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2017 (7) TMI 425 - AT - Income TaxTPA - forward contract with the AE - forward market price to be considered as ALP - Value addition by the assessee in the process of purchase and sale of cotton bales to the AE - assessee has entered into forward contract for sale to AE as well as purchase of cotton bales from local market - Held that:- The assessee has raised this plea that the forward market price as on the date of contract between the assessee and AE has to be taken as ALP. It is pertinent to note that in support of this claim the assessee has not furnished any evidence to show the forward market price on that date. Therefore in the absence of relevant details as well as relevant record this issue cannot be entertained at this stage. Further we have already decided the issue of determination of ALP and taken a view and actual price to the non-AE during the year are relevant. The international transactions involving export to the AE and a comparable price being export to non-AE are taken into consideration. Therefore for the purpose of determining the ALP and in view of our finding on the issue above, we do not find any substance in these additional grounds of the assessee. Working capital adjustment - Held that:- We find that the assessee did not claim working capital adjustment either before the TPO or before the DRP nor the assessee has given any working in the TP study regarding working capital adjustment. The learned Authorised Representative of the assessee has submitted that the assessee raised advance from the AE and therefore an appropriate working capital adjustment has to be granted. We find that this claim of the assessee is not supported by the agreement as there is no clause for giving any advance against the purchase price payable by the assessee. Therefore if the assessee received loan or other advance which is not an advance against the export then the claim of the assessee cannot be accepted. Treatment to foreign exchange gain/loss as operating in nature - Held that:- If the foreign exchange fluctuation gain or loss is arising from the sales realization then it will be operating in nature. However, it would be considered as part of the operating revenue or cost only when such gain or loss is arising from the realization of the sale made during the year. Accordingly, the TPO/A.O. is directed to verify the relevant details and then treat the foreign exchange gain/loss as operating in nature and recompute operating profit/cost of the assessee for the purpose of determining the ALP
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