AI Drafter 
TaxTMI 
TaxTMI 
2024 (11) TMI 489
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....1. That the order dated 11.07.2024 passed by the Commissioner of Income-tax (Appeals) ["CIT(A)"]. National Faceless Appeal Centre under Section 250 of the Income-tax Act, 1961 ("the Act"), to the extent prejudicial to the Appellant, is bad in law and liable to be set aside 2. That the Assessing Officer ("AO") erred in disallowing a sum of Rs. 1,72,98,009/- claimed by the Appellant under Section 37 of the Act in its return of income pertaining to "provision for inventory written off due to obsolescence", and the CIT(A) erred in affirming the same. 3. That the AO and CIT(A) have failed to appreciate the fact that the said provision was voluntarily disallowed in the year in which it was created le., assessment year 2015-16, a....
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....aged in the business of trading in ophthalmic lenses, optical matters and processing of semi-finished ophthalmic lenses. The assessee filed its return of income for the year under consideration on 12.10.2017 declaring total income of Rs. 33,10,52,119/-. The case was selected for scrutiny and the statutory notices were duly served on the assessee. Since the assessee had international transactions with its AE, a reference was made to the Transfer Pricing Officer (TPO) in order to determine the arm's length price of the international transaction the assessee had with its AE. The TPO passed an order u/s. 92CA of the Income Tax Act, 1961 (the Act) proposing a TP adjustment of Rs. 49,45,49,732/- The Assessing Officer (AO) while passing the dr....
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....ve partial relief to the assessee and deleted the addition made by the AO towards interest write off of OG debtors. The assessee is in appeal before the Tribunal for the second time against the disallowance of write off of provision for inventory due to obsolete/bad stock as upheld by the CIT(A). 5. The learned A.R. submitted that the assessee, during the financial year relevant to AY 2015-16, has made a provision towards obsolete/bad stock to the tune of Rs. 8,78,53,132/-. The assessee in the computation of income did not claim the said amount as deduction and accordingly made the adjustment while arriving at the taxable income for AY 2015-16. The learned A.R. further submitted that the amount written off was subsequently reversed by th....
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....to tax during AYs 2016-17 to 2018-19 during which the earlier provision made during AY 2015- 16 were reversed. The assessee reversed the amount of provision made over three assessment years and during the year under consideration an amount of Rs. 1,72,98,009/- was reversed and the same is claimed as deduction while computing the taxable income. In this regard it is relevant to note the following observations of the AO while passing the order u/s. 143(3) r.w.s. 254 of the Act for AY 2018-19, being one of the assessment years in which the assessee has reversed a portion of the provision made during AY 2015-16: - "2.2 Disallowance of any other amount allowable as deduction: (a) During the year under consideration, the assesse....
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....te/bad stock amounting to Rs. 8,78,53,132/- and has voluntarily disallowed the provision on inventory by offering it to tax in the computation of income for AY 2015-16. The assessee has furnished a copy of income tax return and tax computation sheet in support of its claim. On verification, it is noticed that the contention of the assessee is found to be correct on the ground that the entire provision of Rs. 8.78.53,132/-has been disallowed and added back to the total income in the computation of income for the AY 2015-16 leading to a conclusion that the amount of provision has already suffered tax in the AY 2015-16. (e) Subsequently, it is noticed that the assessee has started reversing or writing off the provision for Inventory w....