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of <h1>Tribunal decision: Depreciation allowed, PF contribution validated, ALP reassessment directed</h1> The Tribunal upheld the CIT(A)'s decision regarding the disallowance of depreciation on technical support service fees, allowing depreciation on the ... Depreciation on the WDV of technical support service fees paid - CIT(A) allowed part claim - assessee is a 50/50 joint venture, therefore, there was overaseas AE relationship with Fedders International Air Conditioning and Fedders International INC, USA - Held that:- 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.- Decided against revenue. Disallowance of belated payment of PF in respect of employees’ contribution - CIT(A) deleted the disallowance - Held that:- Considering the dates of payment, due dates and the date on which the payment 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. Issues Involved:1. Disallowance of depreciation on technical support service fees.2. Disallowance of belated payment of Provident Fund (PF) contributions.3. Determination of Arm's Length Price (ALP) for international transactions.Issue-wise Detailed Analysis:1. Disallowance of Depreciation on Technical Support Service Fees:- Facts and Findings:- The assessee, a joint venture company, claimed depreciation on technical support service fees paid to its associated enterprise (AE), Fedders International INC, USA.- The Transfer Pricing Officer (TPO) determined the Arms Length Price (ALP) of the technical support fees to be 'Nil,' leading to the disallowance of depreciation by the Assessing Officer (AO).- The CIT(A) restricted the disallowance, allowing depreciation on the Written Down Value (WDV) of Rs. 47,47,185/- from A.Y. 2002-03, noting that the payment was made and approved by the RBI.- Tribunal's Decision:- The Tribunal upheld the CIT(A)'s decision, emphasizing that the Revenue Department had allowed depreciation on similar terms in earlier years (A.Y. 2002-03 and 2003-04).- The Tribunal found no fallacy in the CIT(A)'s direction to re-compute and allow the eligible depreciation, dismissing the Revenue's ground.2. Disallowance of Belated Payment of Provident Fund (PF) Contributions:- Facts and Findings:- The AO disallowed Rs. 2,95,802/- for belated payment of PF contributions, applying the provisions of section 43B.- The CIT(A) reversed the disallowance, noting that the payments were made within the extended grace period and following the precedent set by Vinay Cement 213 CTR 268 (SC).- Tribunal's Decision:- The Tribunal confirmed the CIT(A)'s factual findings and upheld the deletion of the disallowance, dismissing the Revenue's ground.3. Determination of Arm's Length Price (ALP) for International Transactions:- Facts and Findings:- For A.Y. 2005-06, the TPO made an adjustment to the ALP for the purchase of AC units from AE, noting a price difference compared to non-AE purchases.- The CIT(A) deleted the addition, stating that the TPO did not discuss the most appropriate method for determining ALP and that the assessee's contention gained ground.- Tribunal's Decision:- The Tribunal found that the CIT(A) did not adequately address the comparable instances or the procedure prescribed under Rule 10B(1)(a).- The issue was restored to the CIT(A) for re-evaluation, directing to follow the prescribed procedure and provide an adequate opportunity for hearing to both sides.Conclusion:- The Tribunal dismissed the Revenue's appeal for A.Y. 2004-05 and 2006-07, while partly allowing the appeal for A.Y. 2005-06 for statistical purposes, directing further examination of the ALP determination issue.
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