TaxTMI 
TaxTMI 
2014 (2) TMI 936
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.... surmises. 4. The learned lower authorities have grossly erred in disallowing expenses of Rs.1,106,715/- incurred at Dehradun Unit. Reasons assigned for impugned disallowance are wrong and contrary to the provisions of law. 5. The learned lower authorities have grossly erred in adding a sum of Rs.349,525/- by recourse to Sec.14A of the I.T. Act 1961, even though the said provisions are not attracted at all. The impugned disallowance has been made without complying with the requirements of said section read with the decision of jurisdictional High Court. 6.The learned Assessing Officer has grossly erred in not allowing the set off of brought forward unabsorbed depreciation/business loss. The reasons assigned for the said refusal are wrong and contrary to the provisions of law." 3. ITA NO.1063/M/2011, Departmental appeal for A.Y.2007-08. "1.On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.35,04,640/- which represents the proportionate disallowance of deduction claimed u/s.10B overlooking the finding of the Assessing Officer that only the profits derived with effect from 22.06.2006 were eligible for the exemption, b....
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....for deduction u/s 1 OA/1 OB of the IT Act, 1961. 2. Reasons given by the CIT Appeals for confirming that income of Rs. 53,422/- received on account of Miscellaneous Receipts does not qualify for deduction uls 1 OA/1 OB of the IT Act, 1961 are wrong, insufficient and contrary to the facts and evidences on record V. Disallowance of Commission & brokerage - Rs. 8,02,536/- 1.In the facts and circumstances of the case and in law, the learned CIT Appeals erred in confirming the disallowance of Rs. 8,02,536/- on account of Commission & Brokerage being the amount not qualifying for deduction u/s 1 OA/1 OB of the IT Act, 1961. 2 Reasons given by the CIT Appeals for confirming the disallowance of Rs. 8,02,536/- on account of Commission & Brokerage being the amount not qualifying for deduction u/s 1 OA/1 OB of the IT Act, 1961 are wrong, insufficient and contrary to the facts and evidences on record VI. Disallowance of Exchange variation gain - Rs. 4,93,202/- 1. In the facts and circumstances of the case and in law, the learned CIT Appeals erred in confirming the disallowance of Rs. 4,93,202/- on account of Exchange Variation Gain being the amount not qualifying for deduction u/s 1 OA/1....
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....Y.2007-08 "1.On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance u/s 14A of Rs. 4,00,104 relying on the assessee's ground, that the said amount of disallowance has been added to the computation/return of income, whereas the assessee had not added in back in the computation/return of income. The same is enclosed herewith as Annexured-A. All these appeals were argued together by both the parties, hence for the sake of convenience, these appeals are disposed of by this common order. ITA No.59/M/2011 6. Ground no. 1 is general in nature and in ground nos. 2 and 3 the assessee is aggrieved by the exclusion of an amount of Rs.83,24,090/- out of a total exclusion of Rs. 89,94,622/- from eligible amount for deduction u/s.10A and 10B. The details of aggregate amount of Rs. 89,94,622/- is given in para 5of the assessment order which is as read under: (Rs.) Sale of Scrap 96,789 Excise Refund 677,186 Sale Tax Refund 134,324 ECGC Claim Received 287,434 Dividend Received 673,532 Export Benefits (DEPB) 453,652 Interest on F.D./Margin Money 681,665 (Tax deducted at source Rs.143593/previousyear Rs.37,491/-) Mis....
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....ms other than which are not pressed by the assessee, with a direction to give an appropriate opportunity to the assessee to place all the facts and material on record and thereafter to re-adjudicate the same as per provisions of law. We direct accordingly. Ground no.2 and 3 are considered to be partly allowed for statistical purposes in the manner aforesaid. 10. In ground no.4 the assessee is aggrieved by the sustained addition of Rs. 11,06,715/- in respect of Dehradun Unit. It was further noticed that there were no sales or any other revenue arising out of Dehradun Unit. Therefore, AO observed that the business of Dehradun Unit did not commence and those expenses are "Pre-commencement Expenses". Accordingly, he disallowed this expenditure and the disallowance was agitated in appeal filed before learned CIT(A) who has discussed this issue in para 8 to 10. Before CIT(A), it was submitted that assessee is already in the business of manufacturing of pharma goods and setting up of a plant at Dehradun which is merely expansion of its existing business and is not starting of a new or separate business. Therefore, it was pleaded that expenses should be allowed. On these submissions of th....
