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TMI Blog2020 (2) TMI 421X X X X Extracts X X X X X X X X Extracts X X X X ..... change in the method of accounting adopted by the assessees from what was regularly adopted. Accordingly, we are of the opinion that the Assessing Officer cannot blow hot and cold at the same time and onus clearly lies on the Assessing Officer to prove that the books of account maintained by the assessees suffers any defects. In the absence of any documentary evidence indicating any lapse on the part of the assessees in maintenance of books of account which were subjected to audit by the statutory authorities, we are of the opinion that the additions made by the Assessing Officer to the profits of the assessees only on the basis of surmises and conjectures of low profits on account of higher cost of production and sales price charged by the assessees sister concerns cannot stand the test of law leave alone the Assessing Officer s own logic - basis adopted by the Assessing Officer for making additions towards lower profits cannot be sustained. Addition under business head ' on the pretext that there was an 'apparent loss' on alleged policy of underselling in which event there was an apparent gain in the books of sister concern(s) - Any addition under the head ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en cost and selling price and terming it as an apparent loss under no commercial compulsion in the absence of a cogent finding by Assessing Officer to this effect. (b) When the AO has failed to bring on record any defects, discrepancies or irregularities in trading results or to show that profit earned by the assessee was lower and thus with no material in his possession to show underselling, it was apparent that transactions with sister concerns were genuine or bonafide. CIT (A) erred therefore in concluding that the transactions with sister concerns were not genuine or bonafide resulting in a loss on Sale of Cashew Kernels to the sister concerns amounting to ₹ 89,76,885/-. (c) Both AO and CIT (A) failed to appreciate that the appellant had only followed Arms Length Price (ALP) and hence no loss incurred; ALP being cost + in the case of wholes(superior grades) and splits, butts and pieces (inferior grades) at prices corresponding to wt. average market price of direct exports of such grades accepted by the Dept. all these years. Elsewhere he has taken cognizance of the fact that pricing of direct exports can be relied upon. Purchases of various grades of kernels by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erns, corresponding addition in the purchase cost of the latter ought to have been recognized and benefit given in their assessment. Thus, the whole exercise becomes revenue neutral (2010) 236 CTR (SC) 113. Supreme Court decision was misconstrued. (7) Having accepted the trading results filed by the appellant, no addition was made by the Sales Tax Dept. either on the assessee or sister concerns in any of these years. For the above and other additional grounds that may be advanced and further evidence or records that may be produced at the time of hearing, the appellant prays that the appeal be allowed. 3. We shall consider the facts as narrated in ITA No.37/Coch/2016 in the case of R. Pratap. As per details filed by the assessee, the Assessing Officer noticed that the assessee had sold various grades of cashew kernels to concerns owned by near relatives at values much lower than the cost of production in the course of export. It was, therefore, proposed to disallow the loss on sale of cashew kernels incurred by the assessee through such dealings and the loss was worked out as follows: Sr. No. (1) Name of sister concern (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Mrs. Preetha Nair of Nut Products Company to whom the assessee had sold products at rates less than cost of production had declared income below the taxable limit. Thus, the Assessing Officer found that the assessee had adopted a pricing policy whereby cashew kernels were sold to sister concerns at a price below cost of production which is a planned device to reduce tax incidence. Thus, the Assessing Officer concluded that the assessee had incurred an apparent loss by resorting to the above strategy and loss of ₹ 89,76,885/-was disallowed. The Assessing Officer made similar disallowance for all the assessment years in respect of all the assesses. 