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TMI Blog2015 (11) TMI 1729X X X X Extracts X X X X X X X X Extracts X X X X ..... d that:- Court is unable to discern any legal infirmity in the approach of the CIT (A) which was upheld by the ITAT in the impugned order. It is sought to be suggested that the Assessee makes a provision for stock obsolescence year after year and, therefore, this could not be treated as ‘extraordinary’ or ‘non-recurring’. However, when one peruses the order of the CIT (A) it is seen that the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RDER 1. This appeal by the Revenue is directed against an order dated 25th March, 2015 passed by the Income Tax Appellate Tribunal ( ITAT ) in ITA No.5769/Del/2011 for the Assessment Year ( AY ) 2003-04. The question urged by the Revenue is whether the Commissioner of Income Tax (Appeal) [CIT(A)] erred in accepting the plea of the Assessee that the provision for stock obsolescence/inventory f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d its AEs were at arm s length. 3. The Transfer Pricing Officer (TPO) re-computed the net operating margin and included the provision for obsolescence in the sum of ₹ 2,53,06,608 as part of the operating expenditure of the Assessee. As a result, the difference of ₹ 1,81,79,699 in the net operating margin was attributed to the import of raw materials and accordingly, the TPO made a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce was abnormal and extraordinary in nature, it was required to be excluded for the cost of the Assessee in computing its operating margin. Since the said item occurred only in KOEL, the CIT (A) was of the opinion that its margin needed to be re-worked. The rationale for this was that the same treatment had to be accorded to the tested party i.e. the Assessee and its comparables. Since the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... international transactions is to ensure that there is no avoidance of tax by an Assessee by resorting to an accounting device. The Court is unable to hold that the provision made for stock obsolescence by the Assessee resulted in any undue advantage to it. The comparability analysis undertaken by the CIT (A) which has been affirmed by the ITAT does not suffer from any legal infirmity. 6. No su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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