TaxTMI 
TaxTMI 
2023 (9) TMI 735
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.... 1.2 In order to reduce the profit of eligible unit, the Ld. AO ought not to have compared baggase purchase rate of Shri Kadwa Sahakari Sakhar Karkhan Ltd with our baggase purchase rate. The Ld. Ought to have considered the local baggase sale rate supplied to him and ought not to have reduced any profit of eligible unit. 2. The Ld. AO erred in reducing [CIT(A) erred in confirming] the profit of eligible unit by Rs. 1,76,320/- on account interest allocation u/s 80-IA (10).) 3. The appellant craves its right to add to or alter the Grounds of Appeal at any time before or during the course of hearing of the case." 2. At the outset, ld. Authorised Representative (ld.AR) for the assessee submitted that assessee would not like to press the Ground No.2. Accordingly, Ground No.2 is dismissed as not pressed. Brief facts of the case: 3. The Assessee filed return of income electronically on 29.09.2013 for A.Y. 2013-14 declaring total income at Rs. 98,86,924/-. The assessee's case was selected for scrutiny. It is observed by the Assessing Officer in the assessment order that assessee had claimed deduction under section 80IA amounting to Rs. 97,39,747/-. The assesse....
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....ton. The ld.AR filed copy of the respective ledger accounts. The ld.AR also filed a chart to demonstrate the price at which "bagasse" has been sold by assessee to third parties. The initial part of the said chart is reproduced here as under: Baggas Sales 1-Apr-2012 to 31-March-2013 Date Particulars Vch No. Narration Quantity Rate Value Gross Total Baggas Sales Vat % 30/11/2022 Shrikrishna Power Mill Unit No.2 Dec- 12/B/01 Being sales of Baggas 1279.00 tn @1600/- per from 18.11.2012 to 30.11.2012 on Crussing 10092.381 Tn (1 Tn Steam @0.325 Kg Basghghas) 1279.00 1600.00 20464400.00 2046400.00 2046400.00 03/12/2012 BAPU MAHAJAN Dec- 12/B/02 Bill no. Dec- 12/B/01 29.35 1400.00 41090.00 41090.00 41090.00 03/12/2012 GOLUL HANSARAJ Dec- 12/B/03 Bill no. Dec- 12/B/02 27.05 1400.00 37870.00 37870.00 37870.00 03/12/2012 NANA PANDA KUMBHAR Dec- 12/B/04 Bill no. Dec- 12/B/03 28.46 1400.00 39844.00 39844.00 39844.00 03/12/2012 PRADIP RAJARAM....
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....53.00 77098.00 3855.00 6. The ld. AR submitted that assessee was selling "bagasse" to independent third parties as well as its power units. Therefore, for comparison, AO should have taken the rate at which assessee has sold "bagasse" to third parties. The AO erred in comparing the rate of "bagasse" sale of some other sugar factories like Shri Satpura Tapi Parisar Sahakari Karkhana. The ld.AR also submitted that rate of "bagasse" sale depends on the timings. In the case of assessee, since both units are close to each other, the "bagasse" produced by sugar factory is easily, conveniently, transferred to its power unit. Therefore, ld.AR pleaded that AO's order may be deleted. Submission of ld.DR: 7. The ld. DR for the Revenue strongly relied on the order of the lower authorities. Findings & Analysis : 8. We have heard both the parties and perused the records. It is an admitted position that assessee's manufacturing unit has sold "bagasse" to its power unit at Rs. 1600/- per metric ton. We have perused the paper book filed by the assessee and specially the chart filed by the assessee. It is observed that "bagasse" has been sold by the assessee to Independ....
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....ese facts and circumstances of the case, we are of the opinion that the most appropriate market rate is the rate at which assessee itself has sold "bagasse" to third parties. As mentioned earlier, assessee has sold "bagasse" to third parties at Rs. 1400/- per metric ton whereas it has sold "bagasse" to its power unit at Rs. 1600/- per metric ton. It means assessee has sold the "bagasse" to its power unit at higher rate. It means, assessee is not trying to reduce the profit of manufacturing unit. Section 80IA(8) is reproduced here as under: Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. 80-IA. ******** (8) Where any goods [or services] held for the purposes of the eligible business are transferred to any other business carried on by the assessee, or where any goods [or services] held for the purposes of any other business carried on by the assessee are transferred to the eligible business and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the eligible business does not correspond to the market value of such goods [or se....
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....e in the selling price of the products manufactured by it at its Baddi unit compared to that at Delhi unit. The AO proceeded on the basis that the sales were to related parties thus giving an unfair advantage to the Assessee. 12. The above approach of the AO was rightly found by the CIT(A) to be not justified. Without pointing out the error, if any, in the accounts or disturbing the figures of sales or purchases, to compare the trading results of business of two units and simply reject was clearly not a "reasonable basis", as contemplated by the proviso to Section 80-IA (8) of the Act. The AO's order does not explain the basis for determining the GP ratio of 23% instead of 38.05% for AY 2006-07 and 25% instead of 43.07% for AY 2007-08. In the circumstances, the ITAT's conclusion that the AO's order was passed on conjectures and surmises cannot be said to be erroneous. 13. When there are audited accounts of an entity and the calculation of the GP ratios hinges upon their analysis, the AO should not lightly undertake an exercise that would amount to negating those accounts." 12. In the case under consideration, we have already observed that assessee h....