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.... that according to the decision of Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. Vs. DCIT [2010] 234 CTR(Bom) 1], Rule 8D could not be applied. Learned CIT(A), though has accepted this submission of the assessee but has sustained the disallowance. It is the submission of the learned AR that he has no objection if the matter is restored back to the file of AO with a direction to re- adjudicate this issue without application of rule 8D. 14. In this view of the situation, after hearing both the parties, we restore this issue to the file of AO for re-adjudication in the light of aforesaid decision of Hon'ble High Court in the case of Godrej & Boyce Mfg. Co. Ltd. Vs. DCIT (supra), as admittedly the disallowance cannot be made as per rule 8D as the same not cannot be applied to the impugned assessment year. We direct accordingly, this ground is considered to be allowed for statistical purpose. 15. In ground no.6, the assessee is seeking set off of brought forward/business loss. It was submitted that this issue is now settled by he Tribunal in assessee's own case for A.Y.2005-06 and reference was made to the order dated 18th June, 2013 passed in ITA No.6139/M/201....
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....AT Bangalore Bench's decision was upheld by the Hon'ble Karnataka High Court. 6. We have carefully considered the rival submission and perused the record. In the light of the decision of the Hon'ble Bombay High Court cited supra we are of the view that the deduction under section 10A has to be computed before setting off the loss of earlier years or of a different unit. Since the view taken by the learned CIT(A) is in conformity with the view taken by the Hon'ble jurisdictional High Court, we do not find any infirmity in the said order. Therefore, ground No.1 & 2 are rejected." 16. In this situation, after hearing both the parties, we restore this issue to the file of AO with a direction to adopt a similar computation as he will adopt for A.Y.2005-06 while giving effect to the aforementioned order of the Tribunal. We direct accordingly. For statistical purpose, this ground is considered as allowed. 17. In the result, the appeal is partly allowed in the manner as indicated above. 18. ITA No.1063/M/2011 The only issue raised by the Department in the present appeal is regarding deletion of addition of a sum of Rs.35,04,640/- which represent proportionate disallowance of deduction....
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....any infirmity in the relief granted by Ld. CIT(A). We decline to interfere and this ground of the Revenue is dismissed. 20. Accordingly, the appeal filed by the Revenue is dismissed. ITA No.8703/M/2011 21. For this year also a sum of Rs.80,83,556/- was excluded from eligibility of deduction u/s 10A/10B of the Act. The details as described in the assessment order are as under: "(i) Sale of Scrap Rs.1,44,400/- (ii) Excise Refund Rs. 3,135/- (iii) Dividend Rs.6,25,048/- (iv) Export Benefits (DEPB) Rs.33,34,332/- (v) Interest on fixed deposits/margin money (vi) Interest on I.T.Refund Rs.2,01,475/- (vii) Sundry balance written back Rs.8,34,761/- (viii) Miscellaneous Receipts Rs.8,38,487/- (ix) Commission and brokerage Rs.8,02,536/- (x) Exchange variation gain Rs.4,93,202/- (xi) Notice period salary recovered Rs. 30,158/- (xii) Profit on sale of assets Rs. 84,591/- Total.... Rs.80,83,556/- 22. Similar reasons have been assigned by AO, while excluding the aforementioned amount for the purpose of section 10A/10B as were given in A.Y. 2007-08. However, before Ld. CIT(A) for each items the submissions were made and relevant part of the order of ld. CIT(A) read as under: A. "....
