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2016 (9) TMI 1301
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....after referred to as 'learned AO' or 'AO') under section 143(3) read with section 144C(13) of the Income-tax Act, 1961 (hereinafter referred to as the 'Act') in pursuance of the directions issued by the Hon'ble Dispute Resolution Panel-I, Mumbai (hereinafter referred to as the 'DRP') on the following grounds, each of which are without prejudice to one another: A. General 1. on the facts and in the circumstances of the case and in law the learned AO based on directions of DRP erred in assessing the total income at Rs. 70,36,92,880 as against income computed as Nil by the Appellant, under the normal provisions of the Act. B. Transfer pricing adjustments On the facts and in the circumstances of the case and in law, the learned AO/Additional Commissioner of Income-tax (Transfer Pricing) - 1(1) ('TPO') has: Non consideration of comparability analysis as documented in the transfer pricing study report 2. erred in not considering/accepting the comparability analysis as documented by the Appellant in the Transfer Pricing study report for benchmarking the international transaction of payment of....
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....ing Rs. 94,42,44,756 instead of Rs. 160,88,54,139 as base point 11. erred in re-computing the deduction under section 80lC of the Act by considering Rs. 944,244,756 instead of Rs. 1,608,854,139 as starting point based on the Auditors Report under section 80lC and 80lB of the Act (ie Form 10CCB); Deduction under section 80IC of the Act on interest and rent 12. erred in holding that the Assessee has claimed deduction under section 80lC of the Act on interest income of Rs. 13,04,27,014 and rent income of Rs. 12,23,568; Reducing income pertaining to 80IB unit while re-computing the deduction under section 80IC of the Act 13. erred in reducing income pertaining to 80IB unit of Rs. 2,85,71,926 while re-computing the deduction under section 80IC of the Act without appreciating that the same was already set off against the losses of other units; Deduction in respect of scrap sales under section 80IC of the Act 14. erred in not allowing deduction under section 80IC on scrap sales derived from the manufacturing activity of the eligible Haridwar unit; 15. without prejudice to the above, should have reduced the scrap sales....
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....r the provisions of the Companies Act, 1956 and is, inter-alia, engaged in the business of manufacturing and trading of electrical goods. For the assessment year under consideration, it filed a return of income declaring 'Nil' income, which inter-alia, included the claim of deduction under section 80IC of the Act of Rs. 158,02,82,213/- in respect of Haridwar Unit and under section 80IB of the Act of Rs. 85,71,578/- in respect of Daman Unit. In an assessment finalized under section 143(3) r.w.s. 144C(13) of the Act dated 4/12/2013, the Assessing Officer has determined the total income under normal provisions of the Act at Rs. 70,36,92,880/-, which inter-alia, included scaling down of deductions under section 80IC and 80IB of the Act to Rs. 54,45,48,186/- and also an adjustment to determine arm's length price of the international transactions at Rs. 17,23,45,725/-. The aforesaid assessment has been finalized in terms of the directions issued by the DRP vide order dated 20/11/2013 in response to the objections raised by the assessee against the draft assessment order passed by the Assessing Officer dated 4/2/2013. Before us, the assessee company is in appeal on the afore-stated Gr....
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.... assessee furnished a chart showing unit-wise computation of income, including the determination of amounts eligible for deduction under section 80IC and 80IB of the Act as also the profit/loss of other units, and it has been explained that the same formed the basis for filing the return of income. 6. Elaborating the error on the manner in which the deduction under section 80IC of the Act has been computed by the Assessing Officer, the Ld. Representative for the assessee referred to para-14 of the assessment order, where the Assessing Officer has tabulated the deduction allowable to the assessee under section 80IC of the Act and in this calculation he has started from the figure of Rs. 94,42,44,756/-, which is the profit of the business(net of profits/losses of all units). Further, it is seen that he has further reduced certain amounts from the aforesaid figure, on account of scrap sales, miscellaneous income, profit from trading activity, central excise incentives and income attributable to 80IB unit, etc. The Ld. Representative for the assessee pointed out that if starting point was the net business profit of the assessee the Assessing Officer ought to have adjusted the other ....
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.... the scrap sale pertaining to the Haridwar Unit which is the subject-matter of the claim of deduction under section 80IC of the Act, was only to the tune of Rs. 1,19,22,639/-. Similarly, mistakes has also been pointed out in the exclusion of the amounts of miscellaneous income and profits on trading activity of Rs. 4,69,66,000/- and Rs. 20,84,00,000/- respectively. 6.1 On this aspect, the Ld. Departmental Representative referred to the discussion made by the DRP in para 3.4.1 and 3.4.2 to point out that there were certain inconsistency between the figure reported by the Auditor in Form No.10CCB showing the calculation of deduction under section 80IC of the Act and the figures of profit revealed by the audited final statements, and referred to the following discussion :- "This also means that the figure reported by the auditor in its from 10CCB at Rs. 158.02 is also not correct as it does not match with the audited financials attached to form 10CCB showing profits at Rs. 186,15,73,678/-, wherein the above mentioned expenses have been allocated on a different basis. In other words, there is a clear mismatch in the figure reported in the form 10CCB by the auditor and in th....
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....ssessing Officer, who shall recompute the total income of the assessee based on the unit-wise computation of income made by the assessee for calculating eligibility of deduction under section 80 IC and 80IB of the Act by adopting the same methodology as was accepted in the past years. Ld. Representative for the assessee submitted that assessee would be satisfied if the verification of assessee's computation of income eligible for 80IC benefits is carried out as per the methodology accepted in the past. On this aspect, in our view, there is an apparent mistake made by the Assessing Officer in computing the amount of deduction allowable to the assessee under section 80IC of the Act. Pertinently, the basis of allocation of administrative, sales and interest expenses, etc. adopted by the assessee to arrive at the eligible deduction under section 80IC is similar to that adopted for computing the deduction under section 80IB of the Act. Whereas, the Assessing Officer accepts the working of deduction under section 80IB of the Act as determined by the assessee, while on the other hand, determination of deduction under section 80IC of the Act has been tinkered with. This reflects inherent i....
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....sessing Officer is anyway incorrect. The scrap sales in relation to the Haridwar Unit is only at Rs. 1,19,22,639/-. In any case, on the merit of the claim, it is quite clear that income by way of sale of scrap generated in the manufacturing and production process is also entitled for claim of deduction u/s. 80IC of the Act. Before us, the Ld. Representative for the assessee has relied upon the following judgments in support of such claim:- (i) CIT vs. Sandhu Forging Limited, 336 ITR 0444 (Del) (ii) CIT & Another vs. Modi Xerox Ltd.,265 ITR 200 (All) (iii)Asia Investments Ltd. vs. DCIT, 90 ITD 0630 (Mum.Trib) (iv)CIT vs. Micro Turners, 205 Taxman 18. 9.1 On this aspect also, we deem it fit and proper to restore the matter back to the file of the Assessing Officer with a direction that while re-computing the eligible deduction u/s. 80IC of the Act, sale of scrap generated during the manufacturing and production process be included for the benefit of section 80IC of the Act. 10. In Grounds of appeal No.16 & 17, the assessee has agitated the action of the Assessing Officer in excluding a sum of Rs. 4,69,66,000/- as miscellaneous income. On this....