TaxTMI 
TaxTMI 
2016 (9) TMI 1377
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....ess unit) to company as such (which is non-eligible business) and the provisions of section 80IC(7) r.w.s. 80IA(8) are to be applied to determine the "market value and reasonal profit of eligible business unit. 3. That the CIT(A) has erred in not appreciating the fact that by reducing the profit due to marketing activities and brand value, the A.O. has found out reasonable profit of the eligible business unit (at Baddi) as per 80IA(8) r.w.s. 80IC(7). 4. That the CIT(A) has erred in law and on facts in deleting the addition of excess interest expenses of Rs. 172.42 lacs debited by the assessee in the accounts of Gujarat unit and thereby claiming more deduction u/s 80IC for the Baddi Unit. The assessee had claimed he entire interest expenses of Rs. 440.52 lacs in Gujarat Unit though 30.01% of capital was employed at Baddi unit. 5. That the CIT(A) has erred in deleting the addition of Rs. 6,45,45,525/-made u/s 145A holding that the same is revenue neutral when the Act specifically requires the assessee to include the taxes etc., u/s.145A." 3. First issue is with regard to deduction u/s.80IC on Baddi Unit. Assessing Officer disallowed the claim of deduction u/s.80IC of the Act. ....
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.... the claim of deduction u/s.80IC of the Act as claimed. This view is fortified by the decision of ITAT for A.Y. 2008-09 as discussed above. 4. Next issue is with regard to addition of excess interest expenses of Rs. 172.42 lacs debited by assessee in accounts of Gujarat Unit. At the outset of hearing, learned Authorized Representative point out that this issue is covered in favor of assessee by the order of ITAT in ITA No.1591/Ahd/2013 & C.O. No.188/Ahd/2013 for A.Y. 2008-09, wherein vide para 8 & 9 Tribunal has discussed and decided this issue in favour of assessee by observing as under: "8. We have carefully perused the orders of the authorities below and have given a thoughtful consideration to the facts in issue. The undisputed facts is that the H.P. Unit had sufficient reserves and surplus to meet its liability. In fact, the First Appellate Authority has not only confirmed this but has also observed that the H.P. Unit had advanced surplus money to the Gujarat Unit. A perusal of the findings of the First Appellate Authority would show that he has considered the entire factual matrix qua the issue. 9. Considering the facts in totality, we do not find any reasons to interfer....
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....ty of Central excise if added to enhance the value of closing stock would result in enhanced opening stock on the first day of the next accounting period, namely, April 1, 1997. So the next year's profits would get depressed accordingly. Over a period of time the whole exercise would even out, in other words, be revenue neutral. At the same time while disturbing the value of the closing stock the assessing authority could not change the method of accounting regularly employed. (c) the assessment year being 1997-98 the provisions of section 145A of the Act inserted by the Finance (No.2) Act, 1998 with effect from April, 1 1999 could not be invoked. " 4. Respectfully following the above decision of Hon'ble jurisdictional High Court, the addition made by the A.O. and confirmed by the Ld. CIT(A) is hereby deleted." 5.1 Similar view was taken by Ahmedabad Tribunal in its decision dated 06.01.2012 in case of Jalaram Ceramics Ltd. Vs. DCIT, Circle-4 in ITA No.2187/Ahd/2009 for A.Y. 200506 by holding as under: "5. Having heard the submissions of both the sides, it was found that the assessee had maintained a separate account for the excise duty and that the assessee had paid....
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....3[3] of the Act by the D.C.I.T., Circle-1, Ahmedabad is bad in law and hence, deserves to be cancelled. 2. In law and in the facts and in the circumstances of the case, the learned CIT(A) erred in not giving any finding on the alternative ground raised before him in respect of the error committed by the A.O. in incorrectly computing the net capital employed ratio for allocation of Interest Expenditure and Foreign Exchange Loss [if at all the addition for allocation of Interest expenses and Forex loss is held to be justifiable]." 7.1 At the outset of hearing, learned Authorized Representative submitted that he is not pressing the grounds of Cross Objection. So, same is dismissed as not pressed. 8. As a result, Cross Objection of assessee is dismissed as indicated above. 9. In ITA No.2892/Ahd/2014 (u/s.143(3) r.w.s 263 of the Act) for A.Y. 2008-09, Revenue has filed the appeal on following grounds: "(1) That the CIT(A) has erred in deleting the addition of Rs. 79,28,008/-made u/s 145A holding that the same is revenue neutral when the Act specifically requires the assessee to include the taxes etc. u/s.145A. (2) On the facts and circumstances of the case and in law, the CIT(A....