TaxTMI 
TaxTMI 
2012 (12) TMI 574
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....pital expenditure." 2.1.1 At the very outset, it was submitted by the Ld. A.R. that this issue is covered in favour of the assessee by the tribunal order in assessee's own case for the assessment year 2002-03, copy of which is available on page 485 of the paper book and the relevant para of the tribunal order is para 8.4. He also submitted that this issue is also covered in favour of the assessee by the judgement of Hon'ble Gujarat High Court rendered in the case of Sun Pharmaceutical Ind. Ltd. Vs DCIT 24 DTR 262. 2.1.2 Ld. D.R. supported the orders of authorities below. 2.1.3 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. Since this issue is squarely covered in favour of the assessee by the tribunal order in assessee's own case for the assessment year 2002-03, the disallowance made by the A.O. and confirmed by Ld. CIT(A) cannot be sustained and hence, we delete the same. This ground of the assessee is allowed. 2.2 Ground No.3 is as under: "3. The Learned CIT(A) erred in fact and in law in confirming the action of the AO in making ad hoc disallowance of Rs. 84,908/- being 10% of....
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....assessee by the tribunal order in assessee's own case for the assessment year 2002-03 and the relevant para of the Tribunal order is para 13.4. Accordingly, this part of this ground is rejected. 2.4.2 He further submitted that the 2nd aspect of the matter is regarding the income of the assessee on account of insurance claim of Rs.8,13,129/-. He submitted that this aspect of the matter is covered in favour of the assessee by the decision of Special bench of the Tribunal rendered in the case of Nirma Industries Ltd. Vs ACIT as reported in 295 ITR 199 (Ahd.)(AT). Ld. D.R. could not point out any difference in facts in the present case and in the case of Nirma Industries Ltd.(supra). Hence, by respectfully following this decision of Special bench of the Tribunal, this aspect of the matter is decided in favour of the assessee. 2.4.3 He further submitted that the 3rd aspect of the matter is regarding income of the assessee on account of discount received of Rs.13,03,545/-. He submitted that it is reduction in purchase price and not in the nature of income and this aspect of the matter is covered in favour of the assessee by the same Tribunal order in assessee's own case for the assessm....
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....tors. It was stated by the assessee that free cell scheme was given to the distributors on the basis of the performance. The assessee company has submitted details of free ceils given to its distributor M/s Lakhanpal P. Ltd. M/s Lakhanpa! P. Ltd is also an associate concern covered u/s 40A(2)(b) of the Act. On perusal of replies received from M/s Lakhanpal P. Ltd does not take these free cells received under the scheme of free cells in their stock register and ail the free ceils are passed on to their stockist on pro-rata basis. It was stated by the Assessing Officer that the assessee has not submitted evidences relating to monitoring of the free ceils given to M/s Lakhanpal P. Ltd being a persons covered u/s 40A(2)(b) though free cells given to other distributors to pass on to the respective stockists are proved by these parties. Therefore, free cells given to M/s Lakhanpal P. Ltd numbering 71,01,456 valuing Rs.3,00,39,158/- on the basis of average sale cost of cells amounting to 4.234 per cell was disallowed by the Assessing Officer and added to the total income." 2.5.1 Being aggrieved, the assessee carried the matter in appeal before Ld. CIT(A) but without success and now, the ....
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..... Ltd. stated that they had not taken free cells in the stock although passed on the same to the stokists. He has also noted in the same part that as per the circular issued by the assessee on 31.12.2002, for the claim for the month of Jan 2003, it was stated that the free cells scheme is on the basis of sales at the point of stokist and, therefore, details of free cells passed on to various stokists is necessary to determine whether free cells were actually passed on or not. Regarding this argument of the assessee that distribution of free cells is by way of quantity discount and, therefore, the same is not covered u/s 40A(2b), it was decided by Ld. CIT(A) that the assessee has claimed costs in respect of distribution of free cells in the P & L account and, therefore, it amounts to claim of expenses. Now, we examine the applicability of various judgements cited by the assessee in the facts of various cases as noted above. - The first decision cited by the Ld. A.R. is the Tribunal decision rendered in the case of EWAC Alloys Ltd. Vs DCIT (supra). The facts of this case are that the terms and conditions of the agreement between the assessee and LT were approved by the Government of....
