TaxTMI 
TaxTMI 
TaxTMI 
2015 (5) TMI 1238
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....otal income was determined at Rs.56,87,08,421/-, after making certain disallowances/ additions. Aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld. CIT(A) who vide order dated 15.12.2008 gave part relief so both the parties are before us against their grievances. ITA No.501/Ahd/2009(Assessee's appeal) : AY 2005-06 3. In this appeal by the assessee, following grounds were raised:- 1. The order of assessment is contrary to the facts of the case and prejudicial to the assessee. 2. On appreciation of the facts and circumstances of the case and law, the additions made are contrary to law and based on erroneous understanding of the facts of the case. 3. On appreciation of the facts and circumstances of the case, the Learned Commissioner of Income-tax (Appeals) has erred in upholding the action of the Learned Assessing Officer in making upward adjustment of Rs.1,52,08,915/- to the income of the appellant company on account of determining the Arm's Length Price of the international transactions. The action of the Learned Commissioner of Income-tax (Appeals) is contrary to the facts and law and deserves to be deleted. 4. The Learned Com....
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.... the year under consideration, the assessee-company has sold raw materials and semifinished goods to its AE in USA and further processing as per specific requirements of the customers was done in the US manufacturing plant. The assessee-company had to invest a sum equivalent to the above time cycle as capital if it has to achieve its sales target in USA. The actual average time cycle as calculated by the transfer pricing officer was 200 days. The transfer pricing officer compared this time cycle to the credit period given to unrelated parties and determined the same to be 166 days. The difference of 34 days was considered excessive and interest amount equivalent to interest on 34 days sales was proposed as an adjustment, which worked out to Rs.1,52,08,915/-. 5.1 Matter was carried before the First Appellate Authority, wherein various contentions were raised on behalf of assessee and having considered the same, CIT(A) upheld the action of the Assessing Officer on the issue, by observing that the Arms Length Price in respect of interest not charged on credit period to customers as well as the subsidiary shall be the international bench mark rate. While confirming the addition in res....
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....ro USA are not sold to any other concern. The very foundation of impugned addition in arm's length price on account of excess credit period is thus devoid of any legally sustainable merits or factual basis. When all these factors were pointed out to the learned Departmental Representative, he did not have much to say except to place his bland but dutiful reliance on the orders of the authorities below. However, for the reasons set out above and in the absence of any comparative price and credit period figures on comparable product to support the case of the revenue, we uphold the grievance of the assessee and direct the Assessing Officer to delete this ALP adjustment. The assessee gets the relief accordingly. 21. To sum up, so far as ALP adjustments are concerned, we uphold the plea of the assessee in the terms indicated above, and we reject the grievance of the Assessing Officer." 5.3 Nothing contrary was brought to our knowledge on behalf of the Revenue. Facts being similar, following the same reasoning as mentioned above in the order of the Tribunal in assessee's own case for AYs 2002-03, 2003-04 and 2004-05, the order of the CIT(A) as well as Assessing Officer on this is....
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....d by the Assessing Officer is being adjudicated as under:- 7.1 With regard to accrual and/or profit on sale of DEPB and DFRC, we find that the Assessing Officer had excluded the same from the eligible profit of the appellant company. In appeal, the CIT(A) observed that the DEPB and DFRC licenses are granted to the exporters for receiving the cost of customs duty to remain internationally competitive. Any accrual and / or profit on sale of such export incentives are not linked to manufacturing. In view of this, the CIT(A) upheld the order of the Assessing Officer that any accrual receipt or profit on sale of DEPB and DFRC are not eligible for deduction U/s. 80IB of the Act. 7.1.1 Before us, the ld. Authorized Representative pointed out that in assessee's own case, the ITAT, D-Bench, Ahmedabad in ITA Nos. 1668 & 1669/Ahd/2006 and 2583/Ahd/2007 for Assessment Years 2002-03, 2003-04 and 2004-05, relying on the decision of Hon'ble Supreme Court in the case of Topman Exports v. CIT [2012] 342 ITR 49, has set aside the issue to the file of the Assessing Officer for fresh adjudication. The relevant portion of the decision is as under:- "54. In ground No. 9, the Assessing Officer has ....
