ACIT, New Delhi V. M/s. Caparo Engineering India Pvt. Ltd., New Delhi

ITA 6838/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3480 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2007-2008
• Appeal Filed On: 18-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Transfer pricing; International transaction; Fair market value; Valuation report
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I-2 NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO.6838/DEL/2014 ASSESSMENT YEAR: 2007-08 ACIT, LTU-I, NEW DELHI. VS. M/S. CAPARO ENGINEERING INDIA PVT. LTD., 5 TH FLOOR, RAJENDRA BHAWAN, 210 DDU MARG, NEW DELHI. TAN/PAN: AABCC7862N (APPELLANT) (RESPONDENT) APPELLANT BY: NONE RESPONDENT BY: SHRI SANJAY KUMAR YADAV, SR.D.R. DATE OF HEARING: 15 02 2018 DATE OF PRONOUNCEMENT: 22 02 2018 O R D E R PER AMIT SHUKLA, J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE IMPUGNED ORDER DATED 12.09.2014, PASSED BY THE LD. CIT(APPEALS)-XX, NEW DELHI FOR THE QUANTUM OF ASSESSMENT PASSED U/S.144C(3) FOR THE ASSESSMENT YE AR 2007-08. IN THE GROUNDS OF APPEAL, FOLLOWING GROUND S HAVE BEEN RAISED. 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 5,09,12,109/- MADE WITHOUT APPRECIATING THE FINDINGS OF TPO. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT (A) HAS ERRED IN RESTRICTING THE DISALLOWANCE T O RS. 1,21,854/- ON ACCOUNT OF DISALLOWANCE U/S 14A OF THE INCOME TA X ACT READ WITH RULE 8D IF IT RULES 1962. I.T.A. NO.6838/DEL/2014 2 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.2, 21,895/-, MADE BY ASSESSING OFFICER, ON ACCOUNT OF DISALLOWANCE OF CL AIM OF DEPRECIATION @ 60% ON UPS, AS AGAINST @ 15% ALLOWAB LE. 2. THE NOTICE FOR HEARING WAS SENT TO THE RESPON DENT- ASSESSEE THROUGH SPEED POST ON THE ADDRESS MENTIONE D IN FORM 36 AND IN THE ADDRESS MENTIONED IN THE FIRST APPELLATE ORDER. HOWEVER, THE SAID NOTICE HAS BEEN RETURNED B ACK AS NOT FOUND. ACCORDINGLY, WE ARE PROCEEDING TO DECI DE THE APPEAL ON MERITS AFTER HEARING THE LEARNED DR AND O N THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. 3. THE BRIEF FACTS QUA THE ISSUE OF TRANSFER PRICING ADJUSTMENT ARE THAT, ASSESSEE HAD INTERNATIONAL TRA NSACTION WITH ITS AE, CAPARO VEHICLE PRODUCTS LTD., UK FO R PURCHASE OF OLD/USED MACHINERY AND ACCESSORIES ALONG WITH REIMBURSEMENT OF FREIGHT, INSURANCE AND HANDLING CH ARGES FOR THE VALUE OF RS.9,97,93,331/-. IN THE TP STUDY REPO RT, ASSESSEE HAS CHOSEN ITSELF AS TESTED PARTY AND CUP METHOD WAS ADOPTED THE MOST APPROPRIATE METHOD FOR BENCHMA RKING 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 EARLI ER YEARS WHICH WERE USED FOR THE BUSINESS PURPOSE. THE ASSES SEES CONTENTION WAS THAT, INSTEAD OF INVESTING HEAVY AMO UNT FOR BUYING NEW MACHINES, IT HAD DECIDED TO PURCHASE THE SIMILAR USED MACHINES FROM CVPL AND FOR ASCERTAINING THE FA IR MARKET VALUE OF THE