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TMI Blog2019 (5) TMI 1719X X X X Extracts X X X X X X X X Extracts X X X X ..... contains full address and website address of the firm. Based on the report of Altus International, range of royalty rate is also mentioned in the covering letter. It has duly been signed by the partner of the firm. It also contains contact persons and phone number for any question regarding report. In these circumstances, in our considered opinion, rejection by DRP of the benchmarking report submitted by the assessee is not sustainable. If authorities below have any doubt about the authenticity of the document, same could have very well inquired from the address and phone number mentioned therein. Hence in our considered opinion, interest of justice demands that this issue may be remitted to the TPO. Non-allowance of depreciation on fixed asset - why claim of depreciation should not be allowed as business was not set up - HELD THAT:- Authorities below have erred in appreciating the facts of the case as being claimed by the assessee. Assessee s claim is that machines were duly put to use during the year in a trial run. In the trial run prototype engines were duly manufactured and they were then sold for validation and testing. Sale of said prototype engine has been duly ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight to use the intellectual property and know-how in relation to Base Engine as per the direction of the DRP. 4. The learned DRP erred in not directing the TPO to accept the benchmarking analysis carried out by the appellant based on the Royalty Stat database. 5. The learned TPO erred in rejecting the CUP method applied by the appellant based on Discounted Cash Flow/Present Value Methodology of Valuation for determining the ALP for the above international transaction, which was also corroborated by a valuation report from the Registered Valuer during the course of assessment proceedings. 6. The learned TPO erred in not appreciating the submission made by the Assessee vide letter dated 28 January 2014 clarifying all the inconsistencies and irregularities that have been observed by the TPO in the valuation report. 7. The learned TPO erred in stating that the average rate of royalty rate 3%, which is in line with the industry norms, is not supported by the proper data. He erred in observing that the Assessee has not furnished the data based on scientific search or extraction of data from public domain. 8. The learned TPO erred in obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computed adjustment of ₹ 52,35,76,599.49 to the total income of the assessee. 5. The assessee filed objection before DRP. The assessee, inter alia, filed additional evidence with separate benchmarking international transaction and claimed it to be at arm s length price. For this purpose, assessee has used royalty stat database. Learned DRP admitted additional evidence and asked for the remand report from the TPO. Learned TPO observed that during the course of proceedings before him repeated opportunities were given to the assessee to benchmark international transaction of royalty payment separately while using royalty stat database. Hence, TPO reported that additional evidence now furnished may be rejected. 6. Learned DRP, however, admitted additional evidence. However, DRP dismissed benchmarking analysis carried out by the assessee from royalty stat database pertaining to report of 34 pages on the ground that the same was without any authentication, seal or signature of any agency. Although DRP noted that on the first page, name of Altus International has been mentioned, there is no seal and signature of any person or agency of in the report of 34 pages. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m. Despite this learned DRP accepted the additional evidence and proceeded to observe that the report was unauthenticated in as much as it was unsigned and did not contain seal of the reporting party. We have gone through the copy of the said report submitted. We find that the said report is submitted by Altus International. It contains covering letter which contains full address and website address of the firm. Based on the report of Altus International, range of royalty rate is also mentioned in the covering letter. It has duly been signed by the partner of the firm. It also contains contact persons and phone number for any question regarding report. In these circumstances, in our considered opinion, rejection by DRP of the benchmarking report submitted by the assessee is not sustainable. In our considered opinion if authorities below have any doubt about the authenticity of the document, same could have very well inquired from the address and phone number mentioned therein. Hence in our considered opinion, interest of justice demands that this issue may be remitted to the TPO. Learned TPO is directed to consider this issue afresh in accordance with our direction and observation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... type engines ₹ 52,47,878/- has been duly reflected in the audited annual accounts. Further submission of the assessee on this issue is as under :- The learned DRP has observed that the said sale was not reflected in the accounts. It is submitted that the said sale income has been taken to the Balance Sheet in the books of account as per accounting standard and reduced from the expenditure on project to be capitalized in the accounts. It is submitted that such an accounting treatment had no bearing on the computation of taxable income. The assets were put to use by the appellant and therefore the appellant was eminently eligible to claim depreciation under Income Tax Act. The disclosures in the ROI regarding consumption of material (PB Page 165), production of finished goods viz. engines (PB Page 166) and depreciation on plant and machinery (PB Pages 175 to 179) were duly furnished by the appellant for the relevant previous year. The issue is squarely covered in favour of the appellant by the decision of Honourable Bombay High Court in the case of Larsen Toubro Limited reported in 89 taxmann.com 186 wherein on the backdrop of similar set of facts Honourable Bombay ..... 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