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.... parcel of total income in the computation and so was not claimed while computing deduction u/s.10A and u/s.10B and therefore, the said amount which was added by the Assessing Officer for the purposes of computation u/s.10A and u/s.10B is deleted. The appellant gets relief on this issue. F. Disallowance of sundry balances written off- Rs. 8,34,761/-: I. It was highlighted that it was refund of expenses in earlier years and,therefore, has a direct nexus to export business. The amounts pertaining to Ankleshwar Unit is Rs. 1,68,059/- and Kandla Unit is Rs. 86,635/- and the balance amount does not form part of deduction u/s.1 OA and u/s.1 OB II. In view of the factual position, the amount which can be added back is Rs..2,54,694/- and the balance amount has to be deleted. The appellant getspartial relief on this point. G. Disallowance of miscellaneous receipts - Rs.8,38.487/-: I. It was highlighted that this amount includes amounts received from sale of scrap and that amount is Rs. 7,85,065/-. This amount was already added and not considered for the purposes of section 108. Keeping in view the fact that this amount is already added back, the addition made by the Assessing Officer ta....
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....r has made the addition on account of under valuation of work-in- progress on the ground that work-in-progress was valued at cost including raw-material and excluding labour charges. In this connection, it was submitted that in the past also such additions was made and work-in- progress was enhanced. However by adding the said amount of Rs. 5,88,814/- the Assessing Officer failed to adjust the opening work-in-progress of AY.2007-08. 5.2. I have perused the assessment order and written submissions of the appellant. The Assessing Officer is directed to take opening work-in-progress at the same figure of closing work-in-progress of AY.2007-08 so as to take the at logical end. By not doing so, it was only weakening the addition made in the current year. This Ground of appeal is decided in appellant's favour.* 23. For A.Y. 2008-09 also Ld. AR has submitted a chart which read as under:- 24. Referring to the aforementioned chart, it was submitted by Ld. AR that Ld. CIT(A) has wrongly sustained the addition which are pressed in the chart and to that extent relief should be granted to the assessee. In respect of DEPB issue, he submitted that the deduction was claimed for a sum of....
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....1)(2), VI(1)(2) are being restored back to the file of the AO with a direction to re-adjudicate the same as per our decision given in respect of A.Y.2007-08. Ground No.VIII(1)(2) relating to disallowance of DEPB incentives is covered in favour of assessee by the decision of Tribunal in the case of Arts and Crafts Export vs. ITO(supra) which has been approved by Hon'ble jurisdictional High Court in the case of CIT vs. Arts and Crafts (supra) and this ground is allowed. 28. Ground No.IX(1)(2) is covered in favour of the assessee by the decision of Tribunal in assessee's own case for A.Y.2001-02, where disallowance of Rs.57,55,256/- on account of product registration charges was deleted with the following observations; "2. The first ground relates to deisallowance of Rs.57,55,256/- on account of product registration charges. 3.The assessee had claimed sum of Rs. 57,55,256/- as product registration charges for registration as well as renewal charges for its products paid to US authorities for getting the product registered. The same were disallowed by the Assessing Officer on the ground that the new products would be sold by the assessee not only for one year but in many years as su....
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....which the Tribunal has allowed product registration charges paid for five years as revenue expenditure. Respectfully following the same we allow the product registration charges as claimed by the assessee and the finding of both the lower authorities are vacated. The first ground is allowed." 29. Reference in this record can also be made to the decision of Tribunal dated 25th May, 2006 in ITA No.127/Mum/2005 copy placed on record. The aforementioned decision was subsequently followed by ITAT in respect of assessment year 2002-03 vide order dated 31st August, 2006 in ITA No.2182/Mum/2006 copy of the said order is also placed on record. The relevant observation of Tribunal are as under: "The only issue in this appeal is that according to the revenue expenditure of Rs.46,03,887/- towards product registration charges is capital expenditure whereas according to the assessee, the same is allowable as revenue expenditure. During the course of hearing before us, the Ld. Counsel for the assessee stated that this issue is covered in favour of the assessee and against revenue by the decision of ITAT, 'F' Bench, Mumbai dated 25.5.2006 in the case of assessee in ITA No.127/Mum/2005 for assess....