Essilor India Pvt. Ltd. Vs DCIT (OSD) (ITAT Bangalore)
ITAT Bangalore held that deduction towards reversal of provision for inventory written off due to obsolescence allowable since the same stands offered to tax in the year in which provision was created.
Facts- The assessee is a company engaged in the business of trading in ophthalmic lenses, optical matters and processing of semi-finished ophthalmic lenses. The case was selected for scrutiny and the statutory notices were duly served on the assessee. Since the assessee had international transactions with its AE, a reference was made to the Transfer Pricing Officer (TPO) in order to determine the arm’s length price of the international transaction the assessee had with its AE.
TPO passed an order u/s. 92CA of the Income Tax Act, 1961 (the Act) proposing a TP adjustment of Rs. 49,45,49,732/-. AO while passing the draft assessment order, besides the TP adjustments also made a disallowance u/s. 14A to the tune of Rs. 4,96,73,157/- and also disallowance of provision for inventory written off due to obsolete/bad stock Rs.1,72,98,009/-and disallowance of interest written off on OG debtors of Rs. 9,66,05,046/-.
AO while passing the order giving effect to the directions of the Tribunal gave relief to the assessee towards TP adjustments and the disallowance made u/s. 14A and sustained the disallowance made towards provision for inventory written off and write off of interest on OG debtors.