MACHINES, AN INSPECTION WAS MAD E BY CHARTERED ENGINEERS AND ON THE BASIS OF SAID INSPEC TION, A I.T.A. NO.6838/DEL/2014 3 CERTIFICATE CONTAINING MARKET VALUE, ESTIMATED LIFE OF MACHINE, ETC, WAS ISSUED BY THE CHARTERED ENGINEER. ON SUCH FMV PRICE, THE MACHINE WAS ACCORDINGLY IMPORTED, THAT I S, ON THE PRICE MENTIONED IN THE CERTIFICATE AFTER ASCERTAINI NG THE VALUE OF MACHINE AMOUNT PAID IN GBP. APART FROM THE VALUE OF MACHINES, FREIGHT, INSURANCE AND HANDLING CHARGE WH ICH WAS PAID AT CVPL HAD ALSO BEEN REIMBURSED BY THE ASSESS EE. THE ASSESSEE STATED THAT THE SAME CERTIFICATE PROVIDES THE VALUE OF MACHINES WHICH WAS EQUAL TO FAIR MARKET VALUE OF TH E MACHINES WHICH WAS ACCEPTED BY THE CUSTOM AUTHORITI ES. THUS, IT CONSTITUTES A KIND OF A CUP FOR ASCERTAINI NG THE ALP, AND THEREFORE, TRANSACTION IS AT ARMS LENGTH. 4. THE TPO HOWEVER DID NOT ACCEPT THE FMV AS CERTIFIED BY THE CHARTERED ENGINEER AND OBSERVED THAT EVEN IF SU CH VALUE HAS BEEN ACCEPTED BY THE CUSTOM AUTHORITIES, IT WOU LD NOT FULFILL THE TRANSFER PRICING PRINCIPLES. THE RELEVA NT OBSERVATION OF THE TPO IN THIS REGARD READS AS UNDER:- THE QUESTION BEFORE THE UNDERSIGNED IS NOT THE DET ERMINATION OF FAIR MARKET VALUE OF MACHINES UNDER TRANSFER BUT DE TERMINATION OF ARMS LENGTH PRICE OF THE TRANSACTION OF PURCHASE O F MACHINES. FOR THIS PURPOSE, THE ASSESSEE HAS USED COMPARABLE UNCO NTROLLED PRICE METHOD. RULE 10B(1) (A) OF THE INCOME TAX RULES, 19 62 WHERE PROCEDURE FOR DETERMINATION OF ALP UNDER CUP METHOD IS GIVEN, NOWHERE MENTIONS THE FAIR VALUE FOR THE PROPERTY TR ANSFERRED. HOWEVER, IT DOES MENTIONS THE PRICE CHARGED OR PAID IN A COMPARABLE UNCONTROLLED TRANSACTION. PURPOSE OF VAL UATION UNDER CUSTOMS ACT AND DETERMINATION OF ALP UNDER THE TRANSFER PRI CING REGULATIONS ARE TWO DIFFERENT AND DISTINCT FUNCTION S AND SO TO HOLD TRANSACTIONAL VALUE CERTIFIED BY CUSTOM AUTHORITIES AS ALP UNDER THE TRANSFER PRICING REGULATIONS IS NEITHER FAIR NO R REASONABLE. SUPPORT IS DERIVED FROM THE JUDGMENT OF HONBLE SUP REME COURT IN THE CASE OF ASSOCIATED CEMENT COMPANIES LTD V COMMI SSIONER OF CUSTOMS [2001] 4 SCC 593; 124 STC 59 WHEREIN THE VA LUE OF THE GOODS IMPORTED HAS BEEN DISTINGUISHED FROM THE PR ICE OF THE GOODS. SECONDLY, THE ARS HAVE FILED COPIES OF EPGC AUTHORIZATION I.T.A. NO.6838/DEL/2014 4 LETTERS WHEREIN THERE IS NO VALUATION OF THE MACHIN ERY PURCHASED. UNDER THE CIRCUMSTANCES, NO CREDENCE POSSIBLY CAN B E GIVEN TO THE SAME FOR TRANSFER PRICING PURPOSES SO FAR AS CERTIF ICATES OF CHARTERED ENGINEERS ARE CONCERNED, IT IS TO BE POIN TED OUT THAT THESE CERTIFICATES ARE INDICATIVE OF FAIR MARKET VA LUE 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 CERTIFICA TES ARE PAID FOR THE JOB CARRIED OUT UNDER INSTRUCTION OF THE ASSESS EE OR ITS AE AND SO IT CANNOT BE SAID THAT THEIR OPINIONS HAVE EMANA TED 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. THEREF ORE, VALUE GIVEN IN THE CERTIFICATES CANNOT BE ACCEPTED AS PRI CE 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 MA CHINERY. 