3.1 For the assessment year 2010-11 in the case of R.Pratap, as per details filed by the assessee, the Assessing Officer noticed that the assessee had sold various grades of cashew kernels to concerns owned by near relatives at values much lower than the cost of production in the course of export. It was, therefore, proposed to disallow the loss on sale of cashew kernels incurred by the assessee through such dealings and the loss was worked out as follows: Sr. No. (1) Name of sister con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10171850 246 297 12279655 2107805 3. Chethana Cashew Corporation 14628.600 4126400 282 297 4344694 218294 4. Nut Products Company 20003.76 5276150 264 297 5941116 664966 5. Surya Exports 521.640 128800 247 297 154927 26127 6. Prathyush Exports 1519.560 375200 247 297 451309 76109 TOTAL 12754095 3.3 For the assessment year 2008-09 in the case of R.Prakash, as per details filed by the assessee, the Assessing Officer noticed that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Quantity sold (in Kg.) (3) Sale Price (4) Average rate of sale (5) Cost of production (6) Cost of goods sold (Col. 3x6) (7) Difference (Co. 7-4) (8) 1. Sunfood Corporation Ltd. 154276.3 31561690 204.57899 229 35329272.7 3767582.7 2. Nut Products Company 48761.98 10862580 222.76741 229 11166493.42 303913.42 3. Chethna Cashew Corporation 118911.2 26803600 225.40854 229 27230664.8 427064.8 4. Pratyush Exports 249.48 40920 164.021164 190 47401.2 6481.2 5. Surya Exports 1701 261000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 309 272307442 13498657 Sunfood Corporation 57068.680 14104900 247 309 17634222 3529322 Chethana Cashew Corporation 13471.920 3799600 282 309 4162823 363223 Nut Products Company 27034.560 6941950 257 309 83543679 1411729 Surya Exports 385.560 95200 247 309 119138 23938 Prathyush Exports 453.600 112000 247 309 140162 28162 Swathy Foods 17010 4050000 238 309 5256090 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nut Products Company Daughter 1428 337220 236 275 392947 55727 TOTAL 65778.36 13116854 18029389 4912535 3.8 For the assessment year 2010-11 in the case of T.C. Usha, as per details filed by the assessee, the Assessing Officer noticed that the assessee had sold various grades of cashew kernels to concerns owned by near relatives at values much lower than the cost of production in the course of export. It was, therefore, proposed to disallow the loss on sale of cashew kernels incurred by the assessee through such dealings and the loss was worked out as follows: Sr. No. (1) Name of sister concern (2) Quantity sold (in Kg.) (3) Sale Price (4) Average rate of sale (5) Cost of production (6) Cost of goods sold (Col. 3x6) (7) Difference (Co. 7-4) (8) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rked out as follows: Loss on sale in the course of export to sister concerns ₹ 4,37,61,625/- 3.9.2 For the assessment year 2010-11, in the case of M/s. Vijayalaxmi Cashew Co., as per details filed by the assessee, the Assessing Officer noticed that the assessee had sold various grades of cashew kernels to concerns owned by near relatives at values much lower than the cost of production in the course of export. It was, therefore, proposed to disallow the loss on sale of cashew kernels incurred by the assessee through such dealings and the loss was worked out as follows: Sr. No. (1) Name of sister concern (2) Quantity sold (in Kg.) (3) Sale Price (4) Average rate of sale (5) Cost of production (6) Cost of goods sold (Col. 3x6) (7) Difference (Co. 7-4) (8) 1. Chethna Cashew Corporation 2,48,618,160 6,46,28,060 259.99 268.41 6,67,31,600 21,03,540 2. Nut Products Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 655363 TOTAL 2,68,77,750 4. On appeal, the CIT(A) observed that the onus to establish the fact that the transaction is genuine, in view of diversion of profits to sister concerns which are enjoying tax exemptions and the seller incurring huge loss in the process, is on the assessee. According to the CIT(A), where a trader charges less than the market price for the goods sold, the same would not render him liable to tax on the differential amount if the transaction is genuine. The CIT(A) observed that there was no material available on record to show that the output price is in parity with the obtaining price in the international market. The CIT(A) observed that business expediency to sell the cashew kernels at rates much below to the domestic rates when the assessee is not entitled to the export benefits on sales to sister concerns nor having claimed deduction under section 80HHC of the Act, has not been explained. 4.1 Before the CIT(A), the assessee argued that assessee s selling price has nothing to do wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a price below the cost price without explaining the business expediency to do so and the assessee had also not explained the reason for the pricing policy adopted to sell the kernels to sister concerns to a price below ₹ 364 per kg. which is the maximum export price. According to the CIT(A) , the sister concerns are entitled for deduction u/s. 80HHC of the Act and the damage caused to the revenue in the circumstances above, is nothing but outcome of a planned device to reduce the tax which is not tenable by law. The CIT(A) placed reliance on the judgment of the Gujarat High Court in the case of Patel Chemical Works vs CIT (265 ITR 273) wherein it was held that a sale to a sister concern at a price much below to the market price was a device for tax avoidance. 4.2 According to the CIT(A), it is not disputed that the average cost of production of cashew kernels was ₹ 178 per kg and the sales to sister concerns were made between ₹ 153 per kg to ₹ 177 per kg. The CIT(A) observed that sales to sister concerns for a price between ₹ 153 to ₹ 177 can be on arms length basis only when the price is closer to the export market price of the sister conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) did not find any infirmity in the order of the Assessing Officer and accordingly, the addition of ₹ 89,76,885/- was sustained. 