TaxTMI 
TaxTMI 
2017 (4) TMI 1621
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....dition of Rs.1,27,31,000/- made on account of treating such payment as capital in nature? 3. Whether in the facts and in the circumstances of the case the Ld. CIT(A)-I, Nashik was justified and correct in holding that the lease rental expenses were revenue in nature and deleting the addition of Rs.30,21,129/- made on account of treating such expenses as capital in nature? 4. The appellant prays the order of the Assessing Officer may be restored. 5. The appellant prays to adduce such further evidence to substantiate his case. 3. The first issue raised by the Revenue vide ground of appeal No.1 is against deletion of transfer pricing adjustment of Rs.4,37,30,383/-. 4. Briefly, in the facts of the case, the assessee for the year under consideration had filed the return of income declaring total income of Rs.43,68,70,518/-. Since the assessee had entered into international transactions with its associate enterprises, the Assessing Officer had made reference for determination of arm's length price with reference to the transactions reported by the assessee. The assessee was engaged in the business of producing the entire range of non ageing, energy conserving Power Core Elec....
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.... CPM method applied by the assessee and had applied CUP method by considering sale of small quantities of left over stock which was nowhere comparable to very much quantities sold by the assessee to its associate enterprises in foreign currency. The transaction considered in CUP method by the TPO was not in line with provisions of Rule 10B and 10C of the Income Tax Rules, 1962, was the finding of the CIT(A). Hence, the addition made by the Assessing Officer / TPO on TP adjustment on account of commission and export sales was deleted. 7. The Revenue is in appeal against the order of CIT(A). 8. The learned Departmental Representative for the Revenue pointed out that the assessee was engaged in the export of steel to its associate enterprises in Italy, for which the TPO applied the CUP method to benchmark the arm's length price of said international transactions. In respect of commission receipts from associate enterprises in Germany for marketing of products, the TPO / Assessing Officer applied internal rate of return. He placed reliance on the orders of Assessing Officer / TPO. 9. The learned Authorized Representative for the assessee on the other hand, pointed out that the l....
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.... method for the year under consideration and also for assessment years 2008-09 to 2010-11. The TPO was of the view that CUP method was most appropriate method to be applied. His finding was on the basis of small sales made by the assessee of similar components. However, the transaction picked up for comparison was very negligible and hence, the CIT(A) held that there is no merit in applying the CUP method. Further, the methodology adopted by the assessee in applying the CPM method had been accepted from assessment years 2008-09 to 2010-11 by the TPO himself and no adjustment has been made in the hands of assessee. The assessee has filed on record the assessment orders relating to assessment years 2009-10 and 2010-11 which clearly reveal the transaction of export to associate enterprises being entered into by the assessee with its associate enterprises. In the totality of the above said facts and circumstances, we find no merit in the order of TPO in applying the CUP method to benchmark the international transaction of export to associate enterprises in the hands of assessee. Upholding the order of CIT(A), we dismiss this part of ground of appeal No.1 raised by the Revenue. 11. Now....
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....re. 15. The Revenue is in appeal against the order of CIT(A) in this regard. 16. The learned Authorized Representative for the assessee pointed out that the issue stands covered by the order of Hon'ble Supreme Court in CIT Vs. Woodward Governor India (P.) Ltd. (2009) 312 ITR 254 (SC). 17. The learned Departmental Representative for the Revenue placed reliance on the order of Assessing Officer. 18. We have heard the rival contentions and perused the record. The Hon'ble Supreme Court in CIT Vs. Woodward Governor India (P.) Ltd. (supra) had held that the losses suffered by the assessee on account of foreign exchange difference as on the date of balance sheet was an item of expenditure allowable under section 37(1) of the Act. In the facts before the Hon'ble Supreme Court, the enterprise had reported outstanding liability relating to import of raw material using closing rate of foreign exchange and the difference i.e. loss or gain, arising on conversion of said liability at closing date was recognized in the Profit & Loss Account and the Hon'ble Supreme Court upheld the same. The assessee before us has also borrowed loan in foreign exchange and on the close of each of the year was ....