M/s. A.M. TODA CO. (I) P. LTD., MUMBAI v. ITO 1(2)(1), MUMBAI

ITA 5461/MUM/2005 | 2001-2002
Pronouncement Date: 03-12-2010 | Result: Allowed

Appeal Details

RSA Number 546119914 RSA 2005
Assessee PAN AAACI4884P
Bench Mumbai
Appeal Number ITA 5461/MUM/2005
Duration Of Justice 5 year(s) 3 month(s) 17 day(s)
Appellant M/s. A.M. TODA CO. (I) P. LTD., MUMBAI
Respondent ITO 1(2)(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 03-12-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 03-12-2010
Date Of Final Hearing 18-11-2010
Next Hearing Date 18-11-2010
Assessment Year 2001-2002
Appeal Filed On 16-08-2005
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO. 5461/MUM/2005 (ASSESSMENT YEAR 2001-02) A M TODD CO.INDIA PVT.LTD. (FORMERLY INDOMINT AGRIPRODUCTS PVT LTD) 20 RAJMAHAL 84 VEER NARIMAN ROAD CHURCHGATE MUMBAI-400020. PAN: AAACI4884P . APPELLANT VS INCOME TAX OFFICER 1(2)(1) MUMBAI. .. RESPONDENT APPELLANT BY : SHRI RAJAN R VORA RESPONDENT BY : SHRI P N DEVADASAN O R D E R PER VIJAY PAL RAO JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 1204.2005 OF CIT(A) FOR THE ASSESSMENT YEAR 2001-02.. 2. THIS TRIBUNAL VIDE ITS ORDER DATED 18.03.2009 HA D DISMISSED THE APPEAL OF THE ASSESSEE. SUBSEQUENTLY THE ASSESSEE FILED MA NO.11/MUM/2010 FOR RECALLING THE ORDER OF THE TRIBUNAL REGARDING THE GROUND NO.2 OF THE APPEA L. VIDE ORDER DATED 28.08.2010 THIS TRIBUNAL HAS ALLOWED THE MA FILED BY THE ASSESSEE AND HELD THAT A MISTAKE HAS C REPT IN THE ORDER OF THIS TRIBUNAL AND ACCORDINGLY THE ORDER DATED ITA NO. 5461/MUM/2005 (ASSESSMENT YEAR 2001-02) 2 18.03.2009 WAS RECALLED WITH RESPECT TO GROUND NO. 2 OF THE APPEAL. CONSEQUENTLY THE APPEAL OF THE ASSESSEE WA S PLACED BEFORE US FOR DECIDING THE GROUND NO.2 WHICH READS AS UNDER : GROUND NO.II 1. THE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO OF DISALLOWING THE NET LOSS OF RS.163 27 3 13/- ON ACCOUNT OF EXCHANGE DIFFERENCE ON VARIOUS FOREI GN CURRENCY TRANSACTIONS ENTERED INTO BY THE APPELLANT ; 2. HE FAILED TO APPRECIATE AND OUGHT TO HAVE HELD THAT:: A. THE LOSS OF RS.1 63 13 509 (OUT OF THE TOTAL LOSS OF RS.1 63 27 313) HAD ARISEN TO THE APPELLAN T ON ACCOUNT OF ITS IMPORT AND EXPORT ACTIVITIES I.E. ACTUAL PURCHASE AND SALE TRANSACTIONS IN THE NORMAL COURSE OF BUSINESS AND HENCE WAS ALLOWABLE AS A TRADING LOSS; B. THE LOSS WAS NOT CONTINGENT IN NATURE BUT AN ASCERTAINED LIABILITY C. THE LOSS CLAIMED BY THE APPELLANT WAS IN ACCORDANCE TO ACCOUNTING SYSTEM REGULARLY FOLLOWED AND IN LINE WITH THE RELEVANT ACCOUNTING STANDARD I N FORCE; D. THE AGREEMENT RELIED UPON BY THE AO FOR DISALLOWING THE LOSS OF RS.1 63 13 509/- (OUT OF T HE TOTAL NET LOSS OF RS.1 63 27 313/-) WAS IN NO WAY CONNECTED WITH THE