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.... as discussed above. 7.3.1 Before us, the Authorized Representative pointed out that similar issue has been decided by the ITAT, D-Bench, Ahmedabad in assessee's own case in ITA Nos. 1668 & 1669/Ahd/2006 and 2583/Ahd/2007 for Assessment Years 2002-03, 2003-04 and 2004-05, wherein the issue has been set aside to the file of the Assessing Officer, by observing as under:- "82. In ground No. 8, the assessee has raised the following grievances: "8. On appreciation of the facts and circumstances of the case and law, the learned Commissioner of Income Tax (Appeals) has erred in confirming the action of the learned Assistant Commissioner of Income Tax of excluding following items of income while granting deduction u/s. 80-IB:- Silvassa Daman Sale of export benefit 7805826 -47239 Insurance claim 20558386 594798 The action of the learned Commissioner of Income Tax (Appeals) is contrary to the facts and law and deserves to be deleted." 83. So far as this ground of appeal is concerned, learned representatives agree that this issue can be restored to the file of the Assessing Officer so as the matter can be decided in the light of Topman Exports decision (supra) ....
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....enditure and he, accordingly, disallowed an amount of Rs.10,54,887/- as expenditure incurred for non-business activity. Matter was carried before the First Appellate Authority, wherein various contentions were raised on behalf of assessee and having considered the same, CIT(A) confirmed the order of the Assessing Officer. 8.1 With regard to telephone expenses, the ld. Authorized Representative pointed out that this issue has been decided by ITAT, D-Bench, Ahmedabad in assessee's own in favour of the assessee in ITA No. 1668/Ahd/2006 for Assessment Years 2002-03, wherein it was held as under:- "45. Learned representatives fairly agree that all the above issues are also covered, in favour of the assessee, by order dated 17th July, 2009, in assessee's own case for the assessment year 1999-2000, even as learned Departmental Representative dutifully relied upon the orders of the authorities below. 46. We see no reasons to take any other view of the matter than the view so taken by the coordinate bench. Respectfully following the same, we uphold the order of the CIT(A) and decline to interfere in the matter." 8.2 Nothing congtrary was brought to our knowledge on behalf of Reven....
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....has erred in deleting the addition made on account of Inter Division Transfer without going into the facts and circumstances of the case. 6) On the facts and circumstances of the case and in law, the learned CIT(A) has erred in directing not to exclude the income of Rs.60,73,155/- earned from sale of scrap from the profits eligible for deduction u/s 80IB, though same have no direct or immediate nexus with the manufacturing activity of the assessee as per ratio laid down by the Hon'ble Apex Court in the cases CIT v. Sterling Foods (1999) 237 ITR 579 and Pandian Chemcials vs. CIT (2003) 262 ITR 278 [SC] 6.1) The ld. CIT(A) has granted relief to the assessee without considering the ratio laid down by the Hon'ble M. P. High Court in the case of D. P. Agrawal Vs. CIT 272 ITR 118 [MP] wherein it has been held that scrap income will not be eligible for deduction U/s.80IB of the Act? 6.2) On the facts and circumstances of the case and in law, the learned CIT(A) has erred in directing not to exclude the income of Rs.33,97,131/- earned by way of discount on purchase of DEPB license though it has no direct or immediate nexus with the manufacturing activity of the assessee. 7) On t....
