TaxTMI 
TaxTMI 
2022 (8) TMI 1444
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.... by the Assessee (Sun Pharma Sikkim) - A.Y. 2012-13 1. The grounds of appeal raised by assessee are as under: "1. Re: Disallowance of deduction u/s 80IE(6) r.w.s. 80IA(10) in respect of alleged price difference Rs. 2,13,425/- on purchase from Sun Pharmaceutical Industries Limited (SPIL) & Sun Pharmaceutical Industries (SPI) On the facts and in the circumstances of the case and in law, the Learned CIT (A) erred in upholding the invoking of the provisions of S.80IE(6) r.w.s. 80IA (10) and thereby upholding the disallowance of Rs. 2,13,425/- on account of purchase of materials by the Appellant from SPIL & SPI. 2. Re: Assessing the scrap sale, interest & other income under the head Income from other sources' Rs. 14,54,919/-. (a) On the facts and in the circumstances of the case and in law, the Learned CIT (A) erred in upholding the assessment of interest on bank F.D., interest on loan to employees and other income under the head 'Income from other sources' instead of assessing the same under the head 'Profits and gains of business'. (b) The learned CIT (A) also erred in not appreciating that all the above receipts/inco....
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....e are not repeating the same for the sake of brevity. 4. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we find that issue on hand is covered by order of the coordinate bench of this tribunal in the own case of the assessee for A.Y. 2010-11 and 2011-12 in ITA Nos. 3377 & 215/Mum/2017, where the bench vide order dated 16th May 2019 held as under: 8. In ground no.2 (Asstt. Year 2010-11), the assessee has pleaded that the ld.CIT(A) has erred in excluding the amount representing scrap sale from eligible profit for grant of exemption under section 80IE. The ld. counsel for the assessee submitted that a sum of Rs. 8,59,701/- was upheld by the ld.CIT(A) for exclusion from the eligible profits. Such amount represented interest from bank on fixed deposits, interest of loan to employees and other income, which are assessable under the head income from other sources, and therefore, not eligible for grant of deduction under section 80IE. He pointed out that out of the amount of Rs. 8,59,701/- a sum of Rs. 7,08,144/- represent scrap sale. Break up of this amount has been noted by the CIT(A) on page no.46 of the i....
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....account of scrap sale whereas we uphold the finding of the learned CIT(A). With regard to the exclusion of interest and other income as discussed above, we hold that such income is not eligible for deduction under section 80-IE of the Act. Thus, the ground of appeal raised by the Assessee is hereby partly allowed. 5. In the result appeal of the assessee is hereby partly allowed ITA No. 1397/AHD/2017 an appeal by the Revenue for the A.Y. 2012-13(Sun Pharma Sikkim) 6. The Revenue has raised following grounds of appeal: "I(a) On the facts and circumstances of the case and in law the learned CIT(A) has erred in allowing the assessee's ground on disallowance of deduction u/s 80IE of Rs. 13,61,50,69,980/- without appreciating the fact that the assessee firm was formed by the splitting up and reconstruction of the existing business of SPI and the condition that old / used machinery is less than 20% of the stipulated limit has not been fulfilled by the assessee." I(b) On the facts and circumstances of the case and in law, the Ld. C.I.T. (A) erred in holding that rejection of books of accounts in this case is not legally tenable and hence rejection of books of....
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....down in section 80IE, and accordingly the A.O. had correctly disallowed deduction u/s. 80IE of Rs. 13,61,50,69,980/- II(d) On the facts and circumstances of the case and in law the Ld. C.I.T. (A) erred in holding that the claim of the appellant in respect of deduction u/s. 80IE of the Act is within the purview of the provisions of the Act without appreciating the A.O's finding on the issue of period of use & depreciation of plant and machinery used by Sun Pharma Industries & M/s. Sun Pharma Sikkim. III(a) On the facts and circumstances of the case and in law, the Ld. C.I.T.(A) erred in deleting, the disallowance of deduction u/s 80IE(6) r.w.s. 80IA(10) on apportionment of selling and distribution expenses of Rs. 182,57,00,000/- incurred by the working partner without appreciating the fact that all the sales and distribution expenses were debited to SPIL and no allocation was made to SPI and SPS units as has been revealed during the proceedings of survey action u/s. 133A." III(b) On the facts and circumstances of the case the Ld. C.I.T. (A) erred in deleting the disallowance of deduction u/s. 80IE In respect of selling and distribution expenses without....
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....a) On the facts and circumstances of the case and in law The learned CIT(A) erred in deleting the disallowance of deduction u/s 80IE(6) r.w.s. 80IA(10) on apportionment of management fees of Rs. 87,14,00,000/- without appreciating the fact that the affairs of the assessee were managed by SPIL, the working partner, and nothing is paid or charged by SPIL and hence disallowance made @ 5% of turnover adopted by the Assessing Officer is justifiable and reasonable. VI(b) On the facts and circumstances of the case and in law the learned CIT(A) erred in deleting the disallowance of deduction u/s 80IE(6) r.w.s. 80IA(10) on apportionment of management fees - without appreciating that the provision of the Supplementary Deed of partners if at all, applicable can be only from a date on or after 15th March, 2012, The assessee can not correct its mistakes or undone the anomaly by creating a retrospective charge by a written or otherwise instrument. Such type of the legal and binding written instruments or acts or rules at best can be made by a sovereign Parliaments or the Judiciary. The assessee has simply made a supplementary deed of partnership and tried to give the retrospective effec....
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....he AO by reiterating the findings contained in the assessment order which we have already adverted to in the preceding paragraph. Therefore we are not repeating the same for the sake of brevity. 7.5 On the other hand, the learned AR before us submitted that issue of eligibility of the assessee under section 80IE of the Act arising from A.Y. 2010-11 which was the first year of the claim where the AO disallowed the claim of deduction/exemption. On appeal the learned CIT(A) deleted the disallowances made by the AO against which the Revenue was in appeal before the ITAT in ITA No. 3541/Mum/2015 which has been vide order dated 16th May 2019 decided in the favour of the assessee. Thus, once the eligibility of the assessee to claim deduction under section 80IE is upheld in the first year of claim, the same cannot be disputed in the subsequent year on the same ground. The ld. AR vehemently supported the order of the ld. CIT-A. 8. We have heard the rival contention of both the parties and perused the materials available on record. At the outset, we find that issue on hand is covered by the order of the coordinate bench of this tribunal in the own case of the assessee for AY 2010-11 in....