5. THE TPO, HOWEVER FOR COMPUTING THE ARMS LENGT H PRICE ADOPTED A UNIQUE APPROACH WHEREBY LIFE OF THE MACH INERY GIVEN BY CHARTERED ENGINEER AT INDIA ALONG WITH YEA R OF MANUFACTURING GIVEN BY THE CHARTERED ENGINEER AT UK HAS BEEN TAKEN BY THE TPO AS THE BASIS FOR WORKING OUT THE MARKET VALUE OF THE MACHINERY DURING THE TRANSACTIO N YEAR. WHERE THE MANUFACTURING YEAR WAS NOT GIVEN IN THE R EPORT OF UK ENGINEER, THE ORIGINAL PURCHASE DATE GIVEN IN TH E REPORT OF THE INDIAN ENGINEER HAS BEEN TAKEN BY THE TPO AND H AD APPLIED THE FOLLOWING FORMULA TO DETERMINE THE FMV PRICE FOR THE PURPOSE OF ALP:- MARKET VALUE = (VALUE AT THE TIME MACHINERY MANUFA CTURED/TOTAL LIFE OF THE MACHINERY) * RESIDUAL LIFE ACCORDINGLY, THE TPO DETERMINED THE SUM TOTAL OF AL P OF MACHINERY SO IMPORTED AT RS.4,18,50,851/- AS AGAINS T THE FOB VALUE OF RS.9,27,62,960/- AND THE DIFFERENCE AM OUNTING TO RS.5,09,12,109/- HAS BEEN ADDED AS TP ADJUSTMENT . I.T.A. NO.6838/DEL/2014 5 6. BEFORE THE LD. CIT (A), DETAILED SUBMISSIONS W ERE MADE WHICH HAS BEEN DEALT AND INCORPORATED IN THE APPELL ATE ORDER FROM PAGES 5 TO 7. LD. CIT (A) NOTED THAT SIMILAR I SSUE HAD ARISEN IN THE SUCCEEDING YEAR ALSO, I.E., IN A.Y. 2 008-09, WHEREIN THE TPO HAS ACCEPTED THE SAME METHOD OF VAL UATION DONE BY THE CHARTERED ENGINEER AND NO ADJUSTMENT WA S MADE. HE FURTHER OBSERVED THAT THE METHOD ADOPTED B Y THE TPO IS NOT RECOGNIZED ANYWAY AND IT IS NOT PRESCRIB ED UNDER ANY PROVISION OF LAW, BECAUSE THE TPO HAS TAKEN THE ORIGINAL COST, ESTIMATED LIFE AND RESIDUAL LIFE AS GIVEN BY THE CHARTERED ENGINEER HIRED BY THE ASSESSEE, BUT, THE CURRENT ES TIMATE VALUE AS PRESCRIBED BY THE SAME CHARTERED ENGINEER HAS BEEN REJECTED BY HIM. MOREOVER, THE TPO HAS NOT CARRIED OUT ANY VALUATION FOR THE MACHINERY BY THE ANY APPROVED VAL UER. FURTHER, THE LD. CIT (A) RELYING UPON THE DECISION OF ITAT HYDERABAD BENCH IN THE CASE OF TECUMSEH PRODUCTS IN DIA (P.) LTD. VS. ACIT (2014) 41 TAXMANN.COM 385 (HYD-TRIB), DELETED THE SAID ADJUSTMENT. 7. BEFORE US THE LEARNED DR SUBMITTED THAT UNDER T HE TRANSFER PRICING REGULATIONS, IF CUP METHOD IS TO B E APPLIED, THEN IT HAS TO BE SEEN, WHETHER THE SAME PRICE WOUL D HAVE BEEN PAID UNDER COMPARABLE UNCONTROLLED TRANSACTION . HERE IN THIS CASE, NOTHING HAS BEEN BROUGHT ON RECORD BY THE ASSESSEE. THUS, HE SUBMITTED THAT THE MATTER COULD BE RESTORED BACK TO THE FILE OF THE TPO SO THAT THE AS SESSEE COULD SUBMIT PROPER DOCUMENTS FOR THE PROPER BENCH MARKIN G. I.T.A. NO.6838/DEL/2014 6 8. AFTER CONSIDERING THE RELEVANT FINDINGS AND M ATERIAL DISCUSSED IN THE IMPUGNED ORDERS AS WELL AS THE SUB MISSION MADE BY THE LEARNED DR, WE FIND THAT ASSESSEE