2023 (4) TMI 456 - AT - Income Tax

TP adjustment in relation to import of fixed assets - TPO determined ALP of the old machineries at NIL - assessee has purchased various fixed asset from different AEs - HELD THAT - TPO has asked the assessee to produce invoices/bills, date of purchase by AE and utilization of the machineries, etc. and the assessee has not filed any details before the TPO. No details were brought on record either before the ld. DRP or even before the Tribunal. Therefore,we are of the considered opinion that the TPO has rightly came to a conclusion that the ALP of the old machineries at NIL, which was confirmed by the ld. DRP. We find no infirmity in the order passed by the ld. DRP/Assessing Officer. Accordingly, the ground raised by the assessee is dismissed.

Summary

Issues:
Transfer pricing adjustment in relation to import of fixed assets.

Analysis:
The appeal was filed against the assessment order passed under section 143(3) r.w.s. 144C (13) of the Income Tax Act, 1961 for the assessment year 2012-13. The grounds 1 to 18.1 were not pressed by the assessee. The only issue raised for adjudication was transfer pricing adjustment concerning the import of fixed assets from associated enterprises. The Transfer Pricing Officer (TPO) noted that the assessee used TNMM to benchmark the asset purchase, including depreciation in operating costs, which was not accepted as depreciation is not the international transaction. The TPO required the assessee to establish the ALP of the asset purchased, which the assessee failed to do. The TPO adopted the purchase cost at NIL, suggesting a TP adjustment of Rs. 1.15 crores. The draft assessment order was passed based on the TPO's order.

The assessee appealed to the Dispute Resolution Panel (DRP), which confirmed the draft assessment order, stating that the asset purchase is an international transaction, and the correctness of the purchase cost must be determined as per the Act. The DRP rejected the objections raised by the assessee due to the lack of evidence. The final assessment order was passed by the Assessing Officer, making adjustments as directed by the DRP. The assessee then appealed to the Tribunal, arguing against the determination of ALP at NIL, emphasizing that the machineries had come to India, and the purchase cost was not routed through the profit and loss account.

The Tribunal considered the lack of details provided by the assessee regarding the purchase of fixed assets from different AEs. As no evidence was submitted before the TPO, DRP, or the Tribunal, the TPO's conclusion of ALP at NIL was upheld. The Tribunal found no infirmity in the orders passed by the lower authorities and dismissed the appeal, upholding the decision on transfer pricing adjustment related to the import of fixed assets. The appeal was ultimately dismissed, affirming the decision of the lower authorities.

This detailed analysis highlights the key aspects of the judgment, focusing on the transfer pricing adjustment issue concerning the import of fixed assets and the subsequent legal proceedings and decisions by the authorities involved.