TaxTMI 
TaxTMI 
2009 (8) TMI 1203
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....mation? 4. On the facts and in law, whether the Ld. CIT (A) exceeded is jurisdiction in going beyond the subject matter of the assessment, rendering his order illegal and liable to be set aside? 5. On the facts and in law, whether the Ld. CIT (A) was bound to follow the Hon'ble ITAT order dated 19.10.07 passed in the appellant's own case in IT No.4530/Del/03 along with CO No.119(Del)/06 for A.Y. 2000-01 and ITA No.3283(Del)/04 & ITA No. 3901(Del)/04 for A.Y. 2001- 02, which had already decided the said issue of transfer o profit, in appellant's favour at page 20 para 3.3 and had become final as no appeal was filed against it by the department? 6. On the facts and in law, whether, considering the fact that the department not having filed an appeal to the high court against the aforesaid ITAT order, thus, rendering finality to the said order, the CIT (A) was justified in doing indirectly what he could not do directly, i.e., shift the profit of the two units on estimation? 7. That the appellant craves leave to add, amend, alter, substitute, delete or withdraw any of the grounds of appeal on or before the date of disposal of the appeal. 2. The ass....
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....; ------------------- 23,36,16,877 Excise duty in respect of stock transferred to Kala Amb Unit 6,65,52,250 x 2,76,76,415/23,36,16,877 Further, it was also noticed from the working of overhead expenses that the following expenses were not considered in the working of overheads:- i) Director's remun....
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....ather make the Assessing Officer aware of the shortcomings in the order and he may choose to correct or overcome such shortcomings in future proceedings. Therefore, he observed that the order of ITAT in earlier years is not to be completely followed. It is in this manner the Ld. CIT (A) has dealt with such contention of the assessee. In para 5.8 Ld. CIT (A) observed that even the method suggested by Addl. CIT in his remand report is not correct because expenses under a few heads cannot be allocated to different unit without due examination of vouchers, etc. Ld. CIT (A) has deleted the addition regarding excise duty. However, taking note of the fact that net profit ratio of Faridabad unit being 0.55% as against Kala Amb unit of about 16%, Ld. CIT (A) has observed that the assessee has not been showing correct position of profit in the respective units to avail higher deduction u/s 80-IC as one of the units of the assessee was not eligible for deduction u/s 80-IC. He has made various annexures to his order to show that the assessee has been claiming higher profit in the exempted unit and thereby the Ld. CIT (A) has enhanced the addition to a sum of Rs. 95,00,347/- ignoring the ITAT d....
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....ncement is not warranted at all and that the same is against the earlier order of ITAT and, hence, should be deleted. 5. On the other hand, relying on the order of the Ld. CIT (A) it was vehemently pleaded by Ld. DR that the assessee has been showing excess profit in its Kala Amb unit just to claim higher deduction and, thus, the Ld. CIT (A) was right in observing that the same needs enhancement and he has rightly made the addition of Rs. 95,00,347/- on this issue and his order should be upheld. 6. We have carefully considered the rival submissions in the light of the material placed on record. Copy of the remand report submitted by the Assessing Officer is placed at page 83 to 86 of the paper book. In para 2 the Assessing Officer has mentioned that adjustments regarding excise duty was made as assessee could not explain the basis of allocation of excise duty during the course of assessment proceedings. As a result of poor representation of facts before the Assessing Officer, it was concluded by the Assessing Officer that the goods transferred were net of excise and, in these circumstances, excise duty was added to the cost of goods. Ld. CIT (A) has also accepted such facts a....
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.... books of account or in respect of debiting expenditure of respective units in their accounts. The learned CIT(A) came to the conclusion that the A.O. nowhere pointed out any discrepancy in the books of account or the method of accounting, which has been used consistently from year to year. The books have been maintained in consonance with the excise records and as per standard laid down under the Excise Act. The Assessing Officer has not given any definite finding in the matter. Thus, it was held that he erred in reducing the profit of Himachal Pradesh unit by an amount of Rs. 7,27,311/-. 3.1 Before us, the learned DR referred to the discussion on page 9 of the assessment order, where it is pointed out that the excess profits of Himachal Pradesh unit will have to be transferred to Faridabad unit in the proportion which the material consumed carries to the stock received on transfer from Faridabad unit. In view thereof, Rs. 7,27,311/- were reduced from the profits of Himachal Pradesh unit and this amount were taken as profits of Faridabad unit. 3.2 In reply, the learned counsel explained that the assessee had transferred goods of the value of Rs. 1,25,46,983/- fro....
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....ods or services from other connected businesses to the business of the eligible unit to take the value at arm's length principle. It was his case that goods have been transferred from Faridabad unit to Himachal Pradesh unit at arm's length principle by employing cost plus 15% basis, as provided in rule 8 of the Central Excise Rules, which is nothing but fair market value of the goods transferred by Faridabad unit to Himachal Pradesh unit. Reliance was placed on the order of Hon'ble ITAT, Delhi Bench "B", in the case of National Thermal Power Corporation Ltd. Vs.Addl. CIT, (2004) 91 ITD 101, in which it was pointed out that the provisions of sections 80-IA(8) and 80-IA(9) could be applied if it was established that the gas transferred to the steam unit was not done at the market value on the date of its transfer. Market value will be the price which the goods will fetch in the open market on a hypothetical sale. Nothing was brought on record to show that there was any market for sale of waste hot gas in India. There was also no evidence that such gas could be packaged or transported. Such gas, if not used, has to be discharged in the open atmosphere. It may be that a market may ....
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....e of convenience: - "3.3. Now I come to the argument that this issue is covered by earlier appeal decisions of CIT (A) and ITAT. I have seen the orders of CIT (A) and also the order dtd. 19/10/07 of ITAT. First of all it may be mentioned that a decision on any issue is given on the basis of facts gathered as a result of enquiries/investigation. A person may have in fact committed some crime, but conviction can be made only on the basis of evidence produced before the court by the prosecution. Similarly even if the facts of earlier years are similar, it cannot be said that since addition/disallowance made in those years was deleted no such disallowance can be made in subsequent years. This deletion of some addition by higher judicial authority may rather make the A.O. aware of shortcomings in the order and he may choose to correct or overcome such shortcomings in future proceedings. In fact this has been clearly mentioned by the ITAT in first line of para 3.3 on page 19. Te issue was regarding cost of transferred goods. The ITT mentioned that A.O. has not made out proper case in respect of reduction of Kala Amb (Himachal Pradesh unit) profit. This has been repeated in last ....
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....s raised for Faridabad unit. Sixthly; repair and maintenance charges of Faridabad units were higher at Rs. 25,25,795/- as compared to Kala Amb unit which are 6,63,224/-. Referring to these reasons of low profit in Faridabad unit it was submitted that various letters were filed during the course of assessment proceedings in which the detailed explanations were given regarding lower net profit in Faridabad unit and the same may also be referred. It was submitted that duly audited separate books of account for both the units are maintained which were produced before AO and were also accepted by him. Method of valuation of stock was also explained to the AO who has rightly understood and accepted the same and the minor adjustment has been made in respect of some expenses to work out the percentage of overhead to be added to the cost of material. This explanation of the assessee is recorded in para 4.7 of the impugned order of CIT(A). However, ld. CIT(A) did not give much weight to such submission of the assessee and he observed that there were certain other expenses just like annual maintenance charges, research and development facilities etc. which were not taken into account while co....