TaxTMI 
TaxTMI 
2025 (1) TMI 92
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.... in restricting the disallowance to the extent of Rs. 82,80,000/-. 2. That on facts and law involved, the Ld. CIT(A) has erred in not deciding the issue of reasonableness of the transaction of purchase of poppy seeds from the AE being at Arm's length Price as per Indian transfer pricing regulations and accordingly, in not deleting the entire disallowance of Rs. 1,26,54,000/- as made by the Ld. AO u/s 40A(2)(b) of the Act 3. That the Ld. CIT(A) has erred in not deciding the specific Ground No. 3 relating to jurisdiction of the Ld. AO in determining the FMV of the purchase transaction with AE. 3.1 That on the fact and law involved, Ld. CIT(A) has erred in ignoring the submissions made by the appellant that the FMV determined by the Ld. AO was without jurisdiction being against the binding CBDT instruction No. 3/2016 dated 10.03.2016 read with proviso to section 40A(2)(b) whereby the AO is debarred from determining the ALP of Specified Domestic Transactions in a case where reference is not made to the TPO. On this score itself the disallowance of Rs. 1,26,54,000/- as made by the Ld. AQ u/s 40A(2)(b) should have been deleted by the Ld. CIT(A). 4.....
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....ifference in purchase of poppy seeds and extra expenses Incurred on purchase at higher rate with justification. The AO had also asked the appellant company vide note sheet entry dated 24.10.2016 to furnish explanations in respect of the following queries: (1) Purchase, sales, stock, etc. of PS(poppy seeds) of M/s Arushi Exports, Purchase-bills of M/s Arushi Exports, import cost, if any, purchase order copy, batchwise /lot wise purchase, quality of PS, sale bills, parties other than Astra to which sales were made, rate quality, (ii) detalled qualitative difference in poppy seeds purchased from Turkey party and Arushi Exports and give detalls as per chart too. The AO had asked the appellant to furnish the requisite information in the form of the following chart: Poppy Seeds from Turkey Poppy Seeds from M/s Arushi Exports. Items Rate Quantity Total rate How order got placed Purcase order Batch wise/ lotwise cost price Other expenses on purchase of PS Expenses upto Port &nb....
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.... be taken and it takes a long process and tune to import the same. The appellant has also submitted that at the time of purchase of Poppy seeds from Arushi, the appellant company had no stock of Poppy seeds. As such the purchase of Poppy sends was made from the local market at the prevailing domestic market prices to meet the customers' demand. The appellant has submitted that in case of Import the assesses company has to incur much import related direct expenses such as license fee, Insurance, clearing expenses, ocean freight and transportation etc. Apart from this, there is also indirect cost such as storage and inventory holding cost which further adds to the import cost of goods imported. 7.6 As regards the purchase of poppy seeds of M/s Arushi Exports, filed by the appellant, the AO noted from the ne Invoice that M/s Arushi Exports itself has purchased the poppy seeds from M/s Yumurtacilar, Turkey, the entity with which the appellant company has directly purchased the poppy seeds. The AO noted that the motive of the appellant company behind the purchase of the poppy seeds from M/s Arushi Exports when it had itself purchased from Yumurtacilar, Turkey is very doubtf....
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.... 208.35 per Kg. as against Rs. 159.40 considered by the AO. Ld. AR has stated that if the correct amount even as per AO is taken at Rs 208.35, the excess price comes to Rs. 82,80,000/- as against Rs 1,26,54,000/-, I have carefully considered the submission of Ld. AR. It is found that expenses upto port, expenses from port to godown/shop, other expenses on purchases like storage have not been considered by the AO. If expenses upto port, expenses from port to godown/shop, other expenses on purchases like storage considered, Net Purchase Rate comes to Rs 208.35 per Kg instead of Rs. 159.40 per Kg. The difference per Kg comes to Rs 92/- [300-208]. The total quantity is 90,000 Kg. Thus the disallowance u/s 40A(2)(b) is determined at Rs. 82,80,000/- [ Rs 92 x 90,000 1. Accordingly, the disallowance u/s 40A(2)(b) is restricted to Rs. 82,80,000/- instead of Rs 1,26,54,000/- and the appellant gets a relief of Rs 43,74,000/-. Ground No. 1, 2, 3, 4 and sub-ground number 4.1, 4.2, 4.3 & 4.4 are partly allowed." 4. We have given our thoughtful consideration to the vehement rival contentions so far as the assessee's sole substantive ground challenging both the learned lower authorities' respe....