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....act that both the cover letter and form no. 24 to the application clearly mentioned the correct date of 21.2.009. The ld.CIT(A) verified this fact and accepted that licence was taken on 21.2.2009 and not 21.2.2007 as inferred by the AO. Thus, on re-appreciation of this fact, we are of the view that the ld.AO has taken wrong facts which goaded him to a wrong conclusion. This circumstance cannot be used as a corroborative factor for harbouring a belief that the assessee-firm was constituted after splitting up and reconstruction of existing business. 19. Next reason assigned by the AO in this regard is that Sun Pharma Sikkim was initially being set up as a unit of SPI. When SPI was denied deduction under section 80IA, Sikkim plant was ready for commercial production. The assessee firm was created on 15.1.2009. It booked cost through debit note on 5.3.2009 and journal entry. According to the AO, transfer of assets was just 15 days prior to the issue of provisional licence to manufacture on 20.3.2009 and 46 days prior to the commercial production which created a suspicion about establishment of a new undertaking at Sikkim. The AO thereafter made reference to the production and ....
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.... The discussion made by the ld.CIT(A) in this regard is worth to note. It reads as under: "4.2.6 With regard to the deduction under section 80IE, it is to be noted that the same is available to an 'industrial undertaking' and the deduction is available from the Initial assessment year'. 'Initial assessment year' is defined in section 80IE(7)(i) to mean that the assessment year in which the industrial undertaking begins to manufacture or produce. It is also an equally settled position of law that deduction is qua an undertaking and not qua an assessee. Circular F No.15/5/63IT(A-l) dated 13.12.1963 of CBDT clarified that a new industrial undertaking taken over by another assessee before the expiry of five year the successor will be entitled to the benefit of unexpired period of five years provided the undertaking is taken over as a running concern. Given that section 84 and 80IE are in parimateria, such deduction is available to an undertaking that acquires a running concern for the unexpired period of deduction. Therefore, once the undertaking remains unaffected or unchanged by subsequent change in the ownership, it cannot be said that the business of th....
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.... plant & machinery installed in the industrial undertaking included more than 20% of old plant & machinery. 23. Brief facts with regard to the above are that total amount of plant & machinery of Rs. 49.33 crores were stated to be installed by the assessee. According to the AO, the plant & machinery having value of Rs.14.98 crores represented old and second-hands machinery. To counter this plea of the AO, the assessee has filed additional evidences before the ld.CIT(A) which were taken on record and remand report was called for. These details have been noticed by the ld.CIT(A) in para 4.2.8. Thereafter, the ld.CIT(A) took into consideration reconciled statement of plant & machinery while taking note of written submissions filed by the assessee. After a detailed examination, the ld.CIT(A) has held that the assessee has not used old plant & machinery exceeding 20%. The discussion made by the CIT(A) is worth to note. It reads as under: "4.2.10 The contentions of the appellant have been duly considered along with the findings AO. On perusal of the impugned order it is seen that while the AO, at the time of assessment noted that the appellant had furnished incomplete de....
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....voice cum delivery challan available. 4.2.11 After considering the submissions of the appellant and the observations of the AO in the remand report, I find that on the issue of duplicate bills the AO has not carried out any independent enquiry to establish that such bills pertained to machinery that had already been put to use prior to its installation in the appellant's unit. In my considered opinion, the mere fact that a particular piece of plant or machinery is supported by a duplicate bill, by itself does not prove that the said item is second hand or used. The appellant's contention that many a time the original bills are retained by the State Government Check Post authorities etc. is not without weight. The bills purchased in the prior period are seen to be pertaining to the infra structural part of the new unit and nothing has been brought on record to show that such installation was utilized prior to the commencement of commercial production by the appellant, It is also seen that in most cases where the bills are duplicate or photocopies, the appellant has made other purchases from the same parties also for which original bills are available. The availabili....
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....ion, filling, steel reinforcement, masonry, plaster and water-proofing work. In its submissions the appellant has continuously been stating that work relating to the Sikkim unit was initially undertaken by SPI and that it was only at a later stage that the appellant firm was brought into existence and that the plant and machinery etc. was duly assigned to the appellant firm. That being the case, civil work would have certainly begun much prior to 2009 and the fact that M/s Yuksom Engineering Works has Issued the final bill dated 31/03/2007 can only be taken as proof for completion of the works Indicated therein and not as evidence to show commencement of commercial production as the mere existence of an outside structure cannot by itself be taken to indicate that commercial work was going on inside it. 4.2.12 The AO has further observed that the commencement certificate issued by the Dept. of Commerce & Industries, Govt. of Sikkim was issued on 14/12/2009 and from this fact inferred that the genuineness of the certificate was doubtful since while it gave the issue of date of commencement of production as 20/04/2009, it was issued 7 months later. In this regard the appellan....
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....a Sikkim for the period October 2006 to March 2011. In this regard, the appellant has stated that the said notice was issued taking into account date of beginning of factory construction and that the appellant has only paid a fraction of the demand. From a perusal of the said document I find that it is merely a show cause which has been duly replied to by the appellant and that the document itself does reflect any adverse inference drawn by the Commercial Tax Division, Sikkim. 4.2.15 The AO has further sought to draw inference from the denial of deduction u/s 80IB(4) in the case of the sister concern Sun Pharma Industries Dadra Unit and Jammu Unit for A.Y. 2004-05 and 2005-06 to support his conclusions in the case of the appellant firm, stating that while the ITAT has decided the issue, the Department has not accepted the decision and the matter is pending adjudication before the High Court. A perusal of the orders passed by the Hon'ble ITAT in the case of SPI reveals that the Tribunal considered the issues related to disallowance of deduction u/s 80IB to SPI Jammu (on similar footing as in the present case), in detail in the orders passed for A.Y. 2005-06 (dated 11.06....
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....he present case, there is no reconstruction or splitting up of an earlier existing business. The appellant's case is also further strengthened by the decisions discussed In Para 4.2.17. above. Thus the inescapable conclusion is that there is no splitting up or reconstruction in the case of the appellant during the year under consideration. The aspect of the old/used machinery less than the stipulated limit of 20% has already been found to be in favour of the appellant in the discussion from para 4.2.7 to para 4.2.15. That being so held, the aspect of notional disallowances made by the AO on account of royalty, selling and distribution expenses etc. is adjudicated upon in the following paragraphs" 25. During the course of hearing, the ld.DR relied upon the order of the AO; on the other hand, the ld.counsel for the assessee submitted that ld.CIT(A) has considered each and every aspect and also distinguished as to how the judgments put into service by the AO, are not applicable on the facts of the present case. The ld.counsel for the assessee also relied upon the orders of the ITAT passed in the case of its sister concern viz. Jammu Unit and Dadra Unit. Appeals of these u....
