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TaxTMI 
TaxTMI 
TaxTMI 
2019 (11) TMI 1799
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....ssessment years 2011-12 to 2014-15. Further, the Assessing Officer made disallowance U/s.14A, the claim of R&D expenditure, forward contract loss and leave salary U/s.43B r.w.s 35(2AB) allocated expenditure on scientific research to the units claiming deduction U/s.80IC & U/s.10B units etc. Aggrieved against those orders, the assessee filed appeals before the CIT(A). The ld.CIT(A) partly allowed the appeals. Aggrieved against those orders, the assessee as well as the Revenue filed the above appeals. 3. In respect of the disallowance made U/s.80IC for the assessment years 2011-12 to 2014-15, the ld.AR submitted that the assessee claimed deduction U/s.80IC, in respect of its unit engaged in the business of turbo charger assembly and core assembly at Rudrapur, Uttarakhand for these assessment years. The 80IC unit at Rudrapur has been carrying on Production/manufacture of turbochargers and parts thereof. The raw material (components) as input under goes various operations and finally emerged as a turbocharger. The turbochargers and parts of turbochargers sold as a final product from the 80IC unit is totally different from the input components and is distinct object by itself with diff....
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....ure as contained in section 2(29)(BA) of the Act and therefore, the assessee is eligible for deduction U/s.80IC. The ld.AR submitted that in respect of few components, the Excise Department considered the process involved is not amounting to manufacture under Excise Regulation and not the entire products manufactured from the unit, relying on the decision of the CIT vs. M/s. Faith Biotech Pvt. Ltd., [2015] 54 taxman.com 212 (Delhi). The Assessing Officer arrived the decision based on merely observations made by the Central Excise Department, which was confirmed by the ld.CIT(A). Therefore, the ld.AR pleaded that the appeal be allowed. 3.2 Since, the ld.AR submitted that the report dated 28.01.2015 submitted by the Income Tax Officer -I(4), Rudrapur was not furnished to the assessee, we required the Revenue to place it on record. The Revenue placed them. The relevant portion of the order is extracted as under:- "2. In this connection it is submitted that the spot enquiries has been made in this case and found that M/s.Turbo Energy Ltd is located at Khasra No.403/1, Village- Shimla Pistaur, Kichha Road, PostLalpur, Distt.U.S.Nagar which is a notified area by the Central Govemment.....
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....ore than 25 components manufactured at Chennai were sold to the Rudrapur unit, which was used for the manufacture of turbo chargers at Rudrapur. The assessee also submitted inviting our attention to the statement showing sales of 80IC unit at Rudrapur unit for the impugned assessment years, that the percentage of traded items viz., overhaul kit / secondary kit and core assembly are so minuscule with reference to manufactured items viz., core assemblies, turbo chargers. From the above facts, it is clear that the lower authorities have not properly examined the issues viz., whether the product sold at Rudrapur were subjected to manufacturing activity or not, independent of the audit report from the Central Excise. Therefore, we deem it fit to remit all these issues back to the AO for a fresh examination for the impugned assessment years. The assessee shall lay all materials in support of its contention before the Assessing Officer and comply with the requirements of the Assessing Officer in accordance with law. The AO shall also furnish the copy of Remand Report and its annexures to the assessee and consider the assessee's submissions on them and on due examination, shall pass approp....
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....that additional depreciation is allowed in respect of new machinery or plant which has been acquired and installed in the business of manufacture of production. Such allowance is not permitted in respect of machinery or plant installed in any office premises or residential accommodation. The assessee pleaded that air circulators installed in the factory on which the additional depreciation was not allowed. It constitutes plant and machinery and thus eligible for depreciation allowed for plant and machinery. On appeal, the ld.CIT(A) upheld the disallowance. 5.1 Aggrieved, the ld.AR submitted that the ld.CIT(A) without applying to the facts and circumstances upheld the disallowance based on earlier year order. 5.2 We heard the rival submissions. We find that this issue has not been examined with reference to the facts and circumstances, while the assessee pleads that the impugned asset is air circulator and it is a plant & machinery, without any discussion on this issue, the assessee's claim is considered as electrical installation. Therefore, we remit this issue back to the AO for a fresh examination and due decision. 6. The assessee claimed weighted deduction U/s.35(2AB) on the ....
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.... 6.3 We heard the rival submissions and find merit in the submissions made by the ld.DR and hence, the corresponding grounds of the assessee fail. 7. The assessee claimed depreciation at the rate of 80% on the UPS pleading that it is an energy saving device with additional depreciation at the rate of 20% for the additions made during the year relevant to the assessment year 2011-12. The Assessing Officer held that it is an electrical installation, therefore, he refused the assessee's claim of depreciation at the rate of 80% but allowed at the rate of 15%. Aggrieved, the assessee filed appeal before the CIT(A). The ld.CIT(A) held that UPS cannot be considered to be an integral part of computer, since it is neither an input device nor an output device of a computer. UPS has other uses independent of a computer since it can be used in conjunction with other electrical devices like refrigerators, television sets, etc., and hence, confirmed the rate of depreciation at the rate of 15% as against the assessee's claim at the rate of 80%. 7.1 Aggrieved the ld.AR submitted that following the ITAT order No.351/Mds/2013 dated 03.05.2017, the depreciation at the rate of 60% may be allowed. ....