5. Against this, the assessee is in appeal before us. The Ld. AR submitted that the assessee is engaged in the process of manufacture of cashew kernels from Raw Cashew Nuts (RCN) which were imported as also locally procured mainly for exports. The raw nuts were subjected to various processes like drying, roasting, shelling, peeling, grading etc, and the end product was cashew kernels of various grades like W180, W150,W210,W240, W320, W450 etc (wholes) and splits, pieces/butts having different price realizations in the export market. The outturn which represented production yield in Kg. per bag of RCN of 80 Kg. included all grades. 5.1 The Ld. AR submitted that since the outturn came from the same raw material and the same production procedures, the average cost for each grade can only be arrived at by taking the average cost of production which was accepted by the AO. It was submitted that the average cost of production of cashew kernels was arrived at on total cost basis in accordance with generally accepted accounting principles (GAAP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer as well as CIT(A) ought to have been convinced beyond an iota of doubt that transactions with sister concerns followed Arm's Length Pricing (ALP) with the prices of grades charged to sister concerns having proximity to prices of exports to unrelated parties and were comparable. Therefore, the addition is to be deleted. For this, the Ld. AR relied on the judgment of the Punjab Haryana High Court in the case of CIT vs. Jyothi Industries (2011) 330 ITR 573 ( P H ). 5.3 The Ld. AR submitted that no comparable cases were brought on record by the Assessing officer to rebut the contentions of the assessee. Hence, addition solely on conjectures and surmises not backed by material data is not warranted. For this, he relied on the following case laws: 1) CIT vs. Modi Xerox Ltd. (2016) 41 DTR (All) 55, 2) Vijay C. Kamdar vs. ITO (2007) 305 ITR (AT) (Mum) 163 3) Airtech (P) Ltd. vs. DCIT (2011) 139 TTJ (Del. Trib.) 318 5.4 The Ld. AR submitted that system of Accounting, books of account and accounting policies were accepted by the AO which implied inter alia that grade wise valuation of stock of kernels were recognized by the Dept, which proved comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 127619.24 22711054 177.959483 178 22716225 5170.72 2. Pratyush Exports 589.68 96720 164.021164 178 104963.04 8243.04 3. Surya 1224.72 187920 153.439153 178 218000.16 30080.16 43493.92 5.6 The Ld. AR submitted that the rate of sale to sister concerns ranged between ₹ 153.44 per Kg. to ₹ 177.96 per Kg. , while the cost of production was ₹ 178/- per Kg which resulted in an apparent loss to the tune of ₹ 43,494/-. It was proposed to disallow the above loss. The Ld. AR submitted that vide letter dated 07/12/2010 a detailed reply giving the reason why the exports had been carried out through sister concerns, how the market fluctuation varied and how the differ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not appear before him. This statement was not relied upon by the Additional Commissioner of Customs and he had dropped the proceedings. These materials were not sufficient to hold that the assessee had over-invoiced the purchases. There were different varieties of pens available in the market whose costs differed according to quality and there were different factors to determine the cost of pens. Without bringing any material on record the disallowance made by the Revenue authorities was not justifiable. 5.8 The Ld. AR submitted that the assessing officer had made the addition in assessment year 2009-10 under business head ' on the pretext that there was an 'apparent loss' of ₹ 89.76 lakhs on alleged policy of underselling in which event there was an apparent gain in the books of sister concern(s). According to the ld. AR, any addition under the head income from business becomes revenue neutral in nature since any addition towards underselling in the hands of the assessee becomes a corresponding deduction for purchase in the hands of sister concern(s), as held by the Supreme Court in the case of CIT vs. Glaxo Smithkline Asia (P) Ltd. (2010) 236 CTR (SC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any Ltd. (1973) 91 ITR 8 approving the decision of the Madras High Court in Shri Ramalinga Choodambika Mills Ltd vs. CIT reported in (1955) 28 ITR 952 (Mad). The Ld. AR relied on the judgment of the Supreme Court in Collector of Central Excise New Delhi vs. Guru Nanak Refrigeration Corporation Ltd. 2003 INDLAW SC 301 which approved the decision of the Appellate Tribunal (CEGAT) to the effect that just because sale price was less than cost of production there was no justification to reject the valuation of goods sold for charging Central Excise Duty when the transactions were at Arm's Length. 