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TMI Blog2016 (11) TMI 946X X X X Extracts X X X X X X X X Extracts X X X X ..... third party company in the uncontrolled transaction. The Transfer Pricing Officer has simply compared the written down value of the machinery. As rightly submitted by the assessee, depreciation is provided for all machineries used for production of an article or thing and other capital asset under the Income-tax Act. In view of the specific provision in rule 10B(1)(a) of the Income-tax Rules, the written down value cannot be a determining factor to decide the arm's length price. The value of the machinery has to be compared with identified transaction in the uncontrolled market. Since such an exercise was not done by the Transfer Pricing Officer, this Tribunal is of the considered opinion that the Dispute Resolution Panel has rightly fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee also claimed before the Transfer Pricing Officer that what was purchased by the assessee is not a standalone machine but an entire set of plant and machinery with a proven and time tested production capacity for a well established product. The Transfer Pricing Officer, after considering the objection of the assessee, found that the advantage in purchasing the machinery was not in question. The whole issue arises for consideration was whether the purchase of machinery was at the arm's length ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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 transferred shall be compared with uncontrolled transactions which are identified. Such compared price with uncontrolled transaction shall be adjusted to account for the difference between the international transaction of the assessee and the comparable uncontrolled transaction identified. The price so arrived at has to be taken as the arm's length price in respect of the property transferred. In fact, the Assessing Officer has taken the written down value without identifying any comparable case in the unco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 method, by which,- (i) the price charged or paid for property transferred or services provided in a comparable uncontrolled transaction, or a number of such transactions, is identified ; (ii) such price is adjusted to account for differences, if any, between the international transaction or the specified domestic trans action and the comparable uncontrolled transactions or between the enterprises entering into such transactions, which could materially affect the price in the open market ; (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsaction. 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 for production of an article or thing and other capital asset under the Income-tax Act. A machinery would automatically depreciate when it was put to use in the manufacturing activity. When the machinery was sold, the buyer of the machinery would naturally look for the efficiency and life of the machinery after the purchase. Therefore, the written down value may be one of the factors to be taken into consideration for determining the value of the machinery. However, in view of the specific provision in rule 10B(1)(a) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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