TaxTMI 
TaxTMI 
TaxTMI 
2017 (5) TMI 476
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....in law and on facts in allowed the appeal of the assessee holding that the trade advances written off represents actual business loss incurred by the assessee, which is incidental to the business of the assessee. The assessee need not be in banking business in order to claim write-off of trade advance, which was given to a supplier in the ordinary course of business. 3. The Ld. CIT(A) has erred in law and on facts in allowed of the assessee by relying on the decision of Hon'ble Chennai Income tax Appellate Tribunal (ITAT) in the case of Intimate Fashions (India) Pvt. Ltd Vs. ACIT(Supra) which is squarely applicable in this case and further held that the price differential paid to the AEs by the assessee due to change in copper prices is being at arm's length under section 92 of the Act. 3. The assessee is in the business of manufacturing of wiring harness. During the year under consideration, the assessee has claimed deduction u/s. 10B of the Act at Rs. 7,31,57,477/-. The assessee was asked to explain why deduction claimed u/s. 10B of the Act may not be disallowed. Assessee filed a detailed reply in support of its claim which did not find any favour with the A.O. who di....
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....tion IOB of the Act does not arise. Hence, following the orders of my predecessor for AY 2007-08 and AY 2008-09, deduction under section IOB of the Act is allowed to the Appellant, The ground of the appeal is, therefore, allowed." 6. Before us, the ld. D.R. could not bring to the notice factual/legal error in the findings of the ld. CIT(A). On the other hand, we find that the Hon'ble Jurisdictional High Court of Gujarat has decided this issue in favour of the assessee and against the revenue in Tax Appeal No. 203 of 2015. The relevant part reads as under:- 5. Heard the learned advocates appearing on behalf of the respective parties at length. At the outset, it is required that the assessee claimed the deduction under Section 10B of the Act claiming 100% EOU. It is an admitted position that there was already a permission/approval granted by the Development Commissioner declaring/approving the assessee as 100% EOU. However, on considering the word, approved by the Board of Approval as mentioned in Section 10B of the Act and at the relevant time there was no ratification of the decision of the Development Commissioner by the Board of Approval, the Assessing Officer denied the deduc....
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....ere. Ground no. 1 is dismissed. 8. Ground no. 2 relates to the deletion of disallowance made by the A.O. on account of write-off of trade advances. 9. While scrutinizing the return of income, the A.O. noticed that the assessee has written off trade advances of Rs. 13.98 lacs in its Profit and Loss account. The assessee was asked to justify the claim. The assessee stated that it has made advance with respect to manufacturing of moulds. However, due to poor quality of the moulds, the assessee cancelled the order and since the party did not return the trade advances, the same was written off in the Profit and Loss account. The A.O. was of the opinion that the amount claimed to be written off has never been offered by the assessee as its income in Profit and Loss account. Since, the assessee is not engaged in banking business; therefore, write off of trade advance was not allowable. The A.O. made the addition of Rs. 13,98,298/-. 10. Before the ld. CIT(A), the assessee submitted the copy of the ledger account of the supplier to demonstrate that the trade advances have actually been written off. 11. After considering the facts and the submissions, the ld. CIT(A) was of the opinion tha....
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.... Exchange. The TPO also agreed that the prices of copper had reduced significantly in the copper market between the time the assessee purchased its raw materials and sold to its AE. 17. However, the TPO was of the opinion that the assessee has received varying amount of discounts from its suppliers and there was no basis for quantification of this discount granted by the suppliers. 18. The TPO considered the Arms Length Price of the sale to be the cost of raw material at Rs. 184,4,84,112/- and made an upward adjustment of Rs. 5,55,03,842/-. 19. Before the ld. CIT(A), the assessee once again explained the factual matrix which was duly considered by the ld. CIT(A) and after examining the facts in issue, the ld. CIT(A) observed as under:- "The only dispute between the Appellant and the AO/TPO arose in respect of difference in quantum of discounts given by the two major suppliers of the Appellant and based on that the sale price of material was arrived at. The AO contended that since the Appellant had received varying amount of discounts from its suppliers during the year under appeal and since the Appellant has not provided any calculation and basis for the quantification of the d....