5.9.2 The Ld. AR submitted that CIT(A) picked a single highest price from the details submitted to him and concluded that the transactions are not genuine and not at ALP which was not correct. The Ld. AR relied on the decision of the Tribunal in the case of ITW India Ltd. vs. ACIT (2015) 169 TTJ (Del) 60. According to the Ld. AR, this underlines the need for determination of separate wt. average pricing for wholes and splits with suitable adjustments and for a cogent and meaningful comparison, the same cannot be aggregated. The Ld. AR submitted that ALP therefore could be wt. average of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hetan (352 ITR 484) wherein it was held that Assessing Officer has to adopt the figures and turnover finally assessed by the Sales Tax authorities. The Ld. AR drew our attention to the following Annexures: Annexure I - Bulletin of International Prices Annexure II - Comparison chart showing overall wt. average of sales Vs. Cost Annexure III- wt. average chart Vs. ALP Annexure IV - Comparison with peers in industry Annexure V - Comparison of sales by assess to sister concerns for - exports Vs. Exports by Latter. 5.9.5 The Ld. AR submitted that sales mix has great relevance in the matter of wt. average, a high % of superior grades boost up the wt. average whereas a higher % of inferior grades in the total mix has an opposite effect. According to the Ld. AR without examining the same and commercial compulsion for lower grades to be sold below cost, wt. average of a selective pick up of sales to sister concerns and its comparison with average cost of production would only lead to distorted results and can never be a litmus test of under pricing/apparent loss. The Ld. AR relied on the decisions of the Tribunal in the case of Henkel Adhesives Technologies India (P) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced in respect of one assessee for 2008-09, 2009-10 and 2011-12, issue being common for all years and for all assesses. However, CIT (A) remarked details were not given separately for other assessment year(s). 5.9.9 The Ld. AR submitted that although the CIT(A) had maintained that the export price at which cashew kernels were exported directly by the assessee can be relied on to fix an ALP yet he did not peruse the specific chart prepared in this regard as per his requirements showing such a comparison which would have convinced him that asssessee's transactions with related unit were at Arm's Length. The Ld. AR relied on the judgment of the Delhi High Court in the case of CIT vs. Sumitomo Corporation India (P) Ltd. (2015) 127 DTR (Del) 323. He also relied on the decision of the Tribunal in the case of Sona Okegawa Precision Forgings Ltd. vs. Addl. CIT (2012) 143 TTJ (Del) 516. According to the Ld. AR, the CIT(A) strongly felt that ALP means maximum price and it should be followed. To this, the Ld. AR submitted that observation of Delhi bench of ITAT in the case of Mentor Graphics (Noida) (P) Ltd. vs. DCIT (2007) 109 ITD 101 (Del.) ought to have been appreciated in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the quality of kernels entering the sales before reaching an erroneous conclusion that assessee did not follow ALP and cost was assumed to be ALP at all times leading to distorted results. The CIT(A) placed reliance on the judgment of the Gujarat High Court in the case of Patel Chemical Works vs. CIT (2004) 265 ITR and 273, wherein it was held that a sale to sister concern at a price below market price was a device for tax avoidance. It was submitted that the judgment of the Supreme Court (1973) 91 ITR 8 approving the judgment of the Madras High Court in Choodambika Mills was not brought before Gujarat High Court. According to the Ld. AR, the judgment of the Gujarat High Court cited supra was rendered in a different set of facts and circumstances and was not therefore, applicable to the present case. It was submitted that neither Assessing Officer nor CIT(A) could establish that the assessee had at any point of time sold kernels and in particular inferior grades below their market price and their findings were based only on blanket comparison with average cost which is not a litmus test to conclude under pricing. 6.3 The Ld. AR submitted that in particular, inferior grades fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances to sell such grades below cost. ALP is worked out by taking comparable transactions in comparable circumstances and by allowing a reasonable margin for various factors like timing of contracts for exports, composition of grades, quality of kernels, exchange rate, a reasonable % to cover indirect overheads profit of related units. Pricing has to be identified separately for wholes splits. After all, apples have to be compared with apples. For a cogent of meaningful comparison, the same cannot be aggregated. 