EXPORT AND IMPORT ACTIVITIES BUT WAS ONLY FOR THE CONTRACT RESEARCH DEVELOPMENT A ND CONTRACT AGRICULTURAL SERVICES TO BE PROVIDED BY THE APPELLANT IN ADDITION TO ITS IMPORT EXPORT TRANSACT IONS; 3. THE APPELLANT PRAYS THAT THE DISALLOWANCE OF RS.1 63 27 313/- BE DELETED ITA NO. 5461/MUM/2005 (ASSESSMENT YEAR 2001-02) 3 3. BRIEF FACTS OF THE CASE RELATING TO GROUND NO.2 ARE THAT THE ASSESSEE IS AN INDIAN COMPANY AND ENGAGED IN T HE BUSINESS OF ESSENTIAL OIL AND FLAVOURS AND MANUFAC TURE OF MENTHOL. THE ASSESSEE HAS BEEN DOING THE BUSINESS WITH M/S A.N.TODD AND CO. UK AND M/S A M TODD AND CO. USA. THE ASSESSEE IN THE RETURN OF INCOME FILED FOR THE ASS ESSMENT YEAR UNDER CONSIDERATION HAD CLAIMED EXCHANGE LOS S ON THE FOLLOWING ACCOUNTS : SR.NO. PARTICULARS AMOUNT (RS) 1 EXCHANGE LOSS ON ADVANCE RECEIVED AGAINST SALES RECORDED IN AY 2001-02 11 989 479 2 EXCHANGE LOSS ON ACCOUNT OF AMOUNT OUTSTANDING AGAINST IMPORT MADE IN AY 2001-02 4 324 030 3 EXCHANGE LOSS ON AMOUNT RECEIVABLE FOR R AND D SERVICES 16 434 4 EXCHANGE GAIN ON EXPENSE RECOVERABLE (1 167) TOTAL 16 328 776 THE AO DISALLOWED THE CLAIM OF THE ASSESSEE REGARDI NG EXCHANGE LOSS WITH RESPECT TO THE ADVANCE RECEIVE D AS WELL AS OUTSTANDING AGAINST IMPORT. 4. ON APPEAL THE CIT(A) HAS CONFIRMED THE DISALLOW ANCE MADE BY THE AO 5. BEFORE US THE LEARNED AR OF THE ASSESSEE HAS SU BMITTED THAT THE MAJOR PORTION OF THE SALE WAS MADE BY THE ASSESSEE ITA NO. 5461/MUM/2005 (ASSESSMENT YEAR 2001-02) 4 TO ITS PARENTS COMPANY M/S A M TODD AND CO. AS PER THE TERMS AND CONTRACT NEGOTIATED BETWEEN THE ASSESSEE AND IT PARENT COMPANY THE ASSESSEE COMPANY NORMALLY EXECU TES THE SALES AGAINST THE ADVANCES RECEIVED THEREFORE TH E ADVANCES RECEIVED BY THE ASSESSEE WERE AGAINST THE SUPPLY T O BE MADE BY THE ASSESSEE AND THE SAME IS IN THE NATURE OF TRADE RECEIPT. HE HAS SUBMITTED THAT THE LOSS AMOUNTING TO RS.11 989 479/- WAS ON ACCOUNT OF THE DEFERENCE BET WEEN THE EXCHANGE RATE ON WHICH THE ADVANCES WERE RECEIVED F ROM M/S COMPANY M/S A M TODD AND CO. AND THE EXCHANGE RAE ON WHICH THE EXPORT WAS MADE TO THE SAID COMPANY. OUT OF TOTAL LOSS OF RS. .11 989 479/- ON ACCOUNT OF ADVANCE RE CEIVED AGAINST THE SALES THE LOSS OF RS.8 198 950/- WAS REALIZED LOSS ON ACCOUNT OF ADJUSTMENT OF THE EXPORT PROCEEDS AGA INST THE ADVANCES RECEIVED AND RS.3 790 529/- WAS DUE TO REV ALUATION OF OUTSTANDING ADVANCE RECEIVED AT EXCHANGE RATE P REVAILING ON THE BALANCE-SHEET DATE. HE HAS POINTED OUT THA T THE DETAILS OF THIS EXCHANGE LOSS ON ADVANCES RECEIVED AGAINST THE SALE HAS BEEN GIVEN BY THE ASESEEE AT PAGES 175 T O 180 OF THE PAPER BOOK. HE HAS ALSO REFERRED THE CERTIFIC ATE OF FOREIGN INVOICE OF THE REMITTANCE ISSUED BY THE BANK AND S