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TMI Blog2014 (2) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed to law and facts of the case. 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in including export incentives in export sales to determine the profit margin of the assessee for making comparables under the TNMM method for the purpose of adjustment in determining arm's length price u/s. 92CA of the I.T. Act. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance on the loss on account of foreign exchange fluctuations inspite of the fact that the assessee failed to establish that the aforesaid loss was on account of hedging in foreign exchange and failed to adduce any evidence to substantiate its claim. 3. For these and other grounds th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced on record before us shows that there were different types of bathrobes manufactured and exported by the assessee such as, Kimono, Hood, Shawl, Luxury, Hotels, Kids, Zipper etc. Even these products were further divided into sub types such as Kimono Piece Dyed and Kimono Piece Dyed Velour, Hood Piece Dyed and Hood Yam Dyed Ribbed, Hood with Embroidery and Kimono with Embroidery etc. In the comparable analysis done by applying CUP method, the assessee had not done the comparison between the price of each type of bathrobes but the average price of all the bathrobes supplied to the AEs and non-AEs was taken. In our opinion, such average price which is likely to be varied depending on the type of bathrobes supplied as well as product mix of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the learned CIT(Appeals) submitting that the DEPB benefit was rightly considered by him for the purpose of working out the profit margin of the assessee for comparability analysis as the same was also taken into account in working out the profit margins of the comparable cases. 17. After considering the rival submissions and perusing the relevant material on record, it is observed that 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). Before us, nothing has been brought on record to controvert or rebut this find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fluctuation" (net). In view of no explanation furnished by the assessee in response to the show cause issued by the AO the amount has been disallowed. Aggrieved, assessee filed appeal before Ld. CIT(A). 5. Before Ld. CIT(A) it was submitted that an explanation was filed before AO vide letter dated 20/9/2010 in reference to the notice dated 9/9/2010, wherein as per para -2 of the letter explanation regarding foreign exchange fluctuation loss was filed. It may be mentioned here that the contents of the said letter relevant to the issue has been reproduced in the order of Ld. CIT(A). Along with said explanation the assessee also filed a chart in which details of export registered from 1/4/2006 to March, 2007 was submitted and as per last col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is usually some exchange fluctuation loss arising in the process of conversion of foreign currency is part of trading asset of the assessee and is therefore, trade loss. Such loss is in respect of circulating capital and is, therefore, revenue loss. In this view of the factual situation, Ld. CIT(A) relying on the following decisions has given relief to the assessee, against which department is aggrieved, hence has filed aforementioned ground of appeal. 1. Sutlej Cotton Mills Ltd. vs. CIT [1979] 116 ITR 1 (SC) 2. CIT vs. Harprasad Co. (P.) Ltd. [1975] 99 ITR 118 (SC) 3. Ramchandar Shivnarayan vs. CIT [1978] 111 ITR 263 (SC) 4. CIT vs. Woodward Governor India Pvt. Ltd., 312 ITR 354 (SC) 6. We have heard both ..... X X X X Extracts X X X X X X X X Extracts X X X X
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