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....ed by the Higher Judicial Authorities. Before us, the learned DR has not placed any material on record to point out any distinguishing feature in the facts of the case for the year under consideration and that of earlier year nor has placed any contrary binding decision in its support. Thus, respectfully following the order this tribunal in the own case of assessee, we uphold the finding of the learned CIT(A). Thus, the ground of appeal raised by the Revenue is hereby dismissed. 9. The next issue raise by the Revenue vide ground Nos. I(b) and I(c) is that the learned CIT(A) erred in quashing the book result under section 145(3) of the Act made by the AO. 9.1 The AO during the assessment proceeding found that that the assessee firm showing net profit rate @ 67.85 and claiming 100% exemption/deduction under section 80IE of the Act whereas the majority partner of the assessee firm being Sun Pharma Industries Ltd (97.5%) not enjoying tax holiday and engaged in identical activity declaring NP ratio at 3.12% only. The AO compared the NP ratio declared by the other assessee engaged pharmaceutical industries and found that the average NP declared by those assessee comes at 15.65%. Th....
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.... the same in law relating to Income-tax as well as in civil law, namely if there is no challenge to the transaction j represented by the entries, then it is not open to the revenue or other side to I contend that what is shown by the entries is not real state of affairs. It therefore follows that when a return is furnished based on an account duly audited by the Auditor, the said account should be taken as the basis for assessment and that the account could not be rejected unless there are evidences brought on record so as to establish that the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee. In Lalchand Bhagat Ambica Ram vs CIT (1959) 37 ITR 288(SC) it was held by the Hon'ble Apex Court that there is no presumption of bad faith against an assessee unless there is sufficient material on record to establish and sustain bad faith. Further, in ACIT vs Roopchand Tharani (249 CTR 326 (Chattisgarh High Court) it was held by the Hon'ble High Court that where the AO has not pointed out that any specific defect or discrepancy in the account books maintained by the assessee, which are duly audited by an independent chartered ac....
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....is able to point out certain transactions which have been left to be entered in the books of account or that the assessee has sold some of the items at a price higher than what is disclosed in the books of account or if proper particulars, bills, vouchers, are not forthcoming etc., the books of account cannot be rejected without assigning specific reasons. Absence of vouchers or the supporting evidence in respect of a particular item of expenditure cannot by itself empower an Assessing Officer to invoke provision of Section 145(3) in rejecting the books of account. Amritsar Bench of the Hon'ble Tribunal in Ashok Kumar a Co. v. IT0110043 2 SOT 518 (Asr.) (SMC) held that rejection of books cannot be restored to simply on the basis of absence of some vouchers and failure to produce the same by the assessee. In other words, any such situation should only warrant a specific addition by the Assessing Officer if he comes to a conclusion that such expenditure had not been incurred or not verifiable. Instead of adopting this accepted approach if an Assessing Officer resorts to a convenient approach of rejecting the books in total such action would be illegal against the tenets of Law. I....
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.... to compute the taxable income of the assessee on the basis of book result shown by the assessee and not in the manner as prescribed in section 144 of the Act, In view of the facts and legal propositions as discussed above, it is held that the rejection of books of account in this case is not legally tenable and hence, rejection of books of account by the AO could not be upheld. Ground No. 2 is accordingly, allowed." 9.4 Being aggrieved by the order of the learned CIT(A) the Revenue is in appeal before us. 9.5 The learned DR before us vehemently supported the stand of the AO by reiterating the findings contained in the assessment order which we have already adverted to in the preceding paragraph. Therefore we are not repeating the same for the sake of brevity. 9.6 The ld. AR, on the other hand, submitted that the issue is covered in favour of the assessee by the order of the tribunal in ITA No 3377 & 3541/Mum/2017 in own case of the assessee for A.Y. 2010-11. 10. We have heard the rival contentions and gone through the facts and circumstances of the case, including the materials available on record. As per section 145(3) of the Act, the AO is empowered to reject the boo....
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....n case of Awadhesh Pratap Singh Adbul Rehman & Bros v/s. CIT 201 ITR 404(All) which reads as; "It is difficult to catalogue the various types of defects in the account books of an assessee which may render rejection of account books on the ground that the accounts are not complete or correct from which the correct profit cannot be deduced. Whether presence or absence of stock register is material or not, would depend upon the type of the business. It is true that absence of stock register or cash memos in a given situation may not per se lead to an inference that accounts are false or incomplete. However, where a stock register, cash memos, etc., coupled with other factors like vouchers in support of the expenses and purchases made are not forthcoming and the profits are low, it may give rise to a legitimate inference that all is not well with the books and the same cannot be relied upon to assess the income, profits or gains of an assessee. In such a situation the authorities would be justified to reject the account books under section 145(3) and to make the assessment in the manner contemplated in these provisions." 10.2 Without prejudice to the above, we also note th....
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....and expenditure, naturally there would not be any scope for further deductions. 10.3 In view of the above and after considering the facts in totality, we do not find any infirmity in the order of the learned CIT (A). Accordingly, we uphold the same. Hence the ground of appeal of the revenue is dismissed. 11. The next issue raised by the Revenue vide ground Nos. III(a) to VII(a) is that the learned CIT(A) erred in deleting the disallowances of deduction u/s 80IE of the Act made on account of apportionment of selling & distribution expenses, R&D expenses, royalty expenses, managerial fee and remuneration to partners SPIL. 11.1 The AO during the assessment proceeding found that that the assessee firm is an eligible entity for deduction under section 80IE of the Act which is managed &controlled by the M/s SPIL in such a way that resulted in shifting of taxable profit of M/s SPIL to the assessee firm which is exempted under section 80IE of the Act. The AO found that identical arrangement was also found in case of the sister concern of the assessee namely Sun Pharma Industries (SPI) in A.Y. 2004-05 to 2009-10 and taking leaf from the same, his predecessor in own case of the asse....
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.... order dated 16th May 2019 decided in the favour of the assessee. 12. We have heard the rival contention of both the parties and perused the material available on record. At the outset we find that issue on hand is covered by order of the coordinate bench of this tribunal on own case of the assessee for A.Y. 2010-11 in ITA Nos. 3541/Mum/2017, where the bench vide order dated 16th May 2019 held as under: 28. As far as section 80IE(6) is concerned, it contemplates that provisions contained in sub-section (5) and sub-sections (7) to (12) of section 80IA shall, so far as may be, apply to the eligible undertaking under this section. It contemplates that section 80IA(10) will be applicable for the purpose of section 80IE deduction. In other words, section 80IA(10) be considered as a part of section 80IE if the facts in this regard are available. A perusal of section 80IA(10) would reveal that if where on an analysis of the record it revealed to the AO that on account of close connection between the assessee carrying on the eligible business to which this section applies and any other person, or for any other reasons, the course of business between them is so arranged that the....