UBMITTED THAT THIS FACTS HAS BEEN CLEARLY MENTIONED IN THE S AID CERTIFICATE THAT THE REMITTANCE BY M/S A M TODD AND CO. TO THE ASSESSEE WAS FOR THE PURPOSE OF ADVANCES GIVEN FOR EXPORT . ITA NO. 5461/MUM/2005 (ASSESSMENT YEAR 2001-02) 5 THE LD. AR HAS ALSO REFERRED THE INVOICES RAISED B Y THE ASSESSEE AND THE PURCHASE ORDER PLACED BY THE PAR ENT COMPANY AND SUBMITTED THAT IN THE PURCHASE ORDER AS WELL AS IN THE INVOICE RAISED BY THE ASSESSEE IT IS MENTIO NED THAT THE PAYMENTS WERE RECEIVED IN ADVANCE. HE HAS SUBMITTE D THAT THE CERTIFICATED OF FOREIGN INVOICES REMITTANCE AND EXPORT INVOICES ARE AT PAGES 1 TO 43 AND 156 TO 174 OF TH E PAPER BOOK. AS REGARDS THE LOSS ON ACCOUNT OF OUTSTAN DING AGAINST THE IMPORT MADE BY THE ASESEEE THE LEARNED AR OF T HE ASSESSEE HAS SUBMITTED THAT THE LOSS OF RS.43 24 0 30/- ACCRUED ON ACCOUNT OF RE-VALUATION OF LIABILITY OUT STANDING AT THE END OF HE YEAR AGAINST THE IMPORT MADE BY THE A SESEEE. THUS THE EXCHANGE LOSS WAS ON ACCOUNT OF TRADING L IABILITY AT THE END OF THE YEAR. 6. THE THIRD ITEM OF EXCHANGE LOSS IS ON ACCOUNT OF RECEIVABLE FOR RESEARCH AND DEVELOPMENT SERVICES. THE ASESEEE HAD ENTERED INTO A RESEARCH AND DEVELOPMEN T CONTRACT SERVICE AGREEMENT WITH M/S A M TODD AND C O. USA. IN PURSUANCE OF THE SAID AGREEMENT THE ASSESSEE AG REED TO PROVIDE CERTAIN RESEARCH AND DEVELOPMENT AND CON TRACT OF AGRICULTURAL SERVICES. AS PER THE TERMS OF THE AGR EEMENT THE PARENT COMPANY WOULD COMPENSATE THE ASSESSEE BY REIMBURSING THE EXPENDITURE INCURRED IN PROVIDING THE SERIES + ITA NO. 5461/MUM/2005 (ASSESSMENT YEAR 2001-02) 6 3 % MARGIN. THE EXCHANGE LOSS OF RS. 16 434 TOWAR DS THE AMOUNT RECEIVABLE FROM THE PARENT COMPANY ON ACCOUN T OF BILLS /DEBIT NOTES RAISED BY THE ASSESSEE FOR SERVICES R ENDERED AND EXPENDITURE INCURRED ON BEHALF OF THE PARENT COMPAN Y. THUS. THE LEARNED AR HAS SUBMITTED THAT EXCHANGE LOSS ON THIS ACCOUNT WAS DUE TO RESTATEMENT OF TRADING ASSETS. THE LEARNED AR HAS CONTENDED THAT THE AO WHILE DISALLO WING THE CLAIM OF THE ASSESSEE HAS RELIED UPON THE AGREEMENT EXECUTED BETWEEN THE ASSESSEE AND M/S AM TODD AND CO USA REGARDING RESEARCH AND DEVELOPMENT CONTRACT SERVICE AGREEMENT. THE AO HAS MISUNDERSTOOD THE SAID AGR EEMENT AS AN AGREEMENT FOR EXPORT AND IMPORT BETWEEN THE PARTIES. HE HAS SUBMITTED THAT THERE WAS NO WRITTEN AGREEMEN T BETWEEN THE ASSESSEE AND M/S A M TODD AND CO. USA A ND UK REGARDING EXPORT SALES AND EXPORT OF THE GOODS. TH E PURCHASE ORDERS ITSELF ARE THE AGREEMENTS. THUS THE LEARN ED AR HAS SUBMITTED THAT WHEN THE EXCHANGE LOSS WAS ON ACCOUN T OF TRADING RECEIPT AND TRADING LIABILITY THEN THE SAME IS ALLOWABLE IN VIEW OF THE DECISION OF THE HON. SUPREME COURT I N THE CASE IN THE CASE OF