2019 (2) TMI 1414 - AT - Income Tax

Tribunal allows assessee's appeal in ITA No.1947/Ahd/2015 for various grounds. Revenue's appeal in ITA No.1909/Ahd/2015 dismissed.

The DCIT, Circe-8, Ahmedabad Versus Schutz Disman Biotech Ltd.

The DCIT, Circe-8, Ahmedabad Versus Schutz Disman Biotech Ltd. - TMI Issues Involved:1. Disallowance of late payment of employees' contribution towards superannuation fund.2. Set-off of brought forward losses/unabsorbed depreciation.3. Addition of prior period income and disallowance of prior period expenses.4. Non-allowance of MAT credit.5. Transfer pricing adjustments.6. Deduction u/s 10B on foreign exchange gain.7. Deduction u/s 10B on revised gross total income.8. Addition u/s 69 of the Act.Issue-wise Detailed Analysis:1. Disallowance of Late Payment of Employees' Contribution Towards Superannuation Fund:The assessee's appeal regarding the disallowance of Rs. 38,565/- for late payment of employees' contribution towards the superannuation fund was addressed. The Tribunal noted that the issue is covered against the assessee by the Hon'ble Gujarat High Court in CIT vs. GSTRC. However, the Tribunal also referenced the jurisdictional Tribunal's decision in Suzlon Energy Ltd. vs. DCIT, suggesting that the due date for depositing the contribution should be considered from the payment date, not the due date. Consequently, the matter was restored to the AO for fresh adjudication.2. Set-off of Brought Forward Losses/Unabsorbed Depreciation:The assessee's claim for set-off of brought forward losses/unabsorbed depreciation amounting to Rs. 11,02,365/- was initially disallowed by the AO due to the absence of such losses in previous orders. The Tribunal directed the AO to re-examine the matter, considering the assessee's submission that there were brought forward losses/unabsorbed depreciation to be set off against the current year's income.3. Addition of Prior Period Income and Disallowance of Prior Period Expenses:The Tribunal addressed the addition of prior period income of Rs. 4,29,490/- and the disallowance of prior period expenses of Rs. 18,79,653/-. It was noted that the assessee had shown prior period income of Rs. 3,76,358/- and incurred prior period expenses. The Tribunal directed the AO to allow the set-off of prior period expenses against prior period income, following the precedent set in DCIT vs. Dishman Pharmaceuticals & Chemicals.4. Non-allowance of MAT Credit:The AO disallowed MAT credit of Rs. 17,26,221/- claimed by the assessee. The Tribunal noted a mismatch between the AO's findings and the assessee's submissions. The Tribunal directed the AO to re-examine the matter and allow the MAT credit as per the provisions of section 115JAA of the Act.5. Transfer Pricing Adjustments:The Tribunal addressed the assessee's challenge against the upward transfer pricing adjustment of Rs. 2,33,75,788/-. The Tribunal upheld the application of the turnover filter within the range of 50% of the assessee's turnover, following the precedent set in the assessee's own case for earlier years. The Tribunal directed the AO/TPO to select comparable companies within this range and make suitable adjustments.6. Deduction u/s 10B on Foreign Exchange Gain:The Tribunal addressed the disallowance of deduction u/s 10B on foreign exchange gain of Rs. 19,02,690/-. Following the precedent set in ITO vs. Banyan Chemicals P.Ltd., the Tribunal held that the foreign exchange gain directly related to exports is eligible for deduction u/s 10B and directed the AO to allow the deduction.7. Deduction u/s 10B on Revised Gross Total Income:The Tribunal noted that any disallowances made in respect of the eligible unit/undertaking should enhance the deduction claimed u/s 10B. Following CBDT Circular No.37 of 2016, the Tribunal directed the AO to enhance the deduction u/s 10B by the amount of disallowances made.8. Addition u/s 69 of the Act:The Tribunal addressed the Revenue's appeal against the deletion of addition u/s 69 amounting to Rs. 2,20,10,405/-. Following the precedent set in the assessee's own case for earlier years, the Tribunal upheld the deletion of the addition, noting that the issue had been consistently decided in favor of the assessee by the Tribunal and the Hon'ble Gujarat High Court.Conclusion:- Assessee's appeal in ITA No.1947/Ahd/2015 was allowed for statistical purposes for grounds 1, 2, 7, and 8, while grounds 3 to 6, 9 to 16, and 17, 18 were allowed.- Revenue's appeal in ITA No.1909/Ahd/2015 was dismissed.