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TaxTMI 
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2022 (9) TMI 1035
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.... T.A.Nos.201 to 204/CIT(A)-PDY/2016- 17 for the above mentioned Assessment Year is contrary to law, facts, and in the circumstances of the case. 2. The CIT (Appeals) erred in sustaining the addition pertaining to the presumed cost difference of the goods transferred to the branch at Gauhati in the computation of taxable total income without assigning proper reasons and justification. 3. The CIT (Appeals) failed to appreciate that the transfer pricing analysis was correctly made and ought to have appreciated that the transfer price of the goods under consideration from Pondicherry unit to Gauhati unit was wrongly substituted under facts and in the circumstances of the case on misconstruction of the facts and law, thereby vitiating the related findings. 4. The CIT (Appeals) failed to appreciate that the comparable analysis carried out to determine the ALP was wholly unjustified and ought to have appreciated that the product distinction while making the comparable analysis was completely missed thereby vitiating the addition made in the computation of taxable total income. 5. The CIT (Appeals) failed to appreciate that the presumption of transfer price at lower rate was not co....
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....for the purpose of deduction u/s.80IB of the Income Tax Act, 1961. In response, the assessee submitted that although, it has purchased very same product from two different suppliers, one from its own unit at Puducherry at lesser rate, when compared to purchase from third party by paying higher price, but fact remains that products supplied by the assessee's own unit at Puducherry are at semi-finished stage, whereas products supplied by third party supplier are fully finished goods which are ready for next level of production. The assessee further contended that Guwahati unit has spent further amount towards making products purchased from Puducherry ready for use at next level. If you consider said cost, then purchase price paid by the assessee to its Puducherry unit and purchase price paid to third party is almost equal and thus, question of making additions towards under-invoicing does not arise. 4. The Assessing Officer was not convinced with the explanation furnished by the assessee and according to A.O., the assessee has shifted profit from Puducherry unit to Guwahati unit to claim higher tax benefit by way of deduction u/s.80IC of the Income Tax Act, 1961 @ 100% profit which ....
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....old by Puducherry unit are at semi-finished stage, when compared to products purchased from third party supplier M/s.Aeroaroma Home Care Products and thus, rate charged by third party supplier cannot be compared to rate charged by the assessee. The learned A.R further referring to flow chart process involved in manufacturing of absorbent wicks submitted that Puducherry unit is supplying wicks at semi-finished level. The Guwahati unit is spending further amount towards making products ready for next level of production. If you consider price charged by Puducherry unit and additional cost incurred at Guwahati unit to make the product ready for next level, then there would be no difference between price charged by the assessee and price charged by third party supplier M/s. Aeroaroma Home Care Products. The learned A.R further submitted that the Assessing Officer except stating that there is difference in price charged by the assessee when compared to third party supplier, could not bring on record any other evidence to justify his findings that the assessee has under-invoiced its products to Guwahati unit to claim higher benefit tax incentives allowed in terms of section 80IC of the I....
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....derinvoicing from Puducherry unit and made additions to total income and their orders should be upheld. 8. We have heard both the parties, perused material available on record and gone through orders of the authorities below. The appeals for the assessment years 2008-09 to 2011-12 are coming up for second round of litigation, because in first round of litigation, the Tribunal had set aside the issue to file of the Assessing Officer, with a direction to consider cost sheet furnished by the assessee to explain price difference between its own unit and price charged by third party supplier and to reconsider the issue. The appeal for the assessment year 2012-13 is first round of litigation, however, issue involved is identical to the issue involved in the assessment years 2008-09 to 2011-12. The sole dispute for all these appeals pertains to valuation of goods purchased by Guwahati unit. The assessee is having two units for manufacturing of absorbent wicks, i.e one at Puducherry and another at Guwahati. The Puducherry unit is claiming deduction u/s.80IB of the Income Tax Act, 1961, @ 25% profit, whereas Guwahati unit is claiming deduction @ 100% u/s.80IC of the Income Tax Act, 1961. I....
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....ts. The assessee has filed chart explaining price difference between its own products supplied by Puducherry unit and products supplied from third party supplier and according to the assessee, products manufactured at Puducherry unit are at semi-finished stage and undergone further processing at Guwahati unit. If you consider additional cost incurred by the assessee at Guwahati unit, with basic price charged by Puducherry unit, total cost per unit works out to Rs.0.89 per unit. The assessee has paid Rs.0.77 per unit to product purchased from M/s.Aeroaroma Home Care Products, Puducherry and has carried out secondary operations at Guwahati unit. If you consider additional cost incurred by the assessee for product purchased from third party supplier at Guwahati unit, total cost per unit works out to Rs.0.91 per unit. If you compare both prices, there is minor difference of Rs.0.02 per unit, as against difference worked out by the Assessing Officer, which is on very high. The assessee has explained reasons for small difference in price of similar products purchased from third party supplier and manufactured at its own unit. In our considered view, explanation furnished by the assessee ....