CIT V/S WOODWORDS GOVERNOR (INDIA) P VT LTD REPORTED IN 312 ITR 254. ITA NO. 5461/MUM/2005 (ASSESSMENT YEAR 2001-02) 7 7.. ON THE OTHER HAND THE LEARNED DR HAS SUBMITTED THAT FROM THE DETAILS OF EXCHANGE RATE GIVEN BY THE ASSE SSEE HAS SHOWN AS OPENING BALANCE OF ADVANCE RECEIVE OF RS.144 049 880/- AND CLAIM THE EXCHANGE LOSS. HE H AS FURTHER CONTENDED FROM THE RECORD IT IS NOT CLEAR THAT WHET HER SUCH OPENING BALANCE WAS RECEIVED BY THE ASSESSEE AGAINS T THE SALES AND PURCHASE ORDER PLACED BYS THE PARENT COMP ANY. HE HAS FURTHER SUBMITTED THAT EVEN FROM THE RECORD IT IS NOT CLEAR THAT THE ADVANCE RECEIVED BY THE ASESEEE IS AGAINST WHICH PURCHASE ORDER PLACED BY THE PARENT COMPANY. THERE FORE THE ASSESSEE HAS FAILED TO ESTABLISH THE NEXUS OF THE A DVANCES RECEIVED WITH THE CORRESPONDING PURCHASE ORDER RECE IVED BY THE ASESEEE. HE HAS FURTHER CONTENDED THAT THERE IS NO CO- RELATION BETWEEN THE ADVANCES RECEIVED AND THE PUR CHASE ORDER AS WELL AS THE SALES MADE BY THE ASSESSEE TH EREFORE THE ASESEEE HAS NOT PROVED THAT THESE ADVANCES RECE IVED BY THE ASSESSEE ARE IN THE NATURE OF TRADE RECEIPT AGA INST THE SALES MADE BY THE ASESEEE. HE HAS RELIED UPON THE ORDERS OF THE LOWERS AUTHORITIES. 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND REL EVANT RECORD. FROM THE CAREFUL PERUSAL OF THE ASSESSMENT ORDER WE NOTE THAT THE AO HAS NOT EXAMINED THE ISSUE OF TR ADING RECEIPT AGAINST THE SALE IN THE LIGHT OF FOREIGN IN WARD ITA NO. 5461/MUM/2005 (ASSESSMENT YEAR 2001-02) 8 REMITTANCE CERTIFICATE PURCHASE ORDERS AND INVOICE RAISED BY THE ASSESSEE. SIMILARLY THE AO HAS ALSO NOT EXAM INED THE OUTSTANDING LIABILITY OF THE ASSESSEE TOWARDS IMPOR T MADE BY THE ASESEEE AND THE EXCHANGE LOSS ON ACCOUNT OF TRA DING LIABILITY OUTSTANDING AT THE END OF THE YEAR. THE AO HAS DECIDED THE ISSUE IN THE LIGHT OF AGREEMENT DATED 1 .04.1999 FOR RESEARCH AND DEVELOPMENT AND CONTRACT AGREEMENT FO R SERVICE DATED 1.04.1999. THE RELEVANT PARAGRAPH O F THE ASSESSMENT ORDER AT PAGE 12 AND 13 IS REPRODUCED AS UNDER : 12. IN ORDER TO DEAL WITH THIS SUBJECT IT IS ESSE NTIAL TO GO THROUGH THE VARIOUS CLAUSES OF THE AGREEMENT ENTERED INTO WITH M/S A M TODD AND CO. USA WHICH ARE AS UNDER : FROM THE COPY OF AGREEMENT FILED IT IS SEEN THAT THE AGREEMENT IS FOR CONTRACT RESEARCH AND DEVELOPMENT AND CONTRACT AGRICULTURAL SERVICES AGREEMENT . THE AGREEMENT WAS ENTERED INTO ON THE 1 ST DAY OF APRIL 1999 BY M/S A M TODD AND CO. USA AND THE ASESEEE COMPANY. THE ASSESSEE COMPANY CAME INTO EXISTENCE IN THE YEAR 1995 AND WAS IN THE BUSINESS OF MANUFACTURING OF MINT OIL. THE ASSESSEE WAS A SUPPLIER OF MINT OILS TO M/S A M TODD AN CO. AS PER THE CLAUSE SERVICES AND COMPENSATION M/S A M TODD AND CO. DESIRED