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TMI Blog2025 (1) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... ard both the parties at length. Case file perused. 2. The assessee pleads the following substantive grounds in the instant appeal: "1. That on facts and law involved, the Learned Commissioner of Income Tax (Appeals) [Ld. CIT(A)] has erred in not deleting the entire disallowance of Rs. 1,26,54,000/- made by the Learned Assessing Officer (Ld. AO) by invoking provisions of section 40A(2)(b) and in restricting the disallowance to the extent of Rs. 82,80,000/-. 2. That on facts and law involved, the Ld. CIT(A) has erred in not deciding the issue of reasonableness of the transaction of purchase of poppy seeds from the AE being at Arm's length Price as per Indian transfer pricing regulations and accordingly, in not deleting the entire dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions of the appellant that the addition under Section 40A(2)(b) is not warranted as there is no tax arbitrage involved on the facts of this case. On this ground itself and as per binding precedents, the entire disallowance of Rs. 1,26,54,000/- as made by the Ld. AO u/s 40A(2)(b) of the Act deserves to be deleted. 6. That the above addition as confirmed, is based on erroneous views and / or non-appreciation of the facts or law involved without properly considering the material on record and without affording appropriate specific lawful opportunity. As such too the addition as made is unwarranted and deserves to be deleted. 7. That the interest charged u/s 244A & 234D is incorrect. 8. That the assessment as made and the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hased from Turkey party and Arushi Exports and give detalls as per chart too. The AO had asked the appellant to furnish the requisite information in the form of the following chart: Poppy Seeds from Turkey Poppy Seeds from M/s Arushi Exports. Items Rate Quantity Total rate How order got placed Purcase order Batch wise/ lotwise cost price Other expenses on purchase of PS Expenses upto Port Expenses from Port to godown/shop Any other expenses on purchases like storage Sale price Any discount given on sale Any modi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant company has sold the same very poppy seeds in local market at the rate of Rs. 310/- kg shows that the transaction with M/s Arushi Exports at FMV. Even in the domestic market prices of a product vary from state to state, it is submitted that the Poppy seeds being controlled item its import is not free for any body and any time. Import of poppy seeds is permitted under license from Central Bureau of Narcotics, Ministry of Finance, Government of India, import is permitted of the quantity permitted in the license and the quantity has to be imported within the period specified in the license. On expiry of license period fresh license has to be taken and it takes a long process and tune to import the same. The appellant has also submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rkey Poppy Seeds from M/s Arushi Exports. Items Poppy Seeds Poppy Seeds Rate 159.40 300 Quantity (kgs) 16200 90000 Total rate 25823160 2700000 Expenses upto Port 7260292 Expenses from Port to godown/shop 605836 Any other expenses on purchases like storage 62785 Net purchase rate (including direct costs) 208.35 300/- Sale price 275 310 Any discount given on sale 0 0 Any modification on sale items No No 7.7 In the assessment order the AO noted that the appellant has not furnished any evidence in support of its clalm to prove that the purchase made from M/s Arushi Exports is not at excessive and unreasonable rates. The reliance of Appellant Company upon various judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port to godown/shop, other expenses on purchases like storage have not been considered by the AO. If expenses upto port, expenses from port to godown/shop, other expenses on purchases like storage considered, Net Purchase Rate comes to Rs 208.35 per Kg instead of Rs. 159.40 per Kg. The difference per Kg comes to Rs 92/- [300-208]. The total quantity is 90,000 Kg. Thus the disallowance u/s 40A(2)(b) is determined at Rs. 82,80,000/- [ Rs 92 x 90,000 1. Accordingly, the disallowance u/s 40A(2)(b) is restricted to Rs. 82,80,000/- instead of Rs 1,26,54,000/- and the appellant gets a relief of Rs 43,74,000/-. Ground No. 1, 2, 3, 4 and sub-ground number 4.1, 4.2, 4.3 & 4.4 are partly allowed." 4. We have given our thoughtful consideration to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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