TaxTMI 
TaxTMI 
2008 (12) TMI 681
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....astur and Co. (P.) Ltd. [2000] 243 ITR 10 and that of the apex court in [1999] 239 ITR 233 (sic) ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal is right in allowing the notional /hypothetical cost for ascer- tainment of purchase price of raw materials for deduction under section 80HH and section 80-I of the Act by ignoring the computa- tion contemplated in the said provisions read with section 80AB of the Act ?" The first two questions raised in this appeal concerning the assessee herein have been answered by this court by its order dated June 25, 2008, passed in I. T. A. No. 499 of 2002 C/W I. T. A. Nos. 501 of 2002, 504 of 2002 and 510 of 2002 since reported in CIT v. Wipro Infotech Ltd. [2010] 323 ITR 151 (Karn)). Having answered the very same questions, the same is not required to be considered once again herein. Hence, question Nos. 1 and 2 are answered in terms of the judgment dated June 25, 2008, passed in I. T. A. No. 499 of 2002 C/W I. T. A. Nos. 501 of 2002, 504 of 2002 and 510 of 2002 (since reported in CIT v. Wipro Infotech Ltd. [2010] 323 ITR 151 (Karn)). Therefore, the present appeal is considered so far as question No.3 is concer....
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....he deduction under section 80HH at 20 per cent. of the eligible profit would be Rs. 56,25,881. Similarly, deduction under section 80-I at 25 per cent. of the eligible profit would be Rs. 70,32,352, Accordingly, deductions were followed (allowed ?). Being aggrieved by the assessment order, the assessee preferred an appeal to the Commissioner of Income-tax (Appeals). The Appellate Com- missioner held that the Assessing Officer was correct in excluding the hypothetical octroi, transportation charges, etc., in working out the market value of the fatty acid. The assessee, thereafter, filed an appeal before the Income-tax Appellate Tribunal. The Appellate Tribunal held that the Assessing Officer was not right in reducing the profits of fatty acid at Amalner by the said sums and the amount should be included as profits derived from the industrial undertakings for the purpose of computation of reduction (deduction ?) under section 80HH and section 80-I of the Income-tax Act. Aggrieved by the said order, the Revenue has filed the present appeal. We have heard Sri M. V. Sheshachala, learned counsel appearing for the Revenue and Sri Rajesh Chander Kumar, learned counsel appearing for th....
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....nt received would be offset by the corresponding additional expenses. Therefore, it cannot be that the sale price is increased by such expenses and the profit can be computed without reckoning the expenses. Furthermore, the Appellate Commissioner requested the authorized representative to produce material to show as to what is the market value of fatty acids so that the same could be adopted to work out the profit. However, the authorized representative was not able to furnish any details. Conse- quently, the Appellate Commissioner concurred with the Assessing Officer and held that the assessee is not correct in including costs of octroi. trans- portation charges, etc., in arriving at the market value of the fatty acids. The Appellate Tribunal addressed itself to the provisions of section 80-I(8) of the Act. It has held that section 80-I(8) of the Income-tax Act requires that only if the consideration recorded in the accounts of the industrial undertaking does not correspond to the market value only then the profit of the undertaking would have to be computed by replacing the market value of such goods. The onus, therefore, is on the Assessing Officer to prove that the tr....
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....section 80-I(8) of the Income-tax Act would arise in a situation where there is an absence of a market as in the present case. Therefore, one would have to hypothetically assume the existence of a market and what goods would be available there or not. For this purpose, the cost of the goods available at the nearest market would have to be reckoned and to that the cost such as transportation, local taxes, etc., has to be added. These inputs would have to be added on to the cost of the goods available at the nearest market. Since there is no market available at the place of the assessee, where it is manufacturing its products the said market could either be next door or miles apart. A hypothetical assumption would have to be made by the Assessing Officer with reference to the cost of the goods as available at the nearest market. The values so arrived at would be the market value of the goods for the purpose of Explanation to section 80-I(8) of the Income-tax Act. Expenses such as transportation, octroi and local taxes are expenses that would be incurred for the purpose of determination of the market value. The cost of the goods plus these expenses would hypothetically be the market v....