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....ing agent for bidies on payment of commission and it was the case of the revenue that apart from paying the commission to this sole selling agent, bidies sold to him were at less than market price. Under these facts, it was held that profit earned by the selling agent by sale of bidies is not additional commission and the expenditure incurred by the assessee. In the present case, this is not the case of the revenue that the sale price charged by the assessee is lower than the market rates and hence, this judgement is also not applicable in the present case. - Reliance was also placed on the tribunal decision rendered in the case of Vikshara Trading & Investment (P) Ltd VS DCIT (supra). We find that this judgement is also not applicable in the present case because the facts are different. In that case, the assessee purchased export quality detergent supplied by M/s. Green Products, one of the sister concerns of the assessee company and necessary evidence were filed before the A.O. but the authorities mistook the goods of a local/inferior quality of detergent supplied and compared the prices. Since the facts are different to that of the present case, this judgement is also not appli....
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....erfere in the order of Ld. CIT(A) on this issue. These grounds are rejected. 2.6 Grounds No.8, 9, 9.1, 9.2 and 9.3 are connected with disallowance of royalty of Rs.4,45,53,651/- by invoking the provisions of Section 40A(2b) of the Income tax Act, 1961. 2.6.1 It was submitted by the Ld. A.R. that the TPO has made addition on account of payment of royalty on the ground that the assessee did not provide details of cost of development of technology by the separate enterprise and the information relating to payment of royalty by other group companies. He further submitted that this matter may be restored back to the file of the TPO for afresh decision. Ld. D.R. supported the orders of authorities below. 2.6.2 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. We find that this is the admitted position of facts that various details called for by the TPO were not submitted by the assessee before him. Ld. CIT(A) has also noted that the relevant information asked for by TPO were not submitted by the assessee before T.P.O. but he has not mentioned anything on this aspect that the information called for by the TPO....
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.... available in the file of Ld. CIT(A) but no such attempt has been made by the assessee. Under these facts, we do not find that any case has been made out by the Ld. A.R. for restoring the matter back to the file of Ld. CIT(A). Additional evidence filed before us are not admitted by us because the same is not in compliance with the relevant Tribunal Rules 1963 as mentioned above and therefore, we do not find any reason to interfere in the order of Ld. CIT(A) on his issue because the claim of the assessee was rejected by TPO on this basis that the required evidences were not produced before him and, therefore the order of TPO/A.O. was confirmed by Ld. CIT(A) on this basis that TPO has rightly asked for these documents and since the same were not furnished before him, disallowance was rightly made by him because it is the onus of the assessee to prove that the transactions are at ALP and if the assessee is not able to prove the same, there is no reason for not making the adjustment. Before us also, apart from making these submissions that necessary documents were filed before Ld. CIT(A), no other argument is made to justify interference in the order of Ld. CIT(A) and we have already s....
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....ame as ground No.8 of the assessee's appeal for the assessment year 2002-03 and in that year, this issue was decided against the assessee as per para 12 of the Tribunal order and accordingly, in the present year also, this issue is decided against the assessee. Ground No.11 of the assessee is rejected. 2.9 Ground No.11.1 is as under: "11.1 The learned CIT(A) erred in fact and in law in confirming action of the AO in holding that gross amount of interest and other income is required to be excluded from the profits for the purpose of computing deduction u/s. 80HHC and no deduction should be granted for expenses incurred for earning the said income." 2.9.1 It was submitted by the Ld. A.R. that this issue is covered in favour of the assessee by the decision of Hon'ble Supreme Court rendered in the case of ACG Associated Capsules Pvt. Ltd. Vs CIT 247 CTR 372 (S.C.), wherein netting is allowed. He further submitted that this issue may be restored to the file of the A.O. for a fresh decision regarding netting in the light of this judgment of Hon'ble Apex Court. Ld. D.R. supported the orders of authorities below. 2.9.2 We have considered the rival submissions, peruse....
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....s issue was decided against the assessee by the Tribunal vide para 10 of the tribunal order for the assessment year 1998-99. Accordingly, in the present year also, all these grounds are rejected. 2.12 In the result, this appeal of the assessee is partly allowed. 3. Now, we take up the revenue's appeal for the assessment year 2003-04 in I.T.A.No. 317/Ahd/2009. 3.1 Ground No.1 is as under: "1. On the facts and in the circumstances of the case, the learned CIT(A) erred in directing to allow the reduction u/s 80IB amounting to Rs.1,30,09,683/- overlooking the fact that the assessee failed to file mandatory form No. 10CCB with the return of income which was in violation of provisions of section 80IB(13) r.w.s. 80IA(7)." 3.1.1 Ld. D.R. supported the assessment order whereas the Ld. A.R. supported the order of Ld. CIT(A). He also submitted that this issue was decided in favour of the assessee by the tribunal in assessee's own case for the assessment year 1998-99 and in this regard, he drawn our attention to para 7 of this tribunal order. He further submitted that it is a procedural lapse and the disallowance cannot be made on this ground. 3.1.2 We have considered ....
