AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (2) TMI 449
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....to M/s Haldia Petrochemicals Ltd (HPL) in the facts and circumstances of the case. 2.1. The brief facts of this issue is that the assessee along with other Tata Group Companies were the promoters of M/s Haldia Petrochemicals Ltd (HPL). The ld AO observed that the assessee on one hand had been suffering interest liability on the loans borrowed by it but on the other hand had made interest free advances to HPL and accordingly sought to tax the notional interest income @ 12% on the amounts advanced in the sum of Rs. 989.21 lakhs. The assessee replied that advance was given to HPL during the period that assessee was promoter of HPL prior to commencement of production facilities, along with other Joint Venture Partners. The advance provided to HPL was agreed to be adjusted against the equity contribution and therefore it was agreed that no interest was to be charged on such advance. Subsequently the assessee had decided to withdraw from further participation in the project. However, as HPL was not in a position to repay the money advanced, it was agreed that until commencement of commercial production, HPL would not be compelled to make any refund nor would pay any interest on such adv....
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.... further erred in confirming the action of the Assessing Officer, ignoring the settled principles laid down by the jurisdictional High Court. 1c. That on the facts and in the circumstances of the case, the learned CIT (Appeals) had ignored to consider the submission of the appellant filed during the appeal hearing and while mechanically following the earlier orders, had failed to consider that the loans appearing in the books of the appellant at the time of making the advances, were all paid-off before the beginning of the previous year relevant to the year under appeal." 2.3. The ld AR argued that this issue is covered by the decision of the co-ordinate bench of this tribunal in assessee's own case for the Asst Year 2006-07 in ITA No. 2006/Kol/2013 dated 21.10.2016 wherein the issue was set aside to the file of the ld AO and prayed for the similar direction for this year also. In response to this, the ld DR fairly agreed for the same. 2.4. We have heard the rival submissions. We find that the issue under dispute is covered by the earlier order of this tribunal in assessee's own case as stated supra wherein this tribunal had remanded the issue back to the file of the ld AO to d....
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....hat the issue is covered in favour of the assessee by the decision of the Hon'ble Bombay High Court in the case of CIT vs Bharat Petroleum CorporationLtd 252 ITR 43 (Bom) wherein it has been held that 40A(9) of the Act is not applicable in case the assessee has reimbursed expenses to the club formed for the benefit of the employees. He also placed reliance on the decision of this Tribunal in the case of DCIT vs Chloride Industries Ltd reported in 76 ITD 1 (Kol). 16. On the other hand , the Ld DR relied on the orders of the lower authorities. 17. We have heard the rival submissions, perused the materials available on record and the case laws cited by the Ld. Counsel for the assessee. We find that the facts are not in dispute. We, therefore, find merit in the plea of the Ld. Counsel for the assessee that the Tribunal, Kolkata Bench in the case DCIT vs Chloride Industries Ltd (Supra) has deleted the addition by observing as under: "The Commissioner (Appeals) had deleted the said addition by following the Tribunal's order in the case of DCIT vs APE Belliss India Ltd (IT Appeal Nos. 527 to 531 (Cal) of 1989) . The Tribunal observed that section 40A(9) is not applicable because thi....
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....e only when there is positive income of the business after such aggregation. The ld AO observed that obviously, whether net income of business of an assessee is positive or negative cannot be determined unless the trading results of all the units are aggregated. Accordingly, the ld AO determined the deduction eligible u/s 80HHC of the Act at Rs. 2,27,79,937/-. This action of the ld AO was upheld by the ld CITA. Aggrieved, the assessee is in appeal before us on the following grounds :- "3a That on the facts and in the circumstances of the case, the CIT (A) erred in holding that the deduction under section 80HHC of the Act allowable on a global basis, by wrongly relying on the judgment of the Hon'ble Supreme Court (266 ITR 521), which has no relevance in the present context. 3b That on the facts and in the circumstances of the case Ld CIT(A) should have held that the deductions u/s 80HHC must have been computed based on individual product basis as claimed by the appellant." 4.2. The ld AR fairly agreed that this issue is covered against assessee by the decision of the Hon'ble Apex Court relied upon by the ld AO supra. 4.3. We have heard the rival submissions. We find that a....
