TaxTMI 
TaxTMI 
2016 (11) TMI 946
X X X X Extracts X X X X
X X X X Extracts X X X X
....Shri Jasdeep Singh, the learned Departmental representative, submitted that the assessee is a wholly owned subsidiary company of M/s. Hydraulics SpA, Italy. During the year under consideration, the assessee-company made transaction with its holding company by purchasing machinery. The Transfer Pricing Officer and the assessee adopted comparable uncontrolled price ("CUP") method as the most appropriate method. The value of the machinery purchased by the assessee was compared with the written down value of the parent company. The assessee contended before the Transfer Pricing Officer that the assessee purchased the machinery which was in perfect working condition and continued to perform the same function as it was performing in Italy. The as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....chases a second hand machinery, he would naturally analyse the cost of the original machinery, its depreciated value, repairs and maintenance, etc., to estimate the actual cost of the second hand machinery. Since the depreciation rates are approved by the relevant authorities, according to the learned Departmental representative, the written down value would be the most appropriate value for estimating the arm's length price. Therefore, the Dispute Resolution Panel ought to have accepted the adjustment made by the Transfer Pricing Officer. 3. On the contrary, Shri R. E. Balasubramanyam, the learned representative for the assessee, submitted that under the comparable uncontrolled price method, the price paid for the property transferr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Dispute Resolution Panel. 4. We have considered the rival submissions on either side and also perused the material available on record. We have carefully gone through the provisions of rule 10B of the Income-tax Rules, 1962. Rule 10B(1) provides method for determination of arm's length price in comparable uncontrolled price method. For the purpose of convenience, we reproduce below rule 10B(1) : "10B.(1) For the purposes of sub-section (2) of section 92C, the arm's length price in relation to an international transaction or a specified domestic transaction shall be determined by any of the following methods, being the most appropriate method, in the following manner namely :- (a) comparable uncontrolled price....
X X X X Extracts X X X X
X X X X Extracts X X X X
....inery from its holding company. When the price was determined by comparing the uncontrolled transaction, the difference between the price paid by the assessee and the price so determined in a comparable uncontrolled transaction has to be worked out and the difference between the two shall be taken as the arm's length price. Unfortunately, the Transfer Pricing Officer has not taken any pain either to identify the comparable transaction or to identify the price paid by the third party company in the uncontrolled transaction. The Transfer Pricing Officer has simply compared the written down value of the machinery. 5. As rightly submitted by the learned representative for the assessee, depreciation is provided for all machineries used fo....