6.4 The Ld. AR submitted that when addition is made under sales, corresponding deduction has to be given in purchases of sister concerns. Therefore, no addition is warranted. When the judgment of the Supreme Court cited supra was pointed out, the A.O. held that they were independent overlooking the fact that A.O. himself branded it as underpricing of sales to related units (specified persons u/s. 40A(2) of the Act). The Ld. AR submitted that the assessee as well as sister concerns were in the maximum tax bracket and accordingly, the transactions between assessee sister concerns were again revenue neutral. Hence, it was submitted that addition was unjustifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions are genuine bonafide not sham. Real income concept to be followed which CIT(A) had rightly observed. The Ld. AR relied on the decisions of the Tribunal in the case of ITO vs. PKS Holdings (2017) 152 DTR 215 (Kol) (Trib.) and in the case of Flipkart India (P) Ltd. vs. ACIT (2018) 193 TTJ (Bang.) 685. The Ld. AR relied on the judgment of the Supreme Court in the case of CIT ANR vs. Glaxo Smithkline Asia (P) Ltd. (2010) 236 CTR (SC) 113 and the decision of the Tribunal in the case of Dy. CIT vs. Firstsource Solutions Ltd. (2018) 168 DTR (Mumbai) (Trib.) 161 wherein it was held that exercise of addition alleging underpricing is revenue neutral. The ld. AR relied on the decision of the Supreme Court in the case of SA Builders vs. CIT (2006) 288 ITR 1 and the decision of the Tribunal in the case of Mentor Graphics (Noida) (P) Ltd. vs. DCIT 109 ITD 101 (Del.) wherein it was held that no businessman can be compelled to maximize his profits. The Ld. AR also relied on the following case laws wherein it was held that prices of grades sold to sister concerns for their exports had a nexus with the prices of direct exports (i.e. exports to unrelated parties) and hence, the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to examine whether there was any motive to shift the profit making concern to a loss making concern. It was submitted that in the present case, there was no motive to shift profits from the hands of the present assessees to the sister concerns and it was revenue neutral in the sense that the profits of the sister concerns should be reduced to the extent the assessees profits is sought to be reduced. Prior to abolition of section 80HHC, there was an apprehension that underpricing could be done to enable sister concerns claim greater 80HHC benefit. This is no longer the case from A.Y. 2005-06. Both the assessees and sister concern(s) paid tax at maximum marginal rate. The timing of contracts is also an important parameter in the matter of fixing transfer prices. For example when price of say W320 grade contracted earlier was Rs. X which is less than cost or current price, assessee is bound to sell at contracted price only. The A.O. wrongly presumed that entire sales in India were to sister concerns. The sales were effected in the domestic market through depots, consignment agents etc. In the absence of a clear finding by AO to the contrary, it was only fair and reasonable to presum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions entered by the assessees with the sister concerns are genuine and bona fide and there is no allegation by the Assessing Officer that they are sham transactions. The price charged by the assessees to their sister concerns are in conformity with the normal commercial practice whereby the assessees got huge orders in large quantities with timely recovery of the debts. In our opinion, in the absence of specific findings by the Assessing Officer that the transactions were entered into by the parties herein with the intention to defraud Revenue, the additions made by the A.O. cannot be sustained. This view of ours is fortified by the judgment of the Supreme Court in the case of CIT vs. Calcutta Discount Co. Ltd. (91 ITR 8) wherein it was held that where a trader transfers his goods to another trader at a price less than the market price, and the transaction is a bona fide one, the taxing authority cannot take into account the market price of those goods, ignoring the real price fetched, to ascertain the profit from the transaction. The mere fact that sales were made at prices lower than cost or even the market rates would not entitle the Income tax Department to assess the differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer. This is the only evidence on the basis of which the Assessing Officer had formed the belief of shifting of profit and observed that there was understatement of sale price. These material are not sufficient to hold that the assessee had under-invoiced the sale price. We, accordingly, do not find any reason to agree with the finding of the lower authorities. In these cases, there were different varieties of grades of kernels sold by the assessee and there are different factors which influence the finalization of sale price. Without bringing any material on record, the Assessing Officer is not justified in making addition on account of lower sale price. This view of ours is fortified by the order of Tribunal in the case of Vijay C. Kamdar 305 ITR (AT) 163 (Mum.). As held by the Jaipur Bench of the Tribunal in the case of ITO vs. Kanchan Tara Exports 138 TTJ 592, had the Assessing Officer given due rebate on account of quality and size of kernels, there could not have been any addition made by the Assessing Officer. Even while arriving at the sale price, the