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....tity on the basis of their turnover. He allocated the expenses to each assessee on the basis of turnover and accordingly reduced the eligible profit of the assessee by way of apportionment of expenditure. Let us take the first-one. The details with regard to the selling and distribution of products manufactured by SPIL and SPI are being noticed by the AO in the assessment order in para 10.2. We deem it appropriate to take note of the finding which reads as under: "From the above it is clear that Research and Marketing activities relate to S & D of products manufactured both SPI & SPS {Assessee) are being done by SPIL and related expenditure are charged to SPIL account which reduces the profit of the SPIL. In other words the profit of 80IB and 801E units of SPI SPS are inflated. It is needless to say that assessee is just manufacturing pharmaceutical formulations and selling distribution and marketing expenses, Research etc. are done by SPIL and therefore, the expenses S & D marketing etc. should be borne by SPI and SPS (Assessee) and SPIL on the basis of turnover of each unit. In the circumstances Selling, Distribution and Marketing expenses are required to be allocated am....
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.... "4.4.2 I have considered the facts related to the issue as they emanate from the impugned order and the submissions made in these proceedings. As per the partnership deed of the appellant, SPIL is one of the partners of the appellant firm. There is no dispute the fact that SPIL has been engaged in the business of pharmaceuticals viz. sale of bulk drugs and formulations for several years and has a well-established marketing network all over India. Further, as per the original deed of partnership read with the supplementary deed dated 15.03.2012 it is evident that SPIL is to be remunerated for rendering various services to the appellant firm in the capacity of working partner. It is seen that the assertion of the AO that distribution and selling expenses are not incurred by the appellant is incorrect as appellant had debited Rs 9,4 crores to P&L A/c as selling and distribution expenses. Further, the AO has. placed heavy reliance on the statements recorded from Mrs. Kalyana Sundaram, CEO of SPIL and Shri Sanjay Sahai, GM (Strategic Marketing & Research) of SPILduring the survey proceedings. Both these persons have in the statements recorded stated that the marketing, selling and dist....
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.... ground raised by the appellant is allowed. **** **** **** 4.5.2 I have considered the facts related to the issue at hand. The fact that, the development of products is carried out only by SPIL is not disputed. It is also a fact that in such product technologies are completely owned by SPIL and that neither the appellant firm nor SPI hold any rights of ownership. In the impugned order, the AO has placed heavy reliance on the statement recorded from Dr. T. Rajamannar to conclude that R & D activity carried out by SPIL pertains to the appellant firm as well as SPI which fact is not denied by the appellant at any point in time. The appellant has explained that the products manufactured at the appellant unit are generic products. On consideration o....
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....e might have been various strategic decisions at the HQ level, which is looking after the different entities of the group as a whole. So on the basis of general statement, it could not be harhoured that exactly what expenditures of the assessee, were being borne by its working partner. The second circumstance referred by the AO is a comparable study from SPIL while considering the profit earned by the assessee vis-à-vis ratio of expenditure incurred by it. It is pertinent to observe that the assessee is in the business of manufacturing and sale of pharmaceuticals, drugs/medicines. Some of the drugs were manufactured as bulk drugs. The AO should have found it, who were selling agents or what is the marketing network through whom the assessee has made sales. Even if it has used the network of its working partner, then how the sales have been effected through that network. The assessee has debited expenditure of Rs. 9.4 crors. One can appreciate that if there were only few parties, through them sales were made, then looking into that network and the expenses debited by the assessee, can it be assumed that such a sale target could not be achieved on an incurrence of Rs. 9.5 cror....
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....f the ITAT cited supra. 34. Next item which has been reduced from the eligible profit is an amount of Rs. 48.40 crores. The AO was of the opinion that the assessee has used trademark, brand and logo of SPIL, therefore it should have paid royalty or any other charges to SPIL. He has estimated 8% of the turnover which ought to have been paid by the assessee to SPIL. This 8% has been estimated by the AO on the basis of his view taken in the case of SPI in the assessment years 2004-05 to 2010-11. The stand of the assessee before the Revenue authorities was that on the basis of supplementary partnership deed, SPIL has been given remuneration at the rate of 5% of the turnover. This mechanism has been provided as per supplementary deed. SPIL is a major working partner, who has provided all these facilities to the assessee, and remuneration at 5% of the turnover has been provided. This aspect has been considered by us as well as by the CIT(A) while considering the issues under the head Research and Development. In the case of SPI, this estimation of expenses under the head royalty at 8% of the turnover was deleted. We find that in the present appeals also ld.CIT(A) relied upon ord....
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....turnover on account of such expenditure. On appeal, the ld.CIT(A) did not approve this view point of the AO, basically, for the reasons that this disallowance has been made on the basis of finding recorded in the case of SPI and that finding did not meet approval of ITAT in the case of SPI. 37. Before us, the ld. counsel for the assessee relied upon the orders of the ITAT, Amristar Bench and Mumbai Bench and submitted that the assessee has already paid remuneration at 5% of the turnover which has been accounted in the accounts. No further adjustment was required. This stand of the assessee in the case of SPI has been approved. We find that the finding of the CIT(A) is on this line, and we do not see any reason to deviate from the order of the ITAT, Amristar Bench on this issue. Therefore, we do not find any merit in the contention of the Revenue, and view taken by the CIT(A) is being upheld. ******************* 42. In the next ground of appeal, grievance of the Revenue is that the ld.CIT(A) has erred in deleting the disallowance of deduction under section 80IE(6) r.w.s. 80IA(10) on remuneration to working partner amounting to Rs. 29,02,26,973/-. ....
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....of earlier year nor has placed any contrary binding decision in its support. Thus, respectfully following the order this tribunal in the own case of assessee, we uphold the finding of the learned CIT(A). Thus, the ground of appeal raised by the Revenue is hereby dismissed. 13. In the Result appeal of the Revenue is hereby dismissed. ITA No. 2596/Mum/2018 an appeal by the Assessee - A.Y. 2013-14 (Sun Pharma Sikkim) 14. The Assessee has raised following grounds of appeal: "The Appellant submits the following grounds, which are without prejudice to one another: 1. Re: Disallowance of deduction u/s 80IE(6) r.w.s. 80IA(10) in respect of alleged price difference Rs. 1,25,288/- on purchase from Sun Pharmaceutical Industries Limited (SPIL) On the facts and in the circumstances of the case and in law, the Learned CIT (A) erred m upholding the invoking of the provisions of S.80IE(6) r.w.s. 80IA(10) and thereby upholding the disallowance of Rs. 1,25,288/- on account of purchase of materials by the Appellant from SPIL. 2. Re: Assessing the interest & other income under the head Income from other sources' Rs. 12,49,847/-. (a) On the fact....