LIKE IN THE EARLIER YEARS AND IN THE SUBSEQUENT YEARS HAVE PURC HASED CERTAIN MACHINERIES ALONG WITH ACCESSORIES FROM ITS AE, CAPARO VEHICLE PRODUCTS LTD., UK. THE COST OF FRE IGHT, 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 VAL UE OF THE SAID MACHINERY, THE ASSESSEE HAD SUBMITTED A CERTIF ICATE FROM A CHARTERED ENGINEER WHO HAS VALUED THE MACHINERY T AKING 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 D ETERMINE THE ALP SO IMPORTED AT RS.4,18,50,851/-. 9. IT IS A TRITE PRINCIPLE THAT UNDER OUR TRANSF ER PRICING REGULATIONS, THE INTERNATIONAL TRANSACTION WITH ASS OCIATED ENTERPRISES HAS TO BE BENCH MARKED UNDER THE PRESCR IBED METHODS SO AS TO ARRIVE AT ARMS LENGTH PRICE PAID FOR THE SERVICES OR THE PRODUCT. UNDER CUP METHOD, WHICH IS UNDISPUTEDLY THE MOST APPROPRIATE METHOD IN THE PRE SENT CASE, IT HAS TO BE SEEN THAT FOR ARRIVING AT THE AL P, PRICE CHARGED OR PAID FOR THE SERVICES PROVIDED IN A COMP ARABLE UNCONTROLLED TRANSACTION IS IDENTIFIED AND IF THERE IS ANY DIFFERENCES BETWEEN THE INTERNATIONAL TRANSACTION A ND COMPARABLE UNCONTROLLED TRANSACTIONS WHICH COULD MA TERIALLY AFFECT THE PRICE IN THE OPEN MARKET, THEN SUCH A PR ICE IS I.T.A. NO.6838/DEL/2014 7 ADJUSTED TO ACCOUNT FOR THE DIFFERENCES. IT IS THE ADJUSTED PRICE PAID FOR AVAILING SERVICES WHICH CONSTITUTE THE BEN CH MARK FOR COMPARISON WITH THE PRICE PAID FOR AVAILING OF ANY SERVICE IN AN INTERNATIONAL TRANSACTION. HERE IN THIS CASE, TH E PRICE PAID FOR THE OLD MACHINE HAS BEEN SOUGHT TO BE JUSTIFIED BY DETERMINING THE FAIR MARKET VALUE OF THE OLD MACHIN E IMPORTED BY THE AE. THE FAIR MARKET VALUE IS THE PR ICE WHICH IS TO BE PAID UNDER COMPARABLE UNCONTROLLED TRANSAC TION BY ANY INDEPENDENT ENTITY IN THE OPEN MARKET. THE VALU ATION BY AN INDEPENDENT QUALIFIED EXPERT FOR DETERMINING THE FAIR MARKET PRICE OR THE FMV OF THE MACHINERY HAS TO BE TREATED AS THE ARMS LENGTH PRICE FOR THE VALUE OF SUCH PRO DUCTS OR SERVICES, WHICH COULD BE RECKONED AS THE PRICE PAID BY ANY INDEPENDENT PARTY IN THE OPEN MARKET FOR SUCH PRODU CT OR GOODS. 10. THE ASSESSEE IN THE PRESENT CASE, TO DETER MINE THE FAIR MARKET VALUE OF THE SAID MACHINE HAS GOT THE VALUAT ION DONE BY A CHARTERED ENGINEER WHO HAS CERTIFIED THE COST OF THE MACHINERY TAKING INTO ACCOUNT VARIOUS FACTORS FOR D ETERMINING THE FAIR MARKET VALUE. IN CASE OF USED MACHINERY, O STENSIBLY THE PURCHASE PRICE OF A NEW PRODUCT CANNOT BE TAKEN AS THE COMPARABLE UNCONTROLLED PRICE, BECAUSE THE COST OF USED/ OLD MACHINERY DEPENDS UPON NUMBER OF VARIOUS FACTORS LI KE:- USAGE: A LOT IS DEPENDENT UPON THE CAPACITY UTILIZA TION OF THE MACHINERY; MAINTENANCE: SECONDLY DURING ITS USAGE, HOW THE SAM E HAS BEEN MAINTAINED; I.T.A. NO.6838/DEL/2014 8 OBSOLESCENCE: DESPITE THE FAST CHANGING LIFE, SOME ITEMS DO NOT GET ITS VALUE AND GETS REDUCED BY PASSAGE OF TIME. NUMBER OF