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....ITAT vide order in ITA Nos. 203, 204 & 205/2014 dated 03.05.2017, which is as follows: Extracted from ITAT's order dated 03.05.2017 : 8.0 Ground No.7 of the AY 2007-08 is the disallowance u/s. 40(a)(i) in respect of payment made to Sonima Logistics, Germany without deduction of tax at source. This issue is involved for the A.Ys 200708, 2008-09 and A.Y 2009-10. The AO found that the assessee has paid commission for the AYs 2007-08 to 2009-10 as under: * AY 2007-08 - Rs.5,19,93,634/- * AY 2008-09 - Rs.6,75,34,886/- * AY 2009-10 - Rs.5,32,06,4301- The payment was made to Sonima Logistics, Germany for rendering the following services outside India. a) Import customs clearance including liaison with appropriate agencies b) Transporting the custom cleared containers to warehouse and unloading containers. c) Unpacking cases/cartons and transferring contents to pallets. d) Delivering components to supplier as per schedule. e) After delivery acknowledgements from supplier to be forwarded to Turbo Energy Ltd f) To maintain running account of pallets received from supplier and delivered back to them and reconcile these figures on monthly basis. g) To provided in ....
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.....9(1) of IT Act. The Ld.CIT(A) deleted the addition relying on the decision of the Hon'ble Apex Court in the case of GE Technological Centre Pvt. Ltd. v. CIT 327 ITR 456. The findings and conclusions arrived in earlier ground in respect of payment made to M/s.Biggleswade Ltd., are squarely applicable to this ground also. Therefore, we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld. The Revenue's appeal on this issue for the A.Ys 2007-08, 2008*09 and A.Y 2009-10 are dismissed. 6.4 I have considered the findings of the AO and the written submissions made by the AR. Respectfully following the above decision of the Hon'ble ITAT, the AO is directed to delete the disallowance of payment to Logistic Services made u/s 40(a)(i) for the assessment years under consideration. The appellant succeeds on this ground." Since the ld.CIT(A) followed the order of this Tribunal, supra, we do not find any reason to interfere with the order of the ld.CIT(A). The corresponding grounds of the Revenue's appeals are dismissed. 10. The assessee claimed deduction of Rs.1,62,43,545/- as loss from cancellation of forward contracts for the assessment year 2011-12. ....
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....was no dispute on this issue. As on the closing date, the foreign exchange was restated which resulted into loss and the assessee relied on the Hon'ble Apex Court judgment cited supra wherein it was held that the loss incurred on account of restatement of foreign exchange as on the Balance sheet date is a business loss. For ready reference, we reproduce the catch note of the cited judgment as under: I. Section 37(1), read with section 145, of the Income-tax Act, 1961 - Business expenditure Allowability of - Assessment year 1998-99 Whether expression 'expenditure' as used in section 37 may, in circumstances of a particular case, cover an amount which is really a 'loss', even though said amount has not gone out from pocket of assessee - Held, yes - Whether loss suffered by assessee on account of foreign exchange difference as on date of balance sheet is an item of expenditure under section 37(1) - Held, yes - Whether accounting method followed by an assessee continuously for a given period of time needs to be presumed to be correct till Assessing Officer comes to conclusion for reasons to be given that said system does not reflect true and correct profits - Held....
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....product development and R&D expenses towards the units claiming the deduction U/s.80IC & 10B. Since, the assessee itself claimed that it has undertaken the R&D activity purely for the purpose of development of new prototypes for the new products and the new product to be developed in the future may even be used for the exclusive purpose of export, and also by the units claiming the deduction U/s.80IC & 10B, therefore, the Assessing Officer held that the impugned expenditure is not incurred purely for the purpose of regular units alone. Therefore, the Assessing Officer apportioned the impugned expenditure in proportion to the turnover of those units and disallowed the apportioned expenditure related to the units claiming deduction U/s.80IC & 10B. 11.1 Aggrieved, the assessee filed appeal before the CIT(A). The ld.CIT(A) allowed the appeal relying on the Tribunal order in ITA Nos.203, 204 & 205/Mds/2014 dated 03.05.2017 in the assessee's case related to assessment year 2007-08. Aggrieved, the Revenue is an appeal. 11.2 The ld.DR submitted that the unit claiming deduction U/s.80IC was set up in 2009-10 at Rudrapur in Uttarkhand and commenced its production on 11.02.2010. Admittedly ....