TaxTMI 
TaxTMI 
TaxTMI 
2008 (9) TMI 418
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....Mauritius) Ltd., incorporated in Mauritius which itself is a 100 per cent subsidiary of DMC Stratex Net Works Inc. USA (DMC, USA). During the year the turnover of the assessee was declared at Rs. 16.61 crores. The total cost of goods sold has been shown at Rs. 16.91 crores including customs duty and sales-tax. Accordingly there was gross loss of Rs. 29.57 lacs. Since there was loss in the trading operation and since the entire purchases were made from parent company, the assessee was asked to explain the reason for incurring loss in trading operations. The assessee submitted that the purchase price includes certain abnormal expenses being additional sales-tax, additional customs duty etc. totalling to Rs. 42.22 lacs. It was also submitted t....
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....esults into losses. The AO held that since highly technical equipments are being supplied by parent company, 15 per cent of the value of import from the parent company is considered to be GP margin, which is often enjoyed by Indian importers from unrelated exporters. He, therefore, added a sum of Rs. 1,79,29,096 being 15 per cent of the net import from parent company amounting to Rs. 11.95 crores. The learned CIT(A) held that the explanation given for incurring gross loss is not convincing or acceptable. It is not acceptable that the company was not aware about the sales-tax liabilities. The AO has rightly invoked the provisions of s. 92. He accordingly confirmed the addition made by the AO. The assessee is in further appeal before us. 4. ....
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....iable to pay sales-tax. The cost of goods sold included not only the purchase price but the sales-tax also. This being the first year, the assessee miscalculated and hence suffered by way of losses. However, this does not prove that the transaction with the parent company was arranged in such a fashion so as to earn less than ordinary profits. He further submitted that on one hand the AO alleges higher purchase price paid whereas the customs authorities have alleged that the purchase price is less than the market price and hence additional customs duty to the extent of Rs. 28.19 lacs was slapped on the assessee. The appeal against that was preferred and the Commr. (Customs) has set aside the matter to the customs officer. However, there is ....
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....he assessee received huge discount is a make-believe story and not substantiated on the basis of figures. She further submitted that the sales-tax liability was known prior to receipt of the order from the customer. The order from customer was received in the month of September, 2000 whereas the sales-tax liability was known in the month of May, 2000 when the assessee made application for registration under local/sales-tax and Central sales-tax. As regards order of customs authorities, the same has no bearing in view of the provisions of s. 92 of the Act. She accordingly pleaded that the order of the CIT(A) be upheld. 6. We have carefully considered the relevant facts and arguments advanced. The contention advanced for justifying loss is t....