CHANGE IN OWNERSHIP: IF AN ASSET IS SOLD NUMBER OF TIMES, IT WILL CERTAINLY FETCH LESS VALUE THAN THE ASSET NOT SOLD SO FREQUENTLY; MODEL: A CHANGE IN MODEL/ OR IF NEW MODEL IS AVAILA BLE IN MARKET, THEN VALUE OF THE OLD MODEL DIMINISHES. CHANGE OF MARKET: THERE ARE INSTANCES WHERE THE SAM E ASSET IS HAVING LESS VALUE IN ONE COUNTRY BUT CAN G ET GOOD PRICE IN THE GLOBAL WORLD . THESE ARE SOME OF THE ILLUSTRATIVE FACTORS WHICH BY AND LARGE NEED TO BE SEEN WHILE VALUING THE OLD MACHINES, WHI CH IN OUR OPINION TPO HAS FAILED TO TAKE NOTE OF. HE HAS ALSO NOT CARRIED OUT ANY INDEPENDENT EXERCISE FOR THE VALUE OF THE M ACHINERY BY ANY APPROVED VALUER/CHARTERED ENGINEER SO AS TO CONTROVERT THE FAIR MARKET VALUE DETERMINED BY THE ASSESSEES 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 SI MILAR OLD MACHINE ALONG WITH ITS ACCESSORIES FROM ITS AES. TH US, 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, G ROUND NO.1 IS DISMISSED. 11. SO FAR AS THE ISSUE RELATING TO DISALLOWAN CE OF RS.1,21,854/- ON ACCOUNT OF U/S.14A READ WITH RULE 8D IS I.T.A. NO.6838/DEL/2014 9 CONCERNED, THE BRIEF FACTS ARE THAT THE ASSESSEE HA S MADE INVESTMENT IN SHARES FROM WHERE IT HAS EARNED DIVID END INCOME AT RS.29,21,709/-, WHICH WAS CLAIMED AS EXEM PT. THE ASSESSEES CASE BEFORE THE ASSESSING OFFICER WAS TH AT THE DIVIDEND HAS BEEN EARNED FROM MUTUAL FUNDS WHEREBY THE BANK ITSELF HAS DONE THE ENTIRE TRANSACTION OF BUYI NG AND SELLING THE MUTUAL FUND UNIT ON THE BASIS OF SPECIF IC INSTRUCTION AND NO EXCLUSIVE STAFF HAS BEEN DEPLOYE D BY THE ASSESSEE COMPANY TO MANAGE THE INVESTMENT IN MUTUAL FUND AND NO SPECIFIC EXPENDITURE CAN BE SAID TO BE ATTRI BUTABLE TO THE EARNING OF DIVIDEND INCOME. THE LEARNED ASSESSI NG OFFICER HELD THAT THE INVOCATION OF SECTION 14A IS AUTOMATI C AND IT COMES INTO OPERATION WITHOUT ANY EXCEPTION AS SOON AS THE DIVIDEND INCOME IS CLAIMED EXEMPT AND THE POSSIBILI TY OF INCURRING CERTAIN EXPENDITURE CANNOT BE RULED OUT. ACCORDINGLY, HE DISALLOWED SUM OF RS.8,87,378/- AFT ER APPLYING RULE 8D, EVEN THOUGH THE SAME WAS NOT APPL ICABLE IN THE ASSESSMENT YEAR 2007-08. 12. BEFORE THE LD. CIT(A), THE DETAILED SUBMIS SIONS ON BEHALF OF THE ASSESSEE HAS BEEN MADE AND ALSO RELIA NCE WAS PLACED UPON THE DECISION OF THE LD. CIT(A) IN THE A SSESSMENT YEAR 2009-10, WHEREIN THE ASSESSING OFFICER WAS DIR ECTED TO DELETE THE ADDITION MADE U/S.14A READ WITH RULE 8D. IT WAS ALSO BROUGHT ON RECORD BEFORE THE LD. CIT (A) THAT THE COMPANY HAS USED ITS OWN EQUITY MONEY FOR INVESTMEN T IN MUTUAL FUND UNITS AND NO INTEREST BEARING FUNDS HAV E BEEN USED FOR SUCH PURPOSE, AND THEREFORE, NO DISALLOWAN CE OF INTEREST COULD BE MADE. LD. CIT(A) HELD THAT THOUGH INTEREST I.T.A. NO.6838/DEL/2014 10 EXPENDITURE OF RS.7,65,524/- COULD NOT HAVE BEEN DI SALLOWED BY THE ASSESSING OFFICER UNDER RULE 8D, BECAUSE ADM ITTEDLY NO INTEREST BEARING FUND HAVE BEEN USED FOR THE PUR POSE OF INVESTMENT. HOWEVER, HE HAS CONFIRMED THE DISALLOWA NCE ON ACCOUNT OF INDIRECT EXPENDITURE INCURRED UNDER THE HEAD ADMINISTRATIVE EXPENSES WHICH HAS BEEN WORKED OUT AS PER RULE 8D AT RS.1,21,854/-. 