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....ditions made by the AO on these issues. 2.1 On the facts and circumstances of the case and in law, the Ld. C.I.T. (A) erred in holding that rejection of books of accounts in this case is not legally tenable without appreciating the facts and reasons mentioned by the AO in the assessment order. 2.2 On the facts and circumstances of the case and in law the Ld. C.I.T. (A) erred in not upholding the A.O's action of rejection of books of accounts without appreciating that the assessee during the course of assessment proceedings did not furnish the details called for, and hence considering the facts of the case, the A.O. correctly rejected the books of accounts of the assessee, 3.1 On the facts and circumstances of the case and in law, the learned CIT(A) has erred in allowing the assessee's ground on disallowance of deduction u/s 80IE of Rs. 264,48,12,798/- without appreciating the facts and reasons mentioned by the AO in the assessment order. 3.2 On the facts and circumstances of the case and in law, the learned CIT(A) has erred in allowing the assessee's ground on disallowance of deduction u/s 80IB of Rs. 264,48,12,798/- without appreciat....
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....d. C.I.T. (A) erred in deleting the disallowance of deduction u/s 80IE(6) r.w.s. 80IA(10) on apportionment of selling and distribution expenses of Rs. 48,93,00,000/- incurred by the working partner without appreciating the fact that all the sales and distribution expenses were debited to SPIL and no allocation was made to SPI and SPS units, as has been revealed during the proceedings of survey action u/s. 133A. 4.2 On the facts and circumstances of the case the Ld. C.I.T. (A) erred in deleting the disallowance of deduction u/s. 80IE in respect of selling and distribution expenses without appreciating the A.O's finding on supplementary partnership deed and without appreciating that selling and distribution expenses cannot be considered in conjunction with remuneration and such charging of remuneration was not in accordance with the spirit of section 40(b) of the Act. 5.1 On the facts and circumstances of the case the Ld. C.I.T. (A) erred in deleting the disallowance of deduction u/s 80IE(6) r.w.s. 80IA(10) on apportionment of research and development expenses of Rs. 21,45,000/- incurred by the working partner without appreciating the fact that expenditure relat....
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.... 80IA(10) on remuneration to working partner of Rs. 18,55,46,564/- without appreciating the fact that the assessee had claimed remuneration paid to SPIL on the basis of supplementary deed of partnership dated 15-03-2012 and the same was not allowable in light of the provisions of section 40(b) of the Income-tax Act, 1961," 8.2 On the facts and circumstances of the case and in law the learned CIT(A) erred in deleting the disallowance of deduction u/s 80IE(6) r.w.s. 80IA(10) on remuneration to working partner of Rs. 18,55,46,564/- without appreciating the A.O's finding in the assessment order particularly with regard to assessee's reliance on supplementary partnership deed for inflating its profit for claiming higher deduction u/s 80IE(6) r.w.s. 80IA(10) of the Act." 20. The first issue raised by the Revenue is that the learned CIT(A) erred in not upholding the action of the AO for rejecting the books of accounts. 21. At the outset, we note that the issues raised by the Revenue in its grounds of appeal for the AY 2013-14 are identical to the issues raised by the Revenue in ITA No. 1397/Ahd/2017 for the assessment year 2012-13. Therefore, the findings given in I....
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....nce, the ground of appeal filed by the Revenue is hereby dismissed. 26. In the result appeal of the Revenue is hereby dismissed. ITA No. 3507/Mum/2016 an appeal by the Assesse - A.Y. 2011-12 (Sun Pharma Industries) 27. The assessee has raised the following grounds of appeal: "1. The orders of the lower authorities are arbitrary, not based on proper evidences, without proper reasons, invalid and also bad in law. 2. Re: "Initial assessment year" u/s 80-IB(14)(c) read with sec. 80-IB(2)(ii) (a) On the facts and in the circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) [hereinafter referred to as Learned CIT (A)], while allowing the deduction under section 80-IB(4) in respect of profit from industrial undertaking at Dadra, erred by considering the previous year as 10th year of operation as against the assessee's claim of 8th year of operation. (b) The learned CIT (A) has not appreciated the facts in proper perspective and erred in not appreciating the legal position that, for the purpose of section 80-IB, the initial assessment year is to be reckoned from the date of commencement of "commercial product....
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....nd No. 2 of its appeal is that the learned CIT(A) erred in upholding the year under consideration as 10th year of claim u/s 80IB(4) of the Act with regard to Dadra undertaking against the 8th year claimed. 30. At the outset we find that the issue has been decided against the assessee by the coordinate bench of Amritsar Tribunal in ITA 184/ASR/2009 for A.Y. 200506 where the coordinate bench held the A.Y. 2002-03 as initial year of claim u/s 80IB(4) of the Act for Dadra business undertaking instead of initial year as A.Y. 2004-05 claimed by the assessee. The finding of the Amritsar tribunal has been followed in A.Y. 2004-05, 2006-07 to 2010-11. Therefore following the same we do not find any infirmity in the order of the learned CIT(A). Hence the ground of appeal of the assessee is hereby dismissed. 31. The next issue raised by the assessee vide ground no. 3 of its appeal is that the learned CIT(A) erred in upholding invocation of section 80IB(13) r.w.s 80IA(10) of the Act for purpose of computing deduction under section 80IB of the Act. 32. At the outset we note the learned AR for the assessee before us submitted he has been instructed by the assessee not to press this issu....
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....ction under section 80-16 in respect of delayed payments from M/s Aditya Medisales Ltd. Amounting to Rs. 48,20,32,772/-, the facts are identical to the facts in assessee's own case for the assessment year 2004-05 decided by us hereinabove. Following the same/ this ground of the Revenue is dismissed," "54. As regards ground No 5&6 of the assessee with respect to the interest on FDR amounting to Rs. 3,27,5997- (correct figure Rs. 2,27,599/-) and loan to employees with regard to disallowance of deduction u/s 80-IB, the facts of the issues in hand are identical to the facts decided by the tribunal in assessee's own case dated 11.06.210 in ITA No 184(Asr)/2009 for the assessment year 2005-06. Following the same, the ground No 5&6 of the assessee are dismissed." 24. Following the orders of the decisions of the Amritsar Tribunal in the identical issues, we allow the assessee's claim of deduction under section 80-IB of the Act in respect of interest on delayed payments in question and direct the AO to delete the additions. However, we disallow the assessee's claim of deductions in respect of interest on staff advances & statutory/bank deposits." 34.1 Th....
