Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (5) TMI 1822 - AT - Income TaxTPA - comparable selection - rejection of Calchem Industries (India) Ltd. from the list of comparables on the ground that the assessee has only filed Balance Sheet and P & L account and has not furnished Annual Report for the Financial Year 2009-10 - Held that:- Since information furnished by assessee was incomplete to carry out analysis, the said company was rejected. The assessee has filed Director’s report along with Balance Sheet, P & L account and notes to account of Calchem Industries (India) Ltd for Financial Year 2009-10 as additional evidence. Accordingly, we deem it appropriate to remit the issue back to the file of TPO/Assessing Officer for considering additional evidences filed by assessee and deciding the issue of inclusion/exclusion of the abovesaid company from the list of comparables. Thus, ground raised in appeal by assessee is allowed for statistical purposes. Writing of of Bad Debts’ u/s. 36(1)(vii) - Unrecovered amount of sales proceeds from total sales - Ballarpur Industries Limited though used the material but did not make payment on account of inferior quality of WGCC thus, the assessee decided to ‘write off’ the said amount - Held that:- It is a settled law that entitlement of any deduction cannot depend on the treatment accorded to such entries by assessee. The existence or the absence of entries in the books of account is not determinative of such claim. The Authorities below have taken hyper-technical and pedantic view in rejecting the assessee’s claim of ‘writing off’ of the amount, not received from Ballarpur Industries Limited against supply of WGCC, though the assessee has ‘written off’ the amount by reducing sales price. The manner in which assessee has given accounting treatment to the irrecoverable sales may not be the typical desired method of book entry but it will have the same effect on financial results as is writing off of ‘Bad Debts’. Accordingly, we allow assessee’s claim to the extent of amount irrecoverable from Ballarpur Industries Ltd. against supply of WGCC. Disallowance with respect to reduction in sales price is difference in stock - Held that:- The assessee is consistently raising bills for supply of WGCC on similar methodology and the Revenue has accepted the same in past without any objection. Taking into consideration entirety of facts, we are of considered view that this issue relating to reduction of sales on account of verification of stock needs revisit to Assessing Officer for de novo consideration. We hold and direct accordingly. The assessee shall furnish necessary details before the Assessing Officer viz. the manner of valuation, scope of work carried out by National Survey Engineers and other relevant details. The Assessing Officer after considering the same shall decide the issue afresh after allowing opportunity of hearing to the assessee, in accordance with law. Incorrect computation of operating margin - TPO while computing operating margin has considered ‘write back of provision for doubtful debts’ as non-operating in nature - DRP rejected assessee’s submission by placing reliance on ‘Safe Harbour Rules’ - Held that:- It is an undisputed fact that ‘Safe Harbour Rules’ were introduced on 18.09.2013. Safe Harbour Rules does not apply retrospectively and hence, they would not have application on the assessment year under appeal. The Hon'ble Delhi High Court in the case of Pr. CIT Vs. M/s. Cashedge India Pvt. Ltd [2016 (5) TMI 1348 - DELHI HIGH COURT] has held that “Safe Harbour Rules’ do not apply to the assessment year 2010-11. Whether ‘write back of provision of doubtful debts’ is operating in nature? - Held that:- The Co-ordinate Bench of Tribunal in the case of Haworth (India) (P) Ltd. Vs. DCIT (2017 (10) TMI 1385 - ITAT PUNE) has held that liabilities written back and bad debts recovered are part of operating income of the assessee. Thus, following the decision of Co-ordinate Bench, we hold that Authorities below have erred in coming to the conclusion that ‘write back of provision for doubtful debts’ is non-operating in nature. Treating foreign exchange gain/loss as non-operating in nature - Held that:- As has been pointed earlier, ‘Safe Harbour Rules’ came into existence from September, 2013. They do not apply retrospectively and hence, have no application in the assessment year 2010-11. In the case of Approva System Pvt. Ltd Vs. CIT(A)-IT/TP (2015 (3) TMI 151 - ITAT PUNE), the Co-ordinate Bench of Tribunal has held that foreign exchange gain/loss is part of operating income.
|