By K. B. Bhujle, Advocate
65. Principal CIT vs. Sandvik Asia Pvt. Ltd.
[2022] 449 ITR 312 (Bom.)
A.Y.: 2005-06
Date of order: 8th September, 2022
Section: 10B of ITA, 1961
Export — Loss — Set off — Scope of section 10B — Section 10B provides for deduction and not exemption — Loss sustained in unit covered by section 10B can be set off against other business income.The assessee-company was a part of the S group being a subsidiary of S Sweden, which was the holding company of the assessee. For A.Y. 2005-06, the assessee had made a provision for finished goods obsolescence of Rs. 19,52,000. However, this amount was disallowed by the AO, who held that the closing inventory had to be valued either at cost price or at market price. In its return of income, the assessee adjusted the loss of its newly set up export-oriented unit against the profits earned by its other units. In the return of income the assessee claimed that it had made a payment of Rs. 4,41,44,973 on account of management services to S Sweden. The AO referred the matter to the Transfer Pricing Officer (TPO). The TPO, however, was of the view that there was no evidence with regard to the receipt of services by the assessee and, therefore, made an adjustment of Rs. 4.41 crores. The Commissioner, held, based upon the additional evidence that the management services were rendered to the assessee. The AO accordingly deleted the addition of Rs. 4,41,44,973 based on the transfer pricin
