TMI Blog2017 (5) TMI 476X X X X Extracts X X X X X X X X Extracts X X X X ..... isputed fact is that the advance of ₹ 13,98,298/- was given by the assessee in its ordinary course of business. Therefore, any write off is a business loss incurred in the ordinary course of its business. Therefore, we do not find reason to interfere with the findings of the ld. CIT(A). Transfer Pricing adjustment - Held that:- After giving a thoughtful consideration to the orders of the authorities below and after understanding the factual matrix, we fail to understand how the assessee is expected to explain the quantification of the varying difference in the discount given by two unrelated parties. The assessee could not have approached the two unrelated parties and have asked them to explain why they were giving discount to the assessee. The upward adjustments made by the TPO are uncalled for and, therefore, calls for no interference with the findings of the First Appellate Authority. Revenue appeal dismissed. - 918/AHD/2015 & C.O. No. 85/Ahd/15 - - - Dated:- 2-5-2017 - SHRI R.P. TOLANI, VICE PRESIDENT, AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER For The Appellant : Shri Byomkesh Panda, D.R. For The Respondent : Shri Dhinal Shah, C.A. ORDER PER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter was decided as under: 4.3 I have considered the facts of the case, the submissions of the assessee and the comments of the AO and the Addl.CIT in the remand report. The position of the law read with instructions of the CBDT are unambiguous. In fact the AO has himself spelt them out in para. 10 of the assessment order. The position of law on this issue is as under: i) As per Clause (iv) of Explanation -2 to section I0B of the Act, the undertaking should be approved by the Board of Approval (BoA) for claiming exemption u/s.l0B of the IT Act. ii) The CBDT vide its Instruction dated 09/03/2009 has made it amply clear that the approval granted by the Development Commissioner in the case of an export oriented unit will be considered valid, once such an approval is ratified by the Board of Approval. The assessee has shown by filing the additional evidence, that the approval granted by the Development Commissioner has been ratified by the Board of Approval. The AO and the Add!. CIT both in their remand report have stated that the claim of the assessee for deduction u/s.l0B was disallowed only for the reason that the ratification of the Board of Approval was not there ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board of Approval for EOU Scheme. In the present case, it is not in dispute that the permission/approval granted by the Development Commissioner has been ratified by the Board of Approval, may be subsequently. The moment the decision/approval of the Development Commissioner is ratified by the Board of Approval it will relate back to the date on which the approval was granted by the Development Commissioner. If that be so, it cannot be said that the assessee was not a Export Oriented Unit, which was entitled to the deduction under Section 10B of the Act. Incidentally it is to be noted that in the subsequent circular No.68 issued by the Export Promotion Council for EOUS SEZS dated 14/05/2009 it mentions that from 1990 onwards Board of Approval had delegated the power of approval of 100% to the Development Commissioner and, therefore, it can be very well argued and said that the Development Commissioner while granting the approval of 100% EOU exercises delegated powers. In any case and apart from the above when it is found that at the relevant time the Development Commissioner granted the approval of 100% EOU in favour of the assessee-Company, which came to be subsequently ratified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er authorities. There is no dispute that the assessee has actually written off Rs. 13,98,298/- being advance to the supplier. There is also no dispute relating to the return of moulds by the assessee on finding them not suitable for the purposes of its business. The undisputed fact is that the advance of ₹ 13,98,298/- was given by the assessee in its ordinary course of business. Therefore, any write off is a business loss incurred in the ordinary course of its business. Therefore, we do not find reason to interfere with the findings of the ld. CIT(A). Ground no. 2 is dismissed. 13. Ground no. 3 relates to the deletion of the Transfer Pricing adjustment of ₹ 5,55,03,842/-. 14. Briefly stated the facts qua the issue are that during the year under consideration, the assessee had closed down its business operation. As mentioned elsewhere, the assessee was manufacturing copper wire harness. It had surplus raw materials which remained unused. The surplus raw material consisted of copper wires imported from two unrelated parties namely Copperfield and Shenzhen Baohing Electric Wire. As copper wire is the main ingredient of the copper wire. The price of the copper wire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of purchase price on the basis of prevailing LME price becomes fallacious; and hence, the Appellant is not able to justify the determination of the arm s length price of reimbursement of price differential on sale of the raw material on the basis of the market price. It is seen that raw material purchased from third parties, namely, Copperfield and Shenzhen Baohing accounted in books of accounts at the relevant purchase rate have not been disputed by the A.O/TPO. Accordingly, if the purchase price of the Appellant is not disputed by the AO / TPO, it would be incorrect to challenge the difference in the quantum of discount given by two unrelated suppliers to the Appellant. Further, I agree with the contention of the Appellant that the quantum of discount given by suppliers varies depending on commercial terms like quantity of material purchased, lead time of delivery etc. it is settled principle that AO cannot sit in the judgment for commercial transaction, and particularly it is purchased from third party. Accordingly, considering the fact that the Appellant used to purchase bulk of its raw materials from Copperfield, it is usual that it could ask for higher discount of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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