TO RETAIN THE ASSESSEE TO PROVE CERTAIN RESEARCH AND DEVELOPMENT AND CONTRACT AGRICULTURAL SERVICES. BOTH THE ACTIVITIES WERE PERFORMED IN CONJUNCTION WITH THE STRATEGIC INITIATIVES OF M/S A M TODD AND CO. TO DISCOMMODITIES THE MINT MARKET STABILIZE THE PURCHASE ;PRICE OF MINT IN ORDER TO STABILIZE THE SALE PRICE TO THIRD PARTIES. THE ASSESSEE AGREED TO ITA NO. 5461/MUM/2005 (ASSESSMENT YEAR 2001-02) 9 PROVE THE SERVICES IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE AGREEMENT. ACCORDINGLY M/S A M TODD AND CO. APPOINTED THE ASSESSEE COMPANY TO PROVIDE CONTRACT RESEARCH AND DEVELOPMENT RELATING TO TEST PLOT FARMING THE AGREEMENT CLAUSE COMPENSATION SPEAKS AS M/S A M TODD AND CO. WILL REIMBURSE THE ASSESSEE FOR ALL EXPENSES INCURRED PLUS A 3% MARGIN IN THE CONTRACT RESEARCH AND DEVELOPMENT AND CONTRACT AGRICULTURAL SERVICES. THE REIMBURSABLE EXPENSES ARE-WAGE AND SALARIES OF INDIVIDUALS EMPLOYED IN THE FIELD RESEARCH AND DEVELOPMENT OPERATION RENT TRAVEL AND MOTOR CAR EXPENSES COMMUNICATION EXPENSES REPAIRS AND MAINTENANCE PACKING CHARES. FREIGHT AND FORWARDING. INSURANCE CHARGES PROFESSIONAL FEES UTILITIES OFFICE SUPPLIERS FINANCE CHARGES DEPRECIATION ROOT STOCK. THIS CLAUSE CLEARLY SPEAKS THAT M/S A M TODD AND CO WILL REMIT PAYMENT TO THE ASSESSEE BY WIRE TRANSFER WITHIN 15 DAYS AFTER RECEIVING AND APPROVING THE INCOME. THE ENTIRE SERVICES WERE TO BE PROVIDE BY THE ASSESSEE UNDER THE GUIDANCE AND DIRECTIONS OF M/S A M TODD AND CO. THE M/S AM TODD AND CO HAD THE RIGHT TO DETERMINE THE DURATION OF THE ACTIVITIES PERFORMED BY THE ASESEEE. FURTHER M/S AM TODD AND CO. HAS AUTHORITY TO TERMINATE THESE SERVICES WITHOUT NOTICE TO THE ASSESSEE. THE CONCLUDING PART OF THE AGREEMENT IS M/S A M TODD AND CO. WILL ALSO BE RESPONSIBLE FOR REIMBURSING THE ASSESSEE FOR ANY OUTSTANDING GROWER CONTRACTS THAT BECOME PAYABLE SHOULD M/S A M TODD AND CO. DISCONTINUE THESE ACTIVITIES. THE ASSESSEE COMPANY WAS RESPONSIBLE FOR BILLING M/S AM TODD AND CO ON MONTHLY BASIS FOR ALL THE EXPENSES. M/S A M TODD AND CO. WOULD REMIT THE PAYMENT TO THE ASSESSEE BY WIRE TRANSFER 15 DAYS AFTER RECEIVING AND APPROVING THE INVOICE ITA NO. 5461/MUM/2005 (ASSESSMENT YEAR 2001-02) 10 13. FROM THE READING OF VARIOUS CLAUSES OF THIS AGREEMENT ESPECIALLY THE COMPENSATION AND TERMS AND TERMINATION IT IS CLEAR THAT THE ASSESSEE COMPANY WAS TO RAISE THE BILL IN RESPECT OF THE SERVICES RENDERED AND M/S A M TODD AND CO WAS TO REMIT THE MONEY WITHIN 15 DAY THERE OF. THERE3 AS NO CONDITION IN THE AGREEMENT THAT M/S A M TODD AND CO. WILL GIVEN ANY ADVANCE TO THE ASSESSEE FURTHE R THERE IS ALSO NO PRE-CONDITION TO RECEIVE THE MONE Y IN ADVANCE WITHER FOR SUPPLY OR AGAINST EXPENSE TH ERE IS NO REASON