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....s 80IB u/s 40b. 10. The learned Commissioner of Income-tax (Appeals) erred in deleting the disallowance made by the AO on account of the deduction u/s 80IB (13] in respect of disallowances made u/s 43B. 11. The learned Commissioner of Income-tax (Appeals) erred in deleting the disallowance made by the AO on account of deduction u/s 80IB (13) r.w.s 80IA (10) in respect of R&D Expenses incurred by working Partner." 37. The first issue raised by the Revenue vide ground no. 1 and 3 of its appeal is that the learned CIT(A) erred in holding that Dadra unit was not formed by splitting of existing business, in result, deleting the disallowances of deduction u/s 80IB for Rs. 8,30,03,087/-only. 37.1 The AO consistently from AY 2005-06 to the year under consideration i.e. A.Y. 2011-12 held that industrial undertaking of the appellant firm at Dadra claimed as eligible unit under section 80IB of the Act was formed by the splitting of existing business of M/s Sun Pharmaceuticals Industries Ltd. Thus, the assessee is not eligible to claim deduction u/s 80IB of the Act. 37.2 On appeal by the assessee, the view taken by the AO has been set aside by the learned CIT(A) in f....
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....truction of existing business". "43.3 Keeping in view the facts and circumstances discussed above, we are of the considered opinion that undertaking formed by SPIL at Dadra was qualified for deduction under section 80IB and the first year is taken as assessment year 200203 and the year under consideration become the fourth year of the undertaking and accordingly the benefit of deduction under section 80-IB needs to be allowed as per the provisions of the section and Circular of CBDT, referred to hereinabove". 16. The said decision has been further followed by the Amritsar Bench in the subsequent years also in the assessee's own case. We, therefore, respectfully following the decisions of the ITAT Amritsar, dismiss this ground of appeal of the Revenue and decide the issue in favour of the assessee." 38.1 Thus, respectfully following the consistent view of tribunal in the own case of the assessee we do not find any infirmity in the finding of the learned CIT(A). Hence, the ground of appeal raised by the Revenue is hereby dismissed. 39. The next issue raised by the Revenue vide ground no. 2 of its appeal is that the learned CIT(A) erred in holding that the ....
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....ution expenses, the remaining disallowance of expenses of royalty (of 8% of the turnover) of Rs. 14,15,34,442/- and management fee (of 1% of the turnover) of Rs. 1,76,91805/- are also directed to be deleted, as the same has been notionally considered by the AO which in our view, is incorrect and not justified. Thus, ground No. 5 of the assessee is allowed and ground No. 2 of the Revenue is dismissed.' 19. The said decision was followed by the IT AT Amritsar in assessee's own case pertaining to the subsequent assessment years 2006-07, 2007-08, 2008-09, and 2009-10. Following the said order, the ITAT Amritsar, in assessee's own case for the assessment year 2009-10, issued directions to the AO to delete the disallowance in respect of royalty, management fees and selling and distribution expenses. Therefore, we follow the decision of the ITAT Amritsar and dismiss ground No II(c)&(d) of appeal of the Revenue." 41.2 Thus, respectfully following the consistent view of Amritsar & Mumbai Tribunal in the own case of the assessee for A.Y. 2005-06 to A.Y. 2010-11, we do not find infirmity in the finding of the learned CIT(A). Hence the ground of appeal raised by the Rev....
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....n by the Hon'ble High Court of J&K in case of Shree Balaji Alloys vs. CIT 333 ITR 335 (J&K). The said decision was followed by the Amritsar Tribunal in the assessee's own case in the subsequent assessment years. We, therefore, respectfully following the decision of the ITAT Amritsar, dismiss this ground of the appeal of the Revenue." 43.1 Thus, respectfully following the consistent view of tribunal in own case of the assessee we do not find infirmity in the finding of the learned CIT(A). Hence the ground of appeal raised by the Revenue is hereby dismissed. 44. The next issue raised by the Revenue vide ground No. 8 of its appeal is that the learned CIT(A) erred in deleting the disallowances/exclusion of interest on delayed payment from computation of deduction u/s 80IB of the Act. 44.1 During the year the assessee received interest of Rs. 1,92,60,614/- which was included in the income for the purpose of deduction u/s 80IB of the Act. However the AO held that the interest income cannot be held as income as derived from the industrial undertaking. Thus, the AO excluded/disallowed the same from the computation of deduction. 44.2 On appeal by the assessee, the learned CIT(A)....
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.... regard to disallowance of deduction u/s 80-IB, the facts of the issues In hand are identical to the facts decided by the tribunal in assessee's own case dated 11.06.210 in ITA No 184(Asr)/2009 for the assessment year 2005-06. Following the same, the ground No 5&6 of the assessee are dismissed." 24. Following the orders of the decisions of the Amritsar Tribunal in the identical issues, we allow the assessee's claim of deduction under section 80-IB of the Act in respect of interest on delayed payments in question and direct the AO to delete the additions. However, we disallow the assessee's claim of deductions in respect of interest on staff advances & statutory/bank deposits." 45.1 Thus respectfully following the consistent view of Tribunal in the own case of the assessee, we do not find any infirmity in the finding of the learned CIT(A). Hence, the ground of appeal raised by the Revenue is hereby dismissed. 46. The next issue raised by the Revenue vide ground No. 9 of its appeal is that the learned CIT(A) erred in deleting the disallowance of the deduction under section 80IB of the Act on account of remuneration paid to partner. 46.1 During the year, ....
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....he issue in favour of the assessee. The relevant finding of the coordinate bench in ITA No. 2465/Mum/2014 reads as under: "26. Ground No V of the Revenue appeal, which pertains to adjustment on account of remuneration u/s 40(b) of the Act, is also covered in favour of the assessee by the orders of the Amritsar Bench passed in assessee's own case pertaining to the assessment years 2004-05, 2005-06 2006-07, 2007-08, 2008-09 and 2009-10. The Amritsar Tribunal has decided the identical issue in favour of the assessee in assessee's own case for the assessment year 2009-10 following the decision passed in assessee's own case for the assessment year 2004-05. Ground No 4&5 of the Revenue appeal in the assessee's own case for the assessment year 2004-05 was pertaining to higher deduction u/s 80IB on account of disallowance of remuneration u/s 40(b) and disallowance of deduction u/s 43B respectively. The relevant para of the order of the Tribunal reads as under:- " Since the facts relating to these issues are identical to the facts in assessee's own case for the assessment year 2004-05 decided by us hereinabove, following the same, ground No. 4&5 of the Reve....
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....e coordinate bench by following the order of Amritsar Tribunal in own case of the assessee for AY 2005-06 to A.Y. 2009-10 decided the issue in favour the assessee. The relevant finding of the coordinate bench in ITA No. 2465/Mum/2014 reads as under: "28. Ground No VI relating to deletion of disallowances of deduction u/s 80-IB in respect of disallowances made u/s 28 to 44 of the Act is also covered in favour of the assessee by the orders of The Amritsar Tribunal in assesses own cases for the assessment years 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 and 2009-10. The Tribunal has decided the identical issue in assessee's own case for the assessment year 2004-05 by observing as under:- "18. As regards ground Nos. 4&5 of the Revenue regarding granting of higher deduction u/s 80IB on account of disallowance of remuneration/s 40(b) of the Act amounting to Rs. 15,75,55,218/- and on account of disallowance of deduction u/s 43B amounting to Rs. 12,92,626/-, it is observed that the issue is covered by the decision of the ITAT, Amritsar Bench, vide its order dated 11.06.2010 in ITA No 184(Asr)/2009 in assessee's own case vide paras 37 to 40 at pages 67 to 69 (page....
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....&.D for products developed and launched were included in that, I find that the notional disallowance on account of R&.D expenses has been made on similar lines as the disallowances made for royalty, management fees and selling and distribution expenses. As discussed above, the said notional disallowances were found untenable by the Tribunal and were deleted in its order dated 12.06.2012. No additional facts have been brought on record to support the notional disallowance on account of R&.D expenditure. 16.5 Further in case of M/s. Sun Pharma Sikkim (SPS), sister concern of the appellant firm, similar disallowance was made by the AO for A.Y. 2010-11 on the basis of same facts and relying on the assessment done in the appellant's case. However, the CIT(A) in case of SPS decided the issue in favour of SPS. Relevant ara of CIT(A)'s order is reproduced herein below: "4.5.2 I have considered the facts related to the issue at hand. The fact that the development of products is carried out only by SPIL is not disputed. It is a/so a fact that such product technologies are completely owned by SPIL and that neither the appellant firm nor SPI hold any rights of ownersh....
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...."30. Ground No VII of the appeal pertains to adjustment in respect of R&D expenditure incurred by the working partner of the firm. The ld. CIT(A) has allowed the contention of the assessee that no disallowance is called for because clause 7-B of the partnership deed specifically provides for remuneration for technical assistance in the manufacturing activities and R&D facilities were included in the same. The Ld. CIT(A) has further based its findings on the ground that the notional disallowance on account of R&D expenses has been made by the AO on similar lines as have been made in respect of royalty, management fees and selling and distribution expenses and the said pounds were found not tenable by the Tribunal. Following the rationale behind the deletion in respect of royalty, management fees and selling and distribution expenses, by the ITAT Amritsar, we uphold the deletion made by the Ld. CIT(A) and dismiss this ground of appeal of the revenue." 51.1 Thus, respectfully taking the consistent view of Tribunal in the own case of the assessee, we do not find any infirmity in the finding of the learned CIT(A). Hence the ground of appeal raised by the Revenue is hereby dismissed. ....
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....rom any business' of the industrial under taking. 5. Re: Disallowance of deduction u/s 80IB in respect of interest income - Rs. 1,84,349/- on bank FDR (Jammu Unit Rs. 1,59,791/-; Dadra Unit Rs. 24,558/-) (a) On the facts and in the circumstances of the case and in law, the Learned CIT (A) erred in confirming the disallowance u/s 80-1 B in respect of and to the extent of interest on FDRs amounting to Rs. 1,84,349/- holding them to be not derived from the industrial undertaking. (b) The learned CIT(A) also erred in not appreciating that the section 80IB grants deduction in respect of 'any profits from any business' of the industrial undertaking. 6. Re: Initiation of penalty proceedings u/s. 271(l)(c). On the facts and in the circumstances of the case and in law, the Learned CIT (A) erred in not striking down the initiation of penalty proceedings u/s 271 (1) (c)." 54. The issue raised by the assessee in ground No. 1& 3 of its appeal is general in nature and not requiring any separate adjudication. Hence the same is dismissed as infructuous. 55. The next issue raised by the assessee vide ground no. 2 of its appeal is that t....
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....de by the AO on these issues. 2.1 On the facts and circumstances of the case and in law, the Ld. C.I.T. (A) erred in holding that rejection of books of accounts in this case is not legally tenable without appreciating the facts and reasons mentioned by the AO in the assessment order. 2.2 On the facts and circumstances of the case and in law, the Ld. C.I.T. (A) erred in not upholding the A.O's action of rejection of books of accounts without appreciating that the assessee during the course of assessment proceedings did not furnish the details called for, and hence considering the facts of the case, the A.O. correctly rejected the books of accounts of the assessee. 3.1 On the facts and circumstances of the case and in law, the learned CIT(A) has erred in not upholding the A.O's action that the purchase of Industrial Undertaking at Dadra is the case of splitting up or reconstruction of business of SPIL. 4.1 On the facts and circumstances of the case and in law, the learned CIT(A) erred in deleting the disallowance of deduction u/s 80IB(13) r.w.s. 80IA(10) on apportionment of royalty expenses of Rs. 38,06,09,798/- without appreciating the fac....
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....during the proceedings of survey action u/s. 133A. 6.2 On the facts and circumstances of the case and in law, the Ld. CIT (A) erred in deleting the disallowance of deduction u/s. 80IB in respect of selling and distribution expenses without appreciating the A.O's finding on supplementary partnership deed and without appreciating that selling and distribution expenses cannot be considered in conjunction with remuneration and such charging of remuneration was not in accordance with the spirit of section 40(b) of the Act. 7.1 On the facts and circumstances of the case and in law, the learned CIT(A) has erred in allowing the assessee's ground on disallowance of deduction u/s 80IB in respect of receipt of interest of Rs. 6,02,63,146/- on delayed payments on sales without appreciating the facts and reasons mentioned by the AO in the assessment order. 7.2 On the facts and circumstances of the case and in law, the learned CIT(A) has erred in allowing the assessee's ground on disallowance of deduction u/s 80IB in respect of receipt of interest on delayed payments on sales without appreciating the fact that this was not derived from manufacturing activit....
