Tribunal Ruling: Assessee Prevails on Lease Premium, Ad Hoc Disallowances Upheld

M/s PANASONIC ENERGY INDIA CO LTD. (FORMERLY MATSUSHITA LAKHANPAL BATTERY INDIA CO LTD.) Versus ACIT, CIRCLE 4, BARODA

M/s PANASONIC ENERGY INDIA CO LTD. (FORMERLY MATSUSHITA LAKHANPAL BATTERY INDIA CO LTD.) Versus ACIT, CIRCLE 4, BARODA - TMI Issues Involved:
1. Disallowance of amortization of premium paid for land taken on lease.
2. Ad hoc disallowance of miscellaneous and welfare expenses.
3. Deduction claimed under section 80-IB of the Income Tax Act, 1961.
4. Allocation of expenses and computation of deduction under section 80HHC.
5. Disallowance of royalty payment under section 40A(2b).
6. Addition of sale of scrap in total turnover for computing deduction under section 80HHC.
7. Reduction of 90% of certain incomes from business profits for computing deduction under section 80HHC.
8. Allocation of export expenses for computing deduction under section 80HHC.
9. Allocation of indirect expenses for computing deduction under section 80HHC.
10. Non-filing of mandatory Form 10CCB for claiming deduction under section 80-IB.
11. Addition under section 14A for expenditure attributable to exempt income.

Detailed Analysis:

1. Disallowance of Amortization of Premium Paid for Land Taken on Lease:
The Tribunal found that the issue was covered in favor of the assessee by the tribunal order in the assessee's own case for the assessment year 2002-03 and the judgment of the Gujarat High Court in Sun Pharmaceutical Ind. Ltd. vs. DCIT. Thus, the disallowance made by the AO and confirmed by the CIT(A) was deleted.

2. Ad Hoc Disallowance of Miscellaneous and Welfare Expenses:
The Tribunal noted that the issues were covered against the assessee by the tribunal order for the assessment year 2002-03. Consequently, the ad hoc disallowances of Rs. 84,908/- for miscellaneous expenses and Rs. 2,08,999/- for welfare expenses were upheld.

3. Deduction Claimed Under Section 80-IB:
- Interest on Staff Loan: The Tribunal rejected the claim as it was covered against the assessee by the tribunal order for the assessment year 2002-03.
- Insurance Claim: The Tribunal allowed the claim, following the decision of the Special Bench of the Tribunal in Nirma Industries Ltd. vs. ACIT.
- Discount Receipt: The Tribunal allowed the claim, following the tribunal order for the assessment year 2002-03, noting it as a reduction in purchase price and not income.

4. Allocation of Expenses and Computation of Deduction Under Section 80HHC:
- Sale of Scrap: The Tribunal held that the assessee is not eligible for deduction under section 80HHC for sales of scrap but should include it in the formula for computing the deduction.
- Reduction of 90% of Certain Incomes: The Tribunal rejected the assessee's claim, following the tribunal order for the assessment year 2002-03.
- Netting of Interest Income: The Tribunal restored the matter to the AO for fresh consideration in light of the Supreme Court judgment in ACG Associated Capsules Pvt. Ltd. vs. CIT.
- Allocation of Export Expenses: The Tribunal set aside the issue to the AO for verification, following the tribunal order for the assessment year 1998-99.
- Allocation of Indirect Expenses: The Tribunal rejected the assessee's claim, following the tribunal order for the assessment year 1998-99.

5. Disallowance of Royalty Payment Under Section 40A(2b):
The Tribunal rejected the assessee's claim due to the failure to provide necessary details and information to demonstrate that the royalty payment was at arm's length price.

6. Addition of Sale of Scrap in Total Turnover for Computing Deduction Under Section 80HHC:
The Tribunal held that the assessee is not eligible for deduction under section 80HHC for sales of scrap but should include it in the formula for computing the deduction.

7. Reduction of 90% of Certain Incomes from Business Profits for Computing Deduction Under Section 80HHC:
The Tribunal rejected the assessee's claim, following the tribunal order for the assessment year 2002-03.

8. Allocation of Export Expenses for Computing Deduction Under Section 80HHC:
The Tribunal set aside the issue to the AO for verification, following the tribunal order for the assessment year 1998-99.

9. Allocation of Indirect Expenses for Computing Deduction Under Section 80HHC:
The Tribunal rejected the assessee's claim, following the tribunal order for the assessment year 1998-99.

10. Non-Filing of Mandatory Form 10CCB for Claiming Deduction Under Section 80-IB:
The Tribunal upheld the AO's disallowance due to the assessee's failure to submit the mandatory form 10CCB even during the assessment proceedings.

11. Addition Under Section 14A for Expenditure Attributable to Exempt Income:
The Tribunal upheld the CIT(A)'s decision to delete the addition, noting that the AO had made the addition without any discussion in the assessment order.

Conclusion:
Both the appeals of the revenue and the assessee were partly allowed, with specific issues being upheld or remanded for fresh consideration based on the established precedents and the facts of the case.