13. AFTER CONSIDERING THE SUBMISSION OF THE LEARN ED SR. DR WHO WAS STRONGLY RELIED UPON THE ORDER OF THE ASSES SING OFFICER AND THE RELEVANT FINDINGS GIVEN IN THE IMPU GNED ORDER, WE FIND THAT, IT IS AN UNDISPUTED FACT THAT ASSESSE E HAS INVESTED IN UNITS WITH THE AVAILABILITY OF EQUITY F UND WHICH IS EVIDENT FROM FOLLOWING CHART:- PARTICULARS SHARE CAPITAL \ SHARE APPLICATION MONEY INVESTMENT IN UNITS % OF EQUITY INVESTED AS ON 01.04.2007 41,34,46,750/- 1,02,66,830/- 2.48% AS ON 31.03.2007 161,91,60,985/ - 3,84,74,886/ - 2.37% FROM THE ABOVE, IT IS QUITE EVIDENT THAT NO INTERES T BEARING FUNDS HAVE BEEN DIVERTED FOR THE PURPOSE OF INVESTM ENT, THEREFORE, LD. CIT(A) HAS RIGHTLY DELETED THE DISAL LOWANCE OF INTEREST OF RS.7,65,524/-. 14. SO FAR AS THE INDIRECT EXPENDITURE IS CONCERNE D, THERE IS NO APPEAL BY THE ASSESSEE AND HENCE NO INFERENCE IS CALLED FOR. ACCORDINGLY, GROUND NO.2 RAISED BY THE REVENUE IS I.T.A. NO.6838/DEL/2014 11 DISMISSED. 15. LASTLY, WITH REGARD TO THE DISALLOWANCE OF CL AIM OF DEPRECIATION @ 60% ON UPS, THE ASSESSING OFFICER HA S ALLOWED 15% INSTEAD OF 60% CLAIMED BY THE ASSESSEE ON THE GROUND THAT UPS IS NOT PART OF COMPUTER AND THEREBY MADE THE ADDITION OF RS.2,21,895/-. THE ASSESSEE HAD PUR CHASED UPS FOR RS.4,93,110/- AND HAD CLAIMED DEPRECIATION THEREON @ 60% FOR RS.2,95,860/-. THE ASSESSING OFFICER OBSE RVED THAT DEPRECIATION MENTIONED IN APPENDIX-I RULE 5 OF IT R ULES APPLIES ONLY TO COMPUTER AND COMPUTERS SOFTWARE, WH ICH ALONE ARE ENTITLED FOR DEPRECIATION @ 60% AND SAME RATE CANNOT BE APPLIED FOR UPS. 16. THE LD. CIT(A) HAS DELETED THE ADDITION, FOLLO WING THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. BSES RAJDHANI POWERS LTD. IN ITA 1266/2010, WHEREIN COMPUTER ACCESSORIES/PERIPHERALS LIKE PRINTERS, SCA NNERS, SERVER, UPS, ETC., HAVE BEEN HELD TO BE INTEGRAL PA RT OF COMPUTER SYSTEM, AND THEREFORE, ENTITLED TO DEPRECI ATION @60%. ACCORDINGLY, THE LD. CIT (A) FOLLOWING THE JUD GMENT OF HON'BLE DELHI HIGH COURT AND OTHER DECISIONS OF THE TRIBUNAL ALLOWED THE ASSESSEES CLAIM @60%. 17. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AS THE ISSUE, WHETHER COMPUTER ACCESSORIES/ PERIPHERALS LIKE PRINTERS, SCANNERS, SERVER, UPS ET C, THE RATE OF DEPRECIATION ALLOWABLE IS @ 60% AS HELD BY THE H ON'BLE JURISDICTIONAL HIGH COURT AND CATENA OF OTHER JUDGM ENTS. I.T.A. NO.6838/DEL/2014 12 THUS, GROUND NO.3 RAISED BY THE REVENUE IS DISMISSE D. 18. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND FEBRUARY, 2018. SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22 ND FEBRUARY, 2018 PKK: