Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2013 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (11) TMI 927 - ITAT MUMBAIDisallowance of written off of bad stock - Shortage in stock-in-trade - No evidence produced to prove that the entire loss had crystallized during the year - Held that:- The assessee is in share broking business and many a times, the clients or stock exchange return stocks to the assessee due to reasons such as difference in signature of transferor, forged/ fake share certificate etc. and therefore to take care of such unforeseen circumstances, the assessee has been making provision for such loss @ .01% of turnover. The provision so made is added in the computation of income and actual claim of loss is made after due verification. This year assessee claimed loss of Rs.4,84,796/- which was disallowed by the AO - assessee had been regularly making analysis of the bad stock and only after arriving at the conclusion that the stock had become worthless/ unsaleable, the business decision was taken to write-off the stock - there was no dispute that the assessee was consistently following this accounting practice of write-off of stock - Decided against Revenue. Transfer pricing adjustment - Determination of arm's length price - Expenditure on royalty and business development - Held that:- CIT(A) has examined the business development system followed by other comparable companies in India and has given a finding that these companies on average were incurring business development expenditure which was 6.4% of brokerage turnover whereas similar expenditure incurred by the assessee was only 1.28% including royalty of 1% paid by the assessee . Therefore expenditure incurred by the assessee on royalty and business development could not be considered as excessive compared to the comparable parties. CIT(A) has also applied the TNMM method for benchmarking international transactions. There are 29 comparables selected details of which have already been given earlier which gave an average margin of -5.5% and, in case, loss making companies were excluded, the average margin came to 16.06% whereas in case of the assessee the margin declared was 57.58%. Therefore it is held that no TP adjustment is required to be made in case of the assessee - Decided against Revenue.
|