TaxTMI 
TaxTMI 
2025 (10) TMI 30
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....fficer, under section 143(3)/143(3A) r.w.s. 143(3B) r.w.s.263 of the Act. 2. Since, the issues involved in all the appeals of Revenue and Assessee are common and identical; therefore, these appeals have been heard together and are being disposed of by this consolidated order. For the sake of convenience, the grounds as well as the facts narrated in ITA No. 260/Rjt/2024 for Assessment Year 2010-11, have been taken into consideration for deciding the above appeals en masse. 3. Although, these appeals filed by the Revenue and Assessee contain multiple ground of appeals. However, at the time of hearing we have carefully perused all the grounds raised by the Revenue as well as raised by the Assessee. Most of the grounds raised by the Revenue as well as Assessee, are either academic in nature or contentious in nature. However, to meet the end of justice, we confine ourselves to the core of the controversy and main grievances of Revenue and the Assessee as well. With this background, we summarize and concise the grounds raised by the Revenue as well as Assessee, as follows: (1) The Ld. CIT(Appeals), NFAC, Delhi has erred in law and on facts in directing to allow deduction c....
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....I.T. Act of Rs. 40,17,063/- made by the AO after set off the loss of Rs. 40,17,063/-, of Rudrapur unit-11, against the profit of unit-1, Rudrapur. [This is ground No.5 in Revenue's appeal in ITA No.247/RJT/2024 for A.Y.2012-13] 4. The Revenue has raised additional grounds of appeal in ITA No.260/RJT/2024, which is reproduced below: "The CIT(A)'s order for AY 2010-11 is based on the ITAT's decision for AY 2011-12, which erroneously relied on the non-existent assessment order for AY 2010-11 (assessment order for AY 2010-11 was overturned by the order of Ld. CIT-2, Rajkot vide their order u/s 263 passed on 19.01.2015). Since the ITAT's order itself is flawed, the validity of the CIT(A)'s order for AY 2010-11 is also in question, necessitating appropriate rectification." 5. Summarised and concise grounds of appeal in assessee's appeals are as follows: (1)The ld. CIT(A) erred on facts as also in law, in confirming action of assessing officer in restricting disallowance of deduction under section 80IC of Rs. 1,18,45,693/-, on protective basis, on the alleged ground of inflated profit of Rudrapur unit, being sale by Rajkot unit, in respect ....
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....und No.1 in ITA No.250/RJT/2024 for A.Y.2018-19] (2) The Ld. CIT(Appeals), NFAC, Delhi has erred in law and on facts in not appreciating the fact that the conditions stipulated under section 80IC has not been fulfilled in as much as the Rudrapur Unit neither produces nor manufactures any items and that there is no increase in the investment in Plant and Machinery by at least 50% of the book value as on the first day of the previous year. [This is Ground No.2 of Revenue's appeal in ITA No.260/RJT/2024 for A.Y.2010-11, Ground No.2 in ITA No.247/RJT/2024 for A.Y.2012-13, Ground No.2 in ITA No.248/RJT/2024 for A.Y.2013-14, Ground No.2 in ITA No.249/RJT/2024 for A.Y.2017-18, Ground No.2 in ITA No.250/RJT/2024 for A.Y.2018-19] The Revenue has raised additional grounds of appeal in ITA No.260/RJT/2024, which is reproduced below: "The CIT(A)'s order for AY 2010-11 is based on the ITAT's decision for AY 2011-12, which erroneously relied on the non-existent assessment order for AY 2010-11 (assessment order for AY 2010-11 was overturned by the order of Ld. CIT-2, Rajkot vide their order u/s 263 passed on 19.01.2015). Since the ITAT's order itsel....
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....s in the ambit of tax effect of CBDT circular, therefore, we dismiss Revenue's appeal in ITA No. 249/RJT/ 2024. 10. First, we shall take summarised ground No.1 and 2 and additional ground raised by the revenue. The relevant material facts, as culled out from the material on record, are as follows. The return of income showing total income of Rs. 16,13,21,007/- was filed by assessee on 25-09-2010. The return of income was processed u/s. 143(1) of the I.T. Act, 1961. The case was selected for scrutiny and assessment finalized u/s 143(3) vide order dated 25-03-2013 at the income of Rs. 16,15,40,460/-. 11. Later on, the assessee's case was reviewed by CIT-2, Rajkot, u/s 263 of the Income Tax Act 1961, and order u/s 263 was passed on 19/01/2015. The CIT-II Rajkot after considering the facts on records, set aside the original order u/s 143(3) of the Act, being erroneous and prejudicial to the interest of revenue on the following grounds and observations: "As seen from the records the assessee has claimed a deduction u/s. 80IC of the I.T. Act. in respect of its Rudrapur unit in Uttarakhand. The unit was started in April 2