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.... in ground No. 1& 11 of its appeal is general in nature and not requiring any separate adjudication. Hence the same is dismissed being infructuous. 63. The next issue raised by the Revenue vide ground No. 2 of its appeal is that the learned CIT(A) erred in holding that the books of account rejected by the AO is not sustainable. 64. At the outset we note that the issues raised by the Revenue in its grounds of appeal for the AY 2012-13 are identical to the issues raised by the Revenue in ITA No. 4096/Mum/2016 for the assessment year 2011-12. Therefore, the findings given in ITA No. 4096/Mum/2016 shall also be applicable for the year under consideration i.e. AY 2012-13. The appeal of the assessee for the assessment 2011-12 has been decided by us vide paragraph no. 40 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2011-12 shall also be applied for the year under consideration i.e. AY 2012-13. Hence, the ground of appeal filed by the Revenue is dismissed. 65. The next issue raised by the Revenue vide ground No. 3 of its appeal is that the learned CIT(A) erred in holding that Dadra unit was not ....
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....3. The appeal of the assessee for the assessment 2011-12 has been decided by us vide paragraph no. 45 to 45.1 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2011-12 shall also be applied for the year under consideration i.e. AY 2012-13. Hence, the ground of appeal filed by the Revenue is dismissed. 71. The next issue raised by the Revenue vide ground No. 8 of its appeal is that the learned CIT(A) erred in deleting the disallowance of the deduction under section 80IB of the Act on account of remuneration paid to partner. 72. At the outset we note that the issues raised by the Revenue in its grounds of appeal for the AY 2012-13 are identical to the issues raised by the Revenue in ITA No. 4096/Mum/2016 for the assessment year 2011-12. Therefore, the findings given in ITA No. 4096/Mum/2016 shall also be applicable for the year under consideration i.e. AY 2012-13. The appeal of the assessee for the assessment 2011-12 has been decided by us vide paragraph no. 47 to 47.1 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment yea....
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....nd also bad in law. 2. Re: "Initial assessment year" u/s 80-IB(14)(c) read with sec. 80-IB(2)(ii) (a) On the facts and in the circumstances of the case and in law, the Learned Commissioner of Income lax (Appeals) [hereinafter referred to as Learned CIT (A)], while allowing the deduction under section 80-IB(4) in respect of profit from industrial undertaking at Dadra, erred by considering the previous year as 12th year of operation [i.e. after expiry of eligible period of 10 years] as against the assessee's claim of 10th year of operation. (b) The learned CIT (A) has nor appreciated the facts in proper perspective and erred in not appreciating the legal position that, for the purpose of section 80-IB, the initial assessment year is to be reckoned from the date of commencement of "commercial production" and not from any earlier date. Holding the year under appeal as the 12th year tor claiming deduction u/s 80113(4) of the Act being bad in law, the claim of the appellant treating the year as the 10th year from the beginning with the initial assessment year needs to be allowed/accepted. 3. Re: Invoking the provisions of S. 80IB(13) r.w.s. 80IA(10): ....
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....A No. 3507/Mum/2016 for the assessment year 2011-12. Therefore, the findings given in ITA No. 3507/Mum/2016 shall also be applicable for the year under consideration i.e. AY 2013-14. The appeal of the assessee for the assessment 2011-12 has been decided by us vide paragraph no. 30 of this order against the assesse. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2011-12 shall also be applied for the year under consideration i.e. AY 2013-14. Hence, the ground of appeal filed by the assessee is hereby dismissed. 82. The next issue raised by the assessee vide ground no. 4 and 5 of its appeal is that the learned CIT(A) erred in confirming the exclusion of interest income from computation of deduction u/s 80IB/10B of the Act. 83. At the outset, we note that the issue raised by the assessee in its grounds of appeal for the AY 2013-14 are identical to the issues raised by the assessee in ITA No. 3507/Mum/2016 for the assessment year 2011-12. Therefore, the findings given in ITA No. 3507/Mum/2016 shall also be applicable for the year under consideration i.e. AY 2013-14. The appeal of the assessee for the assessment 2011-12 has been dec....
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.... deleting the disallowance of deduction u/s 80IB(13) r.w.s. 80IA(10) on apportionment of royalty expenses without appreciating that the assessee in the guise of payment in the nature of remuneration for technical services of the nature of royalty adopted a device to inflate its non taxable income as is evident from the fact that assessee itself had admitted that it had included compensation for use of trademark, brand name etc as remuneration and that compensation could not be equated with remuneration. 5.1 On the facts and circumstances of the case and in law, the learned CIT(A) erred in deleting the disallowance of deduction u/s 80IB(13) r.w.s. 80IA(10) on apportionment of management fees of Rs. 17,38,32,062/- without appreciating the fact that the affairs of the assessee were managed by SPIL, the working partner, and nothing is paid or charged by SPIL and hence disallowance made @ 5% of turnover adopted by the Assessing Officer is justifiable and reasonable. 6.1 On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of deduction u/s 80IB(13) r.w.s. 80IA(10) on apportionment of selling and distribution expenses o....
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.... of the case and in law, the learned CIT(A) erred in deleting the disallowance of deduction u/s 80IB(13) in respect of disallowance of Rs. 7,22,191/- made u/s 43B of the Act without appreciating the facts that the AO has made addition on account of excise duty and earned leave due to non deposit of the same before the due date of furnishing return. 10.1 On the facts and circumstances of the case and in law, the Ld. C.I.T. (A) erred in deleting the disallowance of deduction u/s 80IB(13) r.w.s. 80IA(10) on apportionment of research and development expenses of Rs. 40,39,000/- incurred by the working partner without appreciating the fact that expenditure related to R&D was debited only in the hands of SPIL but no allocation was made to SPI and SPS units, as has been revealed during the proceedings of survey action u/s 133A, and the working of allocation of R&D activity on the basis of turnover in the ratio of 3:1 is justifiable and reasonable. 10.2 On the facts and circumstances of the case and in law, the Ld. C.I.T. (A) erred in deleting the disallowance of deduction u/s 80IB(13) r.w.s. 80IA(10) in respect of research and development expenses without appreciating tha....
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....nd distribution expenses to Jammu and Dadra unit by invoking the provision of section 80IB(13) r.w.s. 80IA(10) of the Act. 93. At the outset, we note that the issues raised by the Revenue in its grounds of appeal for the AY 2013-14 are identical to the issues raised by the Revenue in ITA No. 4096/Mum/2016 for the assessment year 2011-12. Therefore, the findings given in ITA No. 4096/Mum/2016 shall also be applicable for the year under consideration i.e. AY 2013-14. The appeal of the assessee for the assessment 2011-12 has been decided by us vide paragraph no. 41 to 41.2 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2011-12 shall also be applied for the year under consideration i.e. AY 2013-14. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 94. The next issue raised by the Revenue vide ground No. 7 of its appeal is that the learned CIT(A) erred in deleting the disallowance/exclusion of interest on delayed payment from computation of deduction u/s 80IB of the Act. 95. At the outset, we note that the issues raised by the Revenue in its grounds of appeal for the AY 2013....