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TMI Blog2016 (5) TMI 1519X X X X Extracts X X X X X X X X Extracts X X X X ..... year also as in earlier years, the assessee continued to carry on the business of manufacturing and sale of aerated and non-aerated beverage products and export of traded and its manufactured products. The assessee had filed return of income declaring total loss of ₹ 135,54,53,820/- under the normal provision of the Act and loss of ₹ 143,04,28,448/- under the provisions of Section 115JB of the I.T. Act. The total income was computed as under: A. Income under the normal provisions of the Act: Income as per return (-) ₹ 135,54,53,820 Add: (i) Preliminary expenses disallowed 8,02,000 (ii) Expenditure on glow sign/neon sign 11,83,07,422 (iii) On a/c of determination of Arm s Length Price for international Transaction 5,40,589 ₹ 11,96,50,011 Less : Depreciation claim allowed to the assessee ₹ 3,42,32,624 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alia, consist of loss incurred by appellant on account of fluctuation in foreign exchange, no benefit can be said to be derived by the associated enterprise in this regard. 4. That on the facts and circumstances of the case and in law, the ld. CIT(A) erred in upholding and in not accepting the arm s length price determined by the appellant, and in choosing to determine the arm s length price by making reference to the TPO even though none of the conditions laid down u/s 92C(3) of the Act, were satisfied. 5. That on the facts and circumstances of the case and in law, the ld. CIT(A) erred in upholding/confirming the action of the ld. AO/TPO in denying the (+/-)5% benefit envisaged under proviso to Section 92C(2) of the Act. The appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at the time of hearing of the appeal, so as to enable your Honor to decide this appeal according to law. 5. At the time of hearing, ld. Counsel for the assessee did not press ground no. 1. Accordingly, the same is dismissed as not pressed. 6. Brief facts apropos ground no. 2 are that during the year the assessee had created a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -01 and the same view was taken for the AY 2001-02 in ITA Nos. 5722, 5663 4989/Del/2004 vide order dt. 31.12.2009. A reference was made to page nos. 235 to 286 of the assessee s paper book. It was also stated that the issue relating to the disallowance of gratuity has been admitted by the Hon ble Jurisdictional High Court vide order dated 02.07.2012 in ITA No. 739/2010. 7. The ld. DR in his rival submissions although supported the orders of the authorities below but could not controvert the aforesaid contention of the ld. Counsel for the assessee. 8. We have considered the submissions of both the parties and carefully gone through the material available on the record. It is noticed that an identical issue having similar facts was a subject matter of the adjudication for the AY 2001-02 in assessee s own case in ITA Nos. 5722, 5663 4989/Del/2004 wherein relevant findings have been given in paras 33 34 of the order dt. 31.12.2009 which read as under: 33. We have carefully considered the rival submissions in the light of material placed before us. It has been the contention of the assessee right from the beginning that a cumulative sum of ₹ 97,84,178/- (₹ 68 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the employees subject to ceiling on accumulation not being a contingent liability, provision made thereof is deductible. Therefore, this claim of the assessee has to be accepted. The AO is directed to delete the addition made on account of provision for leave encashment amounting to ₹ 29,60,888/-. To conclude our findings on this ground are that (i) Opening balance standing to provision for staff benefits, if not debited to the P L account of the year under consideration, could not be considered for addition while computing profit u/s 115JA. (ii) Provision for gratuity being not ascertained liability was to be added while computing book profit u/s 115JA. (iii) Liability of ₹ 29,60,828/- on account of provision for leave encashment being a liability based on actuarial valuation is to be considered ascertained liability hence deductible while computing book profit u/s 115JA. This ground is partly allowed. 34. There is no disparity on facts. The contents of the ld. Counsel for the assessee is that actuarial report is on the record, therefore, the provisions should not be treated as unascertained liability. This report has not been relied upon by the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes. 12. Brief facts apropos ground nos. 3 4 are that the TPO vide his order dated 10/02/2006 determined arm s length price in respect of service provided by the assessee to Pepsico Trading USA at ₹ 5,40,589/-. Since the assessee had not shown this transaction in Form 3CEB, therefore, the AO made an addition of ₹ 5,40,589/- to the assessee s income. 13. Ld. CIT(A) has considered this issue in para 8 of his order and has upheld the addition. 14. Ld. Counsel for the assessee submitted that this issue is also covered by the decision of Tribunal in assessee s own case for AY 2002-03, wherein the Tribunal considered this issue from para 11 to 21 of its order and finally concluded that the loss incurred by the assessee was only on account of foreign exchange fluctuation and the structure of the transaction was such for the assessee that it could not make any profit or incur any loss as the transactions were not being under taken for the sake of any profit. He submitted that the issue is squarely covered by the decision of Tribunal in assessee s own case. 15. The facts as noted by the ld. CIT(A) in his order are as under: The assessee is a subsidiary of Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to its associated enterprise. I am in full agreement with the decision of my predecessor. Therefore, the appellant deserves mark-up on such services. Secondly, the nature of the agreement between the AE and the appellant is such that the appellant will never be able to make profit from such transactions. Therefore, the TPO was right in holding that the foreign exchange loss should be recovered from its related party. Therefore, I uphold the order of the TPO/AO. These grounds of the appellant are dismissed. 17. We have considered the submissions of both the parties. We find that the Tribunal for AY 2002-03 has observed in para 21 as under: 21. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is an admitted fact that the loss incurred by the asessee was only on account of foreign exchange fluctuation as the commodities were sold to the AE at the same rate at which these were purchased from the locak market. On a similar issue the ITAT Delhi Bench in the case of DCIT vs. Global Vantedge P. Ltd. in ITA Nos. 1432 2321/Del/2009 and 116/Del/2011 (supra), held that adjustment on accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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