WHY THE ASSESSEE SHOULD MAKE ADVANCE PAYMENT TO TH4E ASESEEE COMPANY TO USA OR UK AGAINST THE IMPORTS FROM THE SAME COMPANY 9. WE NOTE THAT THIS AGREEMENT BETWEEN THE ASSESSEE AND M/S A M TODD AND CO. IS ONLY REGARDING THE RESEARCH AND DEVELOPMENT AND AGRICULTURAL SERVICES TO BE PROVIDE D BY THE ASSESSEE AND NOT REGARDING THE EXPORT AND IMPORT MA DE BY THE ASSESSEE. THEREFORE THE AO HAS TOTALLY MISPL ACED THE RELIANCE ON THE SAID AGREEMENT FOR THE PURPOSES OF DECIDING THE ISSUE OF EXCHANGE LOSS ON ACCOUNT OF ADVANCES R ECEIVED FOR SALE AND OUTSTANDING FOR IMPORT MADE BY THE ASS ESSEE. IT IS SETTLED PROPOSITION OF LAW AS DECIDED BY THE HON. S UPREME COURT IN THE CASE OF CIT V/S WOODWORDS GOVERNOR (I NDIA) PVT LTD (SUPRA) THAT EXCHANGE LOSS WHATSOEVER SUFFE RED BY THE ASSESSEE ON ACCOUNT OF FLUCTUATION IN RATE OF FOREI GN EXCHANGE ON THE DATE OF BALANCE SHEET IS ALLOWABLE AS BUSINE SS LOSS U/S 37(1) IF THE SAID LOSS ON TRADING RECEIPT OR TRADIN G LIABILITY. IT IS EVIDENT THAT THE FACTUAL ASPECT OF THE ISSUE HAS NOT BEE EXAMINED BY THE LOWER AUTHORITIES AS TO WHETHER ADV ANCES ITA NO. 5461/MUM/2005 (ASSESSMENT YEAR 2001-02) 11 RECEIVED BY THE ASSESSEE IS AGAINST THE SALES MADE AND THE OPENING BALANCE AS SHOWN BY THE ASSESSEE IS ALSO RE CEIPT AGAINST THE SALES MADE BY THE ASSESSEE. SIMILARLY WHETHER SUCH LOSS CLAIMED BY THE ASSESSEE AGAINST THE OUTST ANDING AGAINST THE IMPORT MADE IS CORRECT OR NOT AS WELL AS THE EXCHANGE LOSS ON AMOUNT OF RECEIVABLE FOR RESEARCH AND DEVELOPMENT SERVICES. THEREFORE WE SET ASIDE THIS ISSUE TO THE FILE OF THE AO FOR DECIDING THE SAME AFRESH AFT ER EXAMINATION AND VERIFICATION OF THE RELEVANT RECORD TO FIND OUT WHETHER OPENING BALANCE SHOWN BY THE ASSESSEE AN ADVANCE RECEIPT AGAINST THE SALES AND EXPORT MADE. THE A O HAS TO EXAMINE AND DECIDE THIS ISSUE AFTER VERIFICATION OF THE PURCHASE ORDER WITH CORRESPONDING ADVANCES RECEIVED AND THE INVOICES RAISED BY THE ASESEEE FOR SALES MADE. SIM ILARLY THE ISSUE OF LOSS ON ACCOUNT OF IMPORT AND RESEARCH AND DEVELOPMENT SERVICES IS ALSO TO BE DECIDED AFTER CO NSIDERING THE RELEVANT RECORD AS RELIED UPON BY THE ASSESSEE. IF THE AO FINDS THAT THE LOSS IS ON ACCOUNT OF TRADING RECEI PTS RECEIVABLE AS WELL AS TRADING LIABILITY THE SAME IS ALLOWABLE IN VIEW OF THE DECISION OF THE HON.APEX COURT IN THE CASE OF CIT V /S WOODWORDS GOVERNOR (INDIA) PVT LTD (SUPRA). ITA NO. 5461/MUM/2005 (ASSESSMENT YEAR 2001-02) 12 10.. GROUND NO.2 OF ASSESSEES APPEAL IS ALLOWED FO R STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 3/12/2010 SD S D (T.R.SOOD) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL M EMBER MUMBAI DATED 3 RD DEC 2010 SRL:251110 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI