TaxTMI 
TaxTMI 
TaxTMI 
2016 (10) TMI 1062
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....he case are that the assessee had filed the original Return of Income on 27.10.2006 on total income of Rs. 17,98,53,230/-. Later on, the AO issued notice under section 148 dated 21.3.2011 and in respect of which reasons were provided to the assessee on 4.10.2011. The objections raised by the assessee vide letter dated 15.10.2011 were disposed of by the AO vide his order dated 1.11.2011. Thereafter, the AO proceeded to complete the re-assessment proceedings and assessed the income of the assessee at Rs. 17,57,16,599/- and made the additions vide his order dated 22.12.2011 passed u/s. 147/143(3) of the I.T. Act, 1961. 3. Aggrieved with the aforesaid order, assessee preferred an appeal before the Ld. CIT(A), who vide his impugned order dated 22.12.2011 has statistically allowed the appeal of the assessee. 4. Now the Revenue is aggrieved against the impugned order and filed the present appeal before the Tribunal. 5. Ld. Counsel of the Assessee has relied upon the order of the Ld. CIT(A). He further stated that since the Ld. CIT(A) has held the reassessment as bad in law, but the Revenue has not challenged the same in the present appeal. He further stated that Ld. CIT(A) has passed a....
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....section 148 was issued beyond the prescribed period. Moreover, clearly under these circumstances, such an action is held as 'change of opinion' by the A.O., Further, the issue whether a particular receipt is revenue or capital in nature, is not a simple and straightforward one and it requires appreciation of all relevant facts including various judicial decisions to arrive at a conclusion in this regard. The second issue of allocating head office expenses to various units requires decision as to whether the thumb-rule adopted by the appellant was correct or not. Like any thumb-rule, such computation is also subjective and in the absence of any specific legal provision in the statute, one could not state with accuracy that the computation of appellant was correct or not. Thus both issues are debatable and reopening assessment in respect of the same was therefore not justified. 6.2 Regarding the Ground No.4 of the appeal relating to treatment of the technical fees paid to M/s Mahindra & Mahindra for use of design, drawing production tooling for manufacturing of Independent front suspension for Scorpio Car as capital in nature, the appellant claims that the above expense....
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....on shall automatically stand transferred to M&M solely and exclusively. Samlip and Korin shall not use/transfer to any third party, such design, data, drawings and other technical information at any time for any purpose other than the purpose of this agreement." I find that the appellant has been making such payments from AY 1999-2000 onwards which have been accepted as revenue in nature by the department except during the assessment proceedings for the A.Y. 2009-10, when such payment was treated as capital in nature by the Ld. AO. On the same ground, the reassessment proceeding was initiated in the current year as well. Perusal of the Agreement dated 21 March, 1998 clearly shows that. development of drawing, which is main product of the prototype agreement is clearly held to be property of M/s Mahindra & Mahindra (M&M). Further, the agreement clearly provides that in terms of the agreement, design and drawing taken into manufacturing of the products, and the related documents shall be handed over to M/s Mahindra & Mahindra on termination of the agreement. Keeping in view the same, it is evident that the appellant company was given only limited rights to use the prototype toolin....
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....al sales, is only in the nature of a thumb-Rule for practical ease for such allocation. However, there is no specific provision in the Income Tax Act, 1961, to provide that head office expense should be apportioned in a particular ratio and in a particular manner only. Therefore, merely for invoking the thumb-Rule, proceeding under section 147 should not have been initiated, since there will always be more than one opinion while adopting any thumb-Rule. Furthermore, the principle of consistency is also an important one for the purpose of computation of taxable income as was held by Supreme Court in the case of M/s Radhasoamy Satsang vs. (IT 193 ITR 321 (SC). On the other hand, the appellant's claim under section 80lB is duly supported by the Auditors and which also, on examination, was found acceptable by the Ld. AO in the original assessment proceedings. In view thereof, the addition made on this ground is liable to be deleted. 7. Statistically the appeal stands allowed." 7.1 After going through the findings of the Ld.CIT(A), as aforesaid, with regard to deletion of addition of Rs. 65,14,891/- on account of disallowance of Technical Fees being Capital Expenditure is concer....
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....ly, the issue in dispute is decided against the Revenue. 7.2 With regard to deletion of addition of Rs. 65,14,891/- on account of excess claim of deduction u/s. 80IB amounting to Rs. 3,56,046/- is concerned, we find that Various undertaking of the assessee had aggregated turnover of Rs. 1,83,44,93,675/-, however, out of this, an amount of Rs. 7,55,38,858/- relating to inter-unit transfer, was excluded for calculating the 'total turnover' of the assessee in view of the provision of Companies Act, 1956. However, it is understandable that the actual manufacturing resulted into turnover of Rs. 183.44 crores and the assessee reduced an amount of Rs. 7,55,38,858/- from its turnover, relating to inter-unit transfer in view of the provision of Companies Act 1956. Therefore, the basis of allocation of head office expenses by taking actual amount of turnover was justified and which has been followed by the assessee consistently in earlier years and has not been challenged by the Department either. Moreover, allocation of "head office expenses" for the purpose of computation of deduction 80lB on the basis of ratio of eligible sale to total sales, is only in the nature of a thumb-Rule....