appellant, it is seen that the production of finished goods has been mentioned at 23,83,38,363 pieces. Against this figure an astrix had been marked and it has been mentioned as a foot note as excludes 1388 pcs. of Education ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al information statement for the F.Y. 2004-05 filed with the Central Excise Authority and noticed that at para 4(ii) production of finished goods was shown at 23,83,38,363 pieces. In the excise return in the summary note, it is stated that 1338 pieces of education center and 12,03,068 pieces of sales schemes were excluded. We have also gone through the cost audit report placed in the paper book from 197 to 287, it is noticed that at page no. 200 of this report the detail of production during the year is given at serial 4 to 6 as under:- Sr. No. Particulars 2004-05 4 Production during the year (a) Self manufactured 1U/1D/1P/1PB 160.29 2U/2P 15.24 3U/15V ..... X X X X Extracts X X X X X X X X Extracts X X X X
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