TaxTMI 
TaxTMI 
2018 (4) TMI 36
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion of Rs. 2,21,895/-, made by Assessing Officer, on account of disallowance of claim of depreciation @ 60% on UPS, as against @ 15% allowable." 2. The notice for hearing was sent to the respondent-assessee through speed post on the address mentioned in 'Form 36' and in the address mentioned in the first appellate order. However, the said notice has been returned back as "not found". Accordingly, we are proceeding to decide the appeal on merits after hearing the learned DR and on the basis of the material available on record. 3. The brief facts qua the issue of transfer pricing adjustment are that, assessee had international transaction with its AE, 'Caparo Vehicle Products Ltd., UK' for purchase of old/used machinery and accessories along with reimbursement of freight, insurance and handling charges for the value of Rs. 9,97,93,331/-. In the TP study report, assessee has chosen itself as tested party and CUP method was adopted the most appropriate method for benchmarking the said transaction. During the relevant financial year, assessee has imported certain machines from its AE, 'Caparo Vehicles Products Ltd' UK, (CVPL) like in the earlier years which were used for the business ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e ARs have filed copies of EPGC Authorization Letters wherein there is no valuation of the machinery purchased. Under the circumstances, no credence possibly can be given to the same for transfer pricing purposes So far as certificates of Chartered Engineers are concerned, it is to be pointed out that these certificates are indicative of Fair market value of the machines inspected by the individual concerned; the same may or may not be price paid under comparable uncontrolled transaction. Secondly, the Chartered Engineers issuing certificates are paid for the job carried out under instruction of the assessee or its AE and so it cannot be said that their opinions have emanated under uncontrolled circumstances. Thirdly, no methodology or norms have been given by these engineers regarding particular value of machines taken by them on a particular date. Therefore, value given in the certificates cannot be accepted as price of the machines under comparable uncontrolled circumstances. It is to be made clear here that no other method is applicable in the case of the assessee as only international transaction is purchase of machinery." 5. The TPO, however for computing the arm's length pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....findings and material discussed in the impugned orders as well as the submission made by the learned DR, we find that assessee like in the earlier years and in the subsequent years have purchased certain machineries along with accessories from its AE, 'Caparo Vehicle Products Ltd., UK'. The cost of freight, insurance and handling charges were also reimbursed by the assessee to its AE. The aggregated cost was Rs. 9,97,93,331/-. For the purpose of benchmarking the Fair Market Value of the said machinery, the assessee had submitted a certificate from a Chartered Engineer who has valued the machinery taking into account various factors and then based on such valuation of FMV the assessee has made the payment to its AE. The TPO rejected the said certificate and has determine the ALP so imported at Rs. 4,18,50,851/-. 9. It is a trite principle that under our Transfer Pricing regulations, the international transaction with associated enterprises has to be bench marked under the prescribed methods so as to arrive at arm's length price paid for the services or the product. Under CUP method, which is undisputedly the most appropriate method in the present case, it has to be seen that for ar....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the old machines, which in our opinion TPO has failed to take note of. He has also not carried out any independent exercise for the value of the machinery by any approved valuer/Chartered Engineer so as to controvert the fair market value determined by the assessee's Chartered Engineer. Moreover, here in this case, it is an admitted fact that in the A.Y.2008-09, the TPO has accepted the same value as per the valuation report given by the Chartered Engineer in respect to the purchase of similar old machine along with its accessories from its AEs. Thus, we do not find any infirmity in the order by the ld. CIT (A) in holding that the adjustment made by the TPO is without any basis and has rightly been deleted by him. Accordingly, ground no.1 is dismissed. 11. So far as the issue relating to disallowance of Rs. 1,21,854/- on account of u/s.14A read with Rule 8D is concerned, the brief facts are that the assessee has made investment in shares from where it has earned dividend income at Rs. 29,21,709/-, which was claimed as exempt. The assessee's case before the Assessing Officer was that the dividend has been earned from mutual funds whereby the bank itself has done the entire transac....