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....the circumstances of the case, the learned CIT(A) erred in directing the A.O not to reduce interest on overdue customers at Rs.45,92,754/- and on staff loan at Rs.28,261/- in the computation of eligible profit for arriving at the deduction u/s 80IB overlooking the ratio laid down by Apex Court in Sterling Foods Ltd 237 ITR 579 (SC)." 3.2.1 It was submitted by the Ld. A.R. that this issue is now covered in favour of the assessee by the judgement of Hon'ble Gujarat High Court rendered in the case of Nirma Industries Ltd. as reported in 283 ITR 402 and regarding interest on staff loan of Rs.28,261/-, it was submitted that this issue is not pressed and may be decided in favour of the revenue. Ld. D.R. supported the assessment order. 3.2.2 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below and the judgement of Hon'ble Gujarat High Court cited by the Ld. A.R. We find that there are two types of interest income covered in this ground of the revenue. One is overdue interest on customers of Rs.45,97,254/- and interest from staff loan of Rs.28,261/-. As per the A.O., both these amounts cannot be included for the pu....
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....r income and alternative contention is regarding granting of netting. Consequential issue has been raised by the revenue also in its appeal for this year as per which it is the claim of the revenue that deduction u/s 80-IB is not allowable because Form 10CCB was not filed along with the return of income or in the course of assessment proceedings. But when we examined the assessment order para 14 & 15 where this issue has been decided by the A.O., we find that there is no mention regarding this aspect that the assessee has not submitted Form 10CCB along with the return of income for claming deduction u/s 80-IB of the Income tax Act, 1961. In fact, the A.O. has made disallowance on this basis that it was held in earlier years that no new industrial undertaking has come into existence and it was an expansion of the existing unit and, therefore, the deduction u/s 80-IB is not allowable. On this aspect, the Tribunal decision in assessment year 1998-99 i.e. the 1st year is in favour of the assessee and hence, this objection of the A.O. is not valid and, therefore, we have to examine the issue raised by the assessee on merits. As per Annexure 1 submitted by the Ld. A.R. along with the cha....
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....t and in law in confirming action of the AO in holding that gross amount of interest and other income is required to be excluded from the profits for the purpose of computing deduction u/s. 80HHC and no deduction should be granted for expenses incurred for earning the said income. 9. The learned CIT(A) erred in fact and in law in confirming action of the AO in allocating export expenses of Rs. 14,10,000/- in proportion of export turnover of trading goods to export turnover of manufactured goods, for the purpose of computing deduction u/s. 80HHC of the Act. 10. The learned CIT(A) erred in fact and in law in confirming action of the AO in allocating indirect expenses of Rs. 30,86,947/- instead of indirect expenses of Rs. 1,40,249/- to export of trading goods as done by the appellant, for the purpose of computing deduction u/s. 80HHC of the Act. 10.1 The learned CIT(A) erred in fact and in law in confirming action of the AO in allocating indirect costs of sales depots and Pithampur units despite the fact that entire export of trading goods have taken place from Baroda. 10.2 Without prejudice to above, the ....
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....onceded by the Ld. A.R. that these issues are covered against the assessee by the tribunal decision in assessment year 1998-99 and the relevant para of the tribunal order is para 10. Accordingly, in this year also, this issue is decided against the assessee and these grounds of the assessee are rejected. 4.6 In the result, appeal of the assessee is partly allowed. 5. Now, we take up the Revenue's appeal for the assessment year 2004-05 in I.T.A.No. 318/Ahd/2009. 5.1 Ground No.1 is as under: "1. On the facts and in the circumstances of the case, the learned CIT(A) I erred in directing to allow the reduction u/s 80IB amounting to Rs.90,07,020/- overlooking the fact that the assessee failed to file the mandatory form No. 10CCB with the return of income which was in violation of provisions of section 80IB(13) r.w.s. 80IA(7)." 5.1.1 Ld. D.R. supported the assessment order whereas the Ld. A.R. supported the order of Ld. CIT(A). 5.1.2 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. We find that the only objection of the Revenue as per this ground is regarding non filing of Form 10CCB fo....