Assessing Officer has to give due weightage of the employees cost, administrative cost, interest cost, workin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the value determined by the assessee. By applying the above ratio, we are of the opinion that there is no finding by the I.T. Department that the assesseees returns were rejected by the Commercial Taxes Department and it was duly accepted by the Commercial Taxes Department and in the accepted accounts, the I.T. Department cannot find any difference so as to make the additions. In our opinion, before rejection of books of account, the Assessing Officer should prove that the books of account produced by the assessees are not reliable and that once the books of account were audited and were subject to scrutiny by other statutory authorities, simple rejection of the same by the Assessing Officer without any reason is not acceptable. 8.5 The Assessing Officer is not entitled to make a pure guesswork and make an assessment without any reference to the evidences and material at all. There must be something more than suspicion to support the assessment. A suspicion however, strong may not take the place of proof. The conclusions which are based on surmises and conjectures, cannot take the place of proof. Therefore, the assessments made by the Assessing Officer which are pre-dominantl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mply that averaging cannot be done in a scenario when quality is a crucial factor. For this, reliance is placed on the judgment of the Bombay High Court in the case of Director of Income Tax (International Taxation) vs. Boston Scientific International B.V. (2013) 90 DTR (Bom.) 357. The A.O. had accepted the pricing methodology of the assessee in the following transactions (a). Direct exports i.e. sales to unrelated parties consisting of wholes and splits having separate wt. average rates. (b). Purchases from these very sister concerns consisting of wholes and splits. The Assessing Officer ought to have applied the same yardstick in the matter of pricing of sales to sister concerns for their export. In the course of export and the sales are invoiced grade wise corresponding to the grades exported by the sister concern and relevant export contract price. Hence, the timing of contract is very important. Being for exports, the prices charged to sister concerns grade wise visa- vis exports to unrelated parties are comparable and sales to sister concerns in the course of export are at Arms Length Price(ALP). For lower grades such as splits and pieces, the market price being l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking any further enquiry only for the reason that the supplier of the assessee did not appear before him. This statement was not relied upon by the Additional Commissioner of Customs and he had dropped the proceedings. These materials were not sufficient to hold that the assessee had over-invoiced the purchases. There were different varieties of pens available in the market whose costs differed according to quality and there were different factors to determine the cost of pens. Without bringing any material on record the disallowance made by the Revenue authorities was not justifiable. 8.9 The assessing officer had made the addition in assessment year 2009-10 under business head ' on the pretext that there was an 'apparent loss' of ₹ 89.76 lakhs on alleged policy of underselling in which event there was an apparent gain in the books of sister concern(s). Any addition under the head income from business becomes revenue neutral in nature since any addition towards underselling in the hands of the assessee becomes a corresponding deduction for purchase in the hands of sister concern(s), as held by the Supreme Court in the case of CIT vs. Glaxo Smithkline Asi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tity. The CIT(A) confirmed the Assessing Officer s action in bringing to tax interest under income from other sources. 12. Against this, the assessee is in appeal before us. The Ld. AR submitted that the CIT(A) was not correct in confirming the addition on account of interest u/s. 244A as per 143(1), an intimation disregarding the consistent policy followed by the assessee in the past to treat the same as income on regular assessment. The Ld. AR submitted that the department had accepted the same in earlier years (2013) (153 TTJ (Mum) 257) and (2012) 349 ITR 309 (Mum). 13. The Ld. DR relied on the order of the lower authorities. 14. We have heard the rival submissions and perused the material on record. We do not find any infirmity in the finding of the CIT(A) that the interest on Income tax refund assessable under the head other sources is to be taxed in the year in which the right to such refund had been recognized by an order or the date on which it is actually received by placing reliance on the decision of the Tribunal in the case of DCIT vs. Seshasayee Papers and Bonds Ltd. (2 ITR (Chennai Trib.) 417) wherein it was decided that it has to be taxed in the year of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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