9911796707
TMI Blog2012 (4) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... In Schedule 16 to its final accounts, which provides notes on accounts, the assessee has clarified the significant accounting policies followed by it in the matter of fixed assets and depreciation. It is stated therein that the assessee has provided depreciation on straight-line method. The rates have been adopted on the basis of technical estimates made of useful life of the assets. Accordingly, the assessee has provided depreciation at 33.33% in the case of plant and machinery including computer hardware and software. Furniture and fixtures were depreciated at the rate of 14.29% and motor vehicles at the rate of 20%. Depreciation was provided on office equipment at 20% and air-conditioners at 12.5%. – Held that:- The assessee is in fact not providing technical depreciation influenced by Income-tax Rules No force in the arguments advanced by the assessee company on the question of adjustment of the depreciation factor. - Decided in favor of revenue. - I T Appeal No. 1591 (Mds.) of 2011 - - - Dated:- 30-1-2012 - Dr. O.K. Narayanan, Hari Om Maratha, JJ. S. Hariharan for the Appellant. Shaji P. Jacob for the Respondent. ORDER Dr. O.K. Narayanan, Vice-President ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst order served on the assessee was a draft order under section 144C(1) of the Act. The said corrigendum was served on the assessee on 1-3-2011. The corrigendum also mentioned that the demand notice sent alongwith the first order served on the assessee had to be treated as withdrawn. After the issue of corrigendum, the Assessing Officer passed a final order under section 144C(3) on 28-2-2011, against which, in the normal course, the assessee went before the Dispute Resolution Panel and thereafter came before us. 6. In the above scenario, the contention of the assessee is that the assessing authority has erred in issuing a corrigendum to the original order passed under section 144C(1). According to the assessee, there is no provision under the income-tax law to issue a corrigendum and rectify errors in an order passed by the Assessing Officer. Therefore, the corrigendum issued on 21-2-2011 has no legal force, as a result of which, the assessment proceedings fall on ground. 7. We considered the issue in detail. The procedures to be adopted in the course of a transfer pricing assessment, where adjustments have to be made as suggested by the Transfer Pricing Officer, are well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "15. All irregular or erroneous or even illegal orders cannot be held to be null and void as there is a fine distinction between the orders which are null and void and orders which are irregular, wrong or illegal. Where an authority making order lacks inherent jurisdiction, such order would be without jurisdiction, null non est and void ab initio as defect of jurisdiction of an authority goes to the root of the matter and strikes at its very authority to pass any order and such a defect cannot be cured even by consent of the parties. (See: Kiran Singh v. Chaman Paswan ). However, exercise of jurisdiction in a wrongful manner cannot result in a nullity - it is an illegality, capable of being cured in a duly constituted legal proceedings. 16. Proceedings for assessment under a fiscal statute are not in the nature of juridical proceedings, like proceedings in a suit inasmuch as the assessing officer does not adjudicate on a lis between an assessee and the State and, therefore, the law on the issue laid down under the civil law may not stricto sensu apply to assessment proceedings. Nevertheless, in order to appreciate the distinction between a 'null and void' order and an 'i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Transfer Pricing Officer. Therefore, that proposal was aborted. As a result of the adjustment approved by the Dispute Resolution Panel, an addition by way of adjustment was made by the assessing authority to the extent of Rs. 2,38,24,515/-. It is in this context, that the assessee has raised its contentions regarding the adjustment on depreciation factor. 13. In Schedule 16 to its final accounts, which provides notes on accounts, the assessee has clarified the significant accounting policies followed by it in the matter of fixed assets and depreciation. It is stated therein that the assessee has provided depreciation on straight-line method. The rates have been adopted on the basis of technical estimates made of useful life of the assets. Accordingly, the assessee has provided depreciation at 33.33% in the case of plant and machinery including computer hardware and software. Furniture and fixtures were depreciated at the rate of 14.29% and motor vehicles at the rate of 20%. Depreciation was provided on office equipment at 20% and air-conditioners at 12.5%. 14. It is the case of the assessee that in the case of comparable instances examined by the Transfer Pricing Officer, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hibiting the actual position. 16. In the present case, the assessee has followed a scientific system wherein the assessee is providing for depreciation on a more real time basis. The assessee is in fact not providing technical depreciation influenced by Income-tax Rules. The assessee is providing for more or less the actual depreciation. This actual depreciation is more relevant in working out the operating profit of the assessee. Therefore, we find that no adjustment is called for in the quantum of depreciation provided by the assessee in its operating account so as to work out its operating profit for the purpose of determining the Arm's Length Price (ALP). 17. Apart from the above factual assessment of the case, let us examine the rates provided by the assessee. The Transfer Pricing Officer has examined in paragraphs 13.7, 13.8 and 13.9 in her reference order, the various rates of the depreciation provided by the assessee in its accounts. In the case of computer, the assessee has provided depreciation at the rate of 33.3%. As pointed out by the Transfer Pricing Officer, the Income-tax Rules provide depreciation at 60% in the case of capital items and 100% in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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