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.... Sales with AE to compare the margins in this segment with the margins of the Auction Sub-Segment of the non AE segment, the assessee replied that the said comparison would not be appropriate given the fact that there is huge difference in the nature of business and the functions performed in relation to carrying out of such business in the Auction and Private Sales segment. It was explained that the Auction business of the assessee was in the nature of spot contract when the purchase was made and in the nature of a forward contract when the sale was effected into. The assessee tried to explain the flow of transactions under Auction sub-segment as below:- (a) The assessee sends a broad brush statement along with samples to its AEs for approval. (b) The list of teas in the Auction Market are forwarded to the AEs. (c) The offer list is returned back by the AEs with an approval for the teas and the price negotiated with the AE. (d) The assessee has a price range within which it has to sell to the AE. (e) The assessee would put into application its procuring skills and weightage in commands the market to procure the teas at the lowest cost and sell at the price negotiated. 5....
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....rect Costs) with the same margins of auction purchases with third parties by stating that the nature of functions performed in auction business and in private business are totally distinct and separate and even the risks assumed in each category are distinct. Not satisfied with the replies of the assessee, the ld TPO passed an order dated 26.12.2006 u/s 92CA(3) of the Act recomputing the ALP of the assessee's international transactions by making an adjustment of Rs. 17,68,000/- was made and which was added to the total income of the assessee by the ld AO. 5.3. Before the ld CITA, the assessee reiterated the submissions made before the ld TPO / ld AO. The ld CITA held that the two businesses i.e Auction and Private Business are similar and accordingly sustained the TP adjustment made by the ld TPO. Aggrieved, the assessee is in appeal before us on the following grounds:- 4a. That on the facts and in the circumstances of the case, the CIT(A) erred in confirming disallowance u/s 92 of the Act. 4b. That on the facts and circumstances of the case, the CIT(A) had erred in not considering the 5% tolerance benefit as allowed under the proviso to section 92C(2) of the Act. 5.4. We hav....
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.... the Auction Business, it is only in the nature of a spot contract when the purchase is made and in the nature of a forward contract when the sale is effected into. We find that in this business, the assessee had discharged functions in relation to auction business and also bears the risk in relation to it. The price risk in relation to the sale to its AE and as well as the price risk in relation to the cost of purchase from the third party lies with the assessee. Thus the assessee had performed the functions only of a trader as could be evident from the sequence of transactions enumerated supra. We find that in this Auction Business, a price range of tea is negotiated with the AE instead of a single price. The assessee then explores the auction market and put into application its procuring skills so as to obtain teas at a cost which it can sell within the price range negotiated and make profits thereon. The assessee enters into forward contract while selling teas but enters into spot contract while purchasing, hence , bearing price risk for the cost of purchase. 5.4.3. We are in agreement with the arguments advanced by the ld AR that the private business of the assessee is only i....
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....s as stated above. 6. In the result, the appeal of the assessee in ITA No. 511/Kol/2010 is partly allowed for statistical purposes. ITA No. 2105/Kol/2010 - Asst Year 2004-05 - Revenue Appeal This appeal of revenue is delayed by 43 days and condonation petition has been filed by the revenue. After perusing the condonation petition and the concession given by the Ld. AR, we condone the delay and admit the appeal for hearing. 7. The first issue to be decided in this appeal is as to whether the ld CITA is justified in deleting the disallowance of expenditure incurred in the sum of Rs. 3,69,88,000/- on payment of cess on green leaf from composite income in the facts and circumstances of the case. 7.1. The brief facts of this issue is that the ld AO observed that the assessee had debited a sum of Rs. 369.88 lakhs under the head 'Cess on green leaf' which were paid to Governments of Assam and West Bengal. The ld AO placed reliance on the decision of the Hon'ble Gauhati High Court in the case of Jorhat Group Ltd vs Agricultural ITO reported in 226 ITR 622 (Gau) wherein it was held that the cess on green leaf is deductible from the agricultural income only and not from the composite in....