TaxTMI 
TaxTMI 
2023 (9) TMI 834
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....dics came into existence in F.Y. 1990-91 and M/s 4th D commenced business operations from F.Y. 2002-03 and later on converted into independent entity. The proprietary concern M/s Ozone Ayurvedics is engaged in the business of trading and manufacturing of Ayurvedic formulations and cosmetics and the other proprietary concern M/s 4th D is engaged in the business of publishing of magazines under the name 4th D. Further M/s Ozone Ayurvedics has head office at New Delhi and manufacturing units at Baddi (H.P) and Guwahati (Assam). Unit in Guwahati (Assam) is engaged in manufacturing of Ayurvedic medicines and unit situated at EPIP, Amingaon, Guwahati and manufacturing unit at Bahadurgarh commenced in the year 2004-05 is engaged in manufacturing and trading of Ayurvedic medicines. 2.1 In ITA No. 5442/Del/2012 for A.Y. 2005-06 Ld. AO has narrated sequence of events in previous assessments: "It is pertinent to mention here that during the course of assessment proceedings for the A Y 2003-04, due to nature and complexity of accounts of the assessee and considering the interests of revenue involved, the accounts of the assessee were subjected to Special Audi u/s 142(2A) of I T Act....
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....s in A.Y. 2003-04. The relevant findings of CIT(A)'s order are reproduced here below; "5.13 In para 23.13 of their order Hon'ble ITAT discussed as to whether the unit of Guwahati was new unit or was a result of splitting up of any other unit. After discussing in detail it was observed that it can be said without any doubt that the appellant purchased new machinery from various places in India, transported them to the Guwahati unit and also obtained transport subsidy, which were installed in the Guwahati unit for production of ayurvedic medicines. The scale of operation in Guwahati unit was far higher in quantitative terms than the scale of operation in the Baddi unit. The medicines produced in Guwahati unit were sold in the local market, while the medicines produced in the Baddi unit were exported to various countries outside India. The appellant also obtained loan from a financial institution on the security of plant and machinery installed in the Guwahati unit. He also obtained capital subsidy from the Central Government. All these facts lead to an inescapable conclusion that the Guwahati unit was newly set up with new machinery for production of Ayurvedic medi....
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....as no payments of excessive nature calling for disallowance u/s 40A(2)(a) of the Act. Apparently in the absence of any concrete evidences and evaluating the fair marketing value of the goods and services by learned AO, the ad hoc additions were made which have been deleted by the learned CIT(A) and the same require no interference. The ground is decided against the Revenue. 9.1. The ground is common with ground no. 2 for A.Y. 2007-08 and ground no. 5 in A.Y. 2008-09, except for figures and amount for the relevant assessment years and no distinction of facts was pointed out by learned DR, so these grounds for A.Y. 2007-08 and 2008-09 are also decided against the Revenue. 10. Ground no. 4; The learned CIT(A) has dealt with the issue on page nos. 45 to 50 (relevant para 8 with its sub-paras). Learned CIT(A) has taken into consideration the various expenses and observed that expenses were duly supported by vouchers which were produced before learned AO and no specific instance has been brought on record by AO to justify ad hoc addition while the same set of expenses have been earlier allowed. It can be appreciated that learned AO had merely taken into consideration the disallowan....
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....s. It also ensures the quality of raw material so that the products may not be harmful in any manner. The research work being of utmost necessity of the business of the assessee and there being no adverse material on record to substantiate that R&D expenses were incurred for purposes other than assessee's business, we sustain the findings of the Ld. CIT(A) and reject this ground of the Revenue." 12.1 As there are no distinguishing facts, we respectfully follow the findings of Co-ordinate Bench and reject the ground. 13. Ground no. 7: The learned CIT(A) has discussed the issue on page nos. 53 to 58 ( para 10 with its sub-paras) and in Para 10.6 Ld. CIT(A) has considered all the evidences of assessee, including details of the advances recoverable in cash, to conclude that loans were raised for specific purpose and are secured loans. None of the advances is of the nature which is not related to business of the appellant or is given to any of his sister concern. Learned CIT(A) appreciated that it is no where stated by the Ld. AO as to which part of the loan was not used by the appellant for business purpose. Moreover, the findings of Tribunal in assessee's own case that the appel....
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....sed sales promotion material such as candles, incense sticks (Agarbatti) etc. from Ozone Mission, which is a trust, to promote products of the Trust rather than promoting its own product. Assessee had explained that the assessee does not get any benefit by making over payment to any entity as entire profit of the unit is exempt u/s 80-IB. Further, justification of genuineness of the transaction was submitted before learned CIT(A) and learned CIT(A) made specific finding that there is nothing in the assessment order to show as to how learned AO concluded that payments made were excessive. 16.1 The Bench is of the considered view that the materials purchased by the assessee from Ozone Mission were having specific designs and logo which were not available in the open market. Thus justification of making the purchases has been duly considered by learned CIT(A). Learned AO does not dispute 50% of the expenses on promotion on the basis of being relevant to the business of assessee thus denying remaining 50% for the reason it also benefited Ozone Mission, which was supplying the promotional material is arbitrary. The finding of learned CIT(A) requires no interference. Ground no. 3 is d....