TaxTMI 
TaxTMI 
2019 (7) TMI 1770
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....14A of the Act read with Rule 8D of the Income-tax Rules of Rs. 6,64,63,360/-, addition of interest while computing the income under section 80 HHC of Rs. 2,30,12,554/-, addition by disallowance of deduction claimed under section 80 IA of the Act of Rs. 1,59,37,450/- transfer pricing adjustment on account of international transaction of import of components to the tune of Rs. 7,05,334/-, disallowance of expenditure incurred on account of Royalty on the ground of being capital in nature to the tune of Rs. 22,50,93,565/-, disallowance of expenditure incurred on account of model fee on the ground of being capital in nature of Rs. 5,79,70,090/-and disallowance of provision for warranty made in respect of sales made during the year to the tune of Rs. 1,79,00,000/-. 3. In appeal, Ld. CIT(A) upheld the addition on account of 14A of the Act read with Rule 8D of the Rules, treatment of interest for the purpose of deduction under section 80 HHC of the Act, disallowance of deduction claimed under section 80 IA of the Act and was adjustment. Ld. CIT(A), however, deleted the disallowance of expenditure incurred on account of Royalty, model and the provision for warranty made in respect of sale....
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....red to above constitute proper compliance with the requirement of Section 14A of the Act. In unequivocal terms, ld. AO held that earning exempt income involves so many administrative expenses under several heads and it is not possible to believe that the assessee did not incur any expenditure whatsoever. In view of this factual 5 position, we are of the considered opinion that there is no violation of the requirement of recording of reasons by ld. AO. 9. It is submitted by the ld. AR that for the earlier Assessment Year 2002-03, under similar set of circumstances, ld. AO disallowed 25% of the dividend income u/s 14A of the Act and it was directed to be reassessed by ld. CIT(A) by applying Rule 8D of the Rules but the Tribunal remanded the matter to the file of ld. AO for reconsideration taking into account the decision of the Hon'ble Delhi High Court in the case of Maxopp Investment Ltd., 347 ITR 272 (Del). We find such an order at page Nos. 11 to 59 of the paper book on this issue and at page no.7 of such order, the Tribunal reached a conclusion that the matter needs to be set aside to the file of the AO for reconsideration keeping in mind the decision of the Hon'ble Delhi High C....
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....nexus between the FD and the business and if such nexus is established, to consider the same as business income for the purpose of Section 80 HHC of the Act. Grounds are answered accordingly. 13. In respect of the interest on bills discounting, it is submitted that such a transaction is inextricably linked to the business of the assessee and constitute business income. It is explained that the assessee is given a credit period of 30 to 45 days by the suppliers, but if the supplier wants immediate payment or a shorter credit period, the assessee deducts a certain amount based on the invoice value which is termed as discount; that similarly for meeting the increasing demand of supplies from vendors/suppliers the assessee makes payments against orders in advance for which they charge interest. Ld. AR, therefore, submits that this way of transactions clearly arises from the normal business transactions of the assessee and the resultant interest constitutes business income. 14. Reliance is placed on the decision of Hon'ble Orissa High Court in the case of Tata Sponge Iron Ltd vs CIT, 292 ITR 175 for the principle that interest earned by the assessee from its customers for delayed paym....
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....oans provided to employees is inextricably linked to the business of the assessee and constitute business income for consideration under section 80 HHC of the Act. We, therefore, direct the Assessing Officer to consider the same accordingly. 19. Third head of addition which was confirmed by the ld. CIT(A) and challenged by the assessee is in respect of deduction of Rs. 1,59,37,415/- claimed u/s 80IA of the Act in respect of captive power generating unit of the assessee situated at Gurgaon. On this aspect, the submission of the assessee is that in the area of assessee's undertaking the Haryana State Electricity Board(HSEB) was unable to meet the demand of industrial consumption for supply of electricity necessary for running the industrial units and, therefore, the assessee had to set up a power plant near the manufacturing facility to meet the captive consumption of requirement of powers and on that score, the assessee is entitled for deduction u/s 80IA of the Act. 10 20. It is submitted that for the purpose or computation of deduction u/s 80IA by adopting the transfer price of power, captively consumed, with mark up of 15% on the cost of generation at Rs. 5.79 certified in the c....
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....ollows: "In the present case also there are three rates, (i) rates at which power is purchased from state electricity board, (ii) the cost of production of the power by the legible unit of the assessee and mark up thereon (iii) the rates at which power is supplied by independent party to its ancillary unit. Therefore, there are multiple basked of the market rates. As held in above decision that the multiple options for the price of a product are available, then the option which is most favourable to assessee needs to be adopted for the purposes of determining inter-unit transfer price u/s 80IA(8) of the Act. Further, it is not the case of the revenue that the power cost incurred by the assessee is 12 inflated or incorrect. In that view of the matter, in the present case, considering that three different prices for supply of power are available in the market, the method adopted by the appellant to compute inter-unit transfer price by imputing a reasonable mark-up on its cost of production i.e. Rs. 8.75, which was less than the rate of Rs. 9.84 charged by Maruti, was quite a reasonable for the purposes of computing deduction u/s 80IA(4) of the Act. Therefore, we reverse the disallo....
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....le giving effect to the order of the Tribunal for AY 2006-07 deleted the transfer pricing adjustment observing that the assessee made purchase of only Rs. 81 crore from its AEs out of the total purchase of Rs. 5911 crores and the process of indigenisation was steadily progressing and the assessee had subsequently stopped purchasing these components when such parts 14 are available indigenously as per the desired quality in sufficient quantity. 29. On a careful consideration of the matter, we find that out of the total purchases of Rs. 20,46,58,682/- from the domestic market, the assessee imported from associated enterprises the components worth Rs. 22,83,666/- which does not constitute any significant portion thereof. We, therefore, having regard to the directions given by the Tribunal for earlier years and the approach adopted by the ld. AO while deleting the addition on this score, hold that the transfer pricing adjustment to the tune of Rs. 7,05,334/- made by the TPO cannot be sustained and accordingly while allowing the ground delete the same. ITA No.5529/Del/2014 30. Revenue challenged the deletion by the ld. CIT(A) of the expenditure incurred on account of Royalty, model ....