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2014 (2) TMI 461 - ITAT MUMBAITransfer pricing adjustment – Determination of arm’s length price u/s 92CA of the Act - Determination of profit margin - Export incentives included in export sales – Comparables under TNMM method – Held that:- The decision in Welspun Zucchi Textiles Ltd. Versus Assistant Commissioner of Income-tax-2(3), Mumbai [2013 (9) TMI 336 - ITAT MUMBAI] followed - The DEPB benefit was not taken into consideration by the AO/TPO for the purpose of working out the profit margin of the assessee whereas such benefit was taken into account in the comparable cases while working out their profit margin as found by the learned CIT(Appeals) - nothing has been brought on record to controvert or rebut this finding recorded by the learned CIT(Appeals) and this being so, there was no justifiable reason to interfere with the decision of the learned CIT(Appeals) that the DEPB benefit received during the year under consideration should be considered as part of the turnover of the assessee for working out the profit margin to make the comparison of like to like and similar to similar - Since the profit margin of the assessee after taking into consideration the DEPB benefit as part of its turnover comes to 12.30% as against the average net profit margin of 13.05% of the comparables which is within the safe limit of 5%, - no TP adjustment in respect of transactions made with the associated enterprises was required to be made in the case of the assessee – the decision of the learned C1T(Appeals) upheld in deleting the addition made by the AO by way of TP adjustment – Decided against Revenue. Deletion on the loss on account of foreign exchange fluctuation – Speculative transaction - Proper explanation not furnished - Held that:- The decision in CIT v. Badridas Gauridu (P.) Ltd. [2003 (1) TMI 61 - BOMBAY High Court] followed - the assessee, an exporter of the cotton, having booked foreign exchange in forward market to hedge against losses, loss suffered by the assessee on account of failure to honour certain contract was not speculation loss but was allowable as business less – the export contracts entered into by the assessee for export of cotton in some cases failed. In the circumstances, the assessee was entitled to claim deduction as a business loss – Decided against Revenue.
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