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....h as ledger extract of the year of which such debt was pertaining; however, the assessee did not file the details as asked for. In view of above, the Assessing Officer disallowed the bad debts, by observing that the assessee has denied the department the opportunity of verification by not providing complete address. He disallowed the bad debts, mainly on the following reasoning:- i) It has not been established that the debts have really become bad. ii) The sale on which the debt is claimed was booked in earlier years wherein the assessee was entitled for deduction u/s 80IB @100% on the profits and gains of industrial undertaking and no tax was paid on the profit element of such sales. iii) In the year under consideration, the undertaking of the assessee is eligible for deduction u/s 80IB @ 30%. Assessee could have claimed the bad debt in earlier years wherein it was eligible for deduction u/s 80IB@ 100% rather waiting till the years when the liability to pay the tax has arisen to the assessee @ 70% on the profits and gains of business. iv) The profit on the sale [which has been claimed as bad debt during the year] was claimed as exempt u/s 80IB in the earlier years and henc....
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....1/10th of the expenditure incurred on foreign travelling expenses has been made by the Assessing Officer and the CIT(A) has deleted the addition in question, after verifying the details of the same. Moreover, similar relief has been given by ITAT in assessee's own case for Assessment year 2002-03 to 2004-05 which has not been disputed by the Revenue. Moreover, the appeal against the ITAT order has not been admitted by the Hon'ble Gujarat High Court in Tax Appeal No.1927 of 2010. In view of the same, the order of the CIT(A), whereby he has deleted the addition, is hereby confirmed. 15. Next issue is with regard to disallowance of depreciation claimed on HT lines for electricity supply in respect of Vapi-1 unit (Rs.2,40,488/-) and Silvassa Unit (Rs.7,99,620/-). The Assessing Officer disallowed the depreciation claimed by the assessee-company on HT lines. He observed that the assesseecompany has not owned the HT Lines and was claiming depreciation on it. According to him, as per provisions of Income Tax Laws, depreciation can be allowed only to the owner of the assets. The Assessing Officer accordingly disallowed the depreciation claimed on HT Lines and the depreciation amount was ad....
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....ions of the Co-ordinate Bench, of course after providing adequate opportunity of being heard to the assessee. 17. Next issue is with regard to the income from sale of scrap from the profits eligible for deduction u/s 80IB of Rs.60,73,155/-. The Assessing Officer excluded the income from sale of scrap from the profits eligible for deduction u/s 80IB of the Act. On appeal, the CIT(A) granted relief to the assessee by observing that scrap is natural outcome of the manufacturing process and the same is generated during the manufacturing process and thus, directly related to the source of business income. Similar view has been taken by the Coordinate Bench of the Tribunal in assessee's own case for AY 2002-03 to 2004-05 and the same was not disturbed by Hon'ble Gujarat High Court in Tax Appeal No.15 of 2011. 17.1 Nothing contrary was brought to our knowledge on behalf of the Revenue. Facts being similar, we are not inclined to interfere in the findings of the CIT(A) who has rightly directed the Assessing Officer to include the same as part of income from business for the purpose of calculation of deduction u/s 80IB. Accordingly, the same is upheld. 18. Next issue is with regard to ex....
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....r the purpose of calculation of deduction u/s 10B. Accordingly, the same is upheld. 20. Next issue is with regard to the addition made to book profit u/s 115JB in respect of loss on wind farm project amounting to Rs.2,87,461/-. The Assessing Officer added loss of windmill as negative income for calculating the book profit u/s 115JB. The Assessing Officer has made the addition to the book profit stating that loss represents negative profit. 20.1 Matter was carried before the First Appellate Authority, wherein various contentions were raised on behalf of assessee and having considered the same, CIT(A) granted relief to the assessee and the same has been opposed before us on behalf of the Revenue inter alia submitting that order of the CIT(A) be set aside in this regard and that of Assessing Officer be restored. On the other hand, the ld. Authorized Representative for the assessee supported the order of the CIT(A). 20.2 After going through rival submissions and material on record, we find that the intention of legislature u/s 115JB appears to tax the book profit excluding the profit from industrial undertaking as mentioned and also from business of generation of power. As per the ....