2022 (2) TMI 384

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....ial amounting to Rs. 1,70,00,000/- belonged to earlier concern which was returned back due to quality concerns and it was a loss to the assessee. The TPO held that no supporting evidences except one list of raw material and no proof of inventory was furnished and in the absence of evidences the TPO/AO did not accept the submissions of the assessee. Before the DRP, it was submitted that the additional evidence regarding supporting the claim of loss relating to the extraordinary expenses were submitted and remand report was sought from the TPO/AO. We note that the said remand report relating to the issue was reproduced in the order of DRP from Page Nos. 10 to 17. On perusal of the same, we note that some charges involving export invoices of I....

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....st of goods returned cost of demurrages, etc. is to be considered as extraordinary expenses. Therefore, we find no infirmity in the direction of DRP which was followed by the AO in its final assessment order. Thus, the first issue raised by the assessee is dismissed. 4. The second issue raised by the assessee is treating the foreign exchange gain as operating revenue. 5. The AO observed that the foreign exchange fluctuation gain/loss is included in the operating revenue/expense for the computation of PLI, the actual receipts/payments are substituted in the place of sale price or purchase price charged on the date of transfer and the PLI so computed would reflect the net margin prevalent at the time of realization/payment rather than the n....

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....nd ex consequenti, the application of other rules will be ousted. The sequitur is that where such an option is not availed, neither section 92CB gets triggered nor the relevant rules including 10TA(k). In that scenario, determination of the ALP is done de hors the safe harbour rules. Once these rules are kept out of compass, the otherwise settled position by virtue of the judgment of the Hon'ble Delhi High Court in B.C. Management Services Pvt. Ltd. (supra) and various Benches of the Tribunal across the country holding foreign exchange gain/loss as operating revenue/loss in the ALP determination, comes to the fore. We, therefore, hold that the foreign exchange gain/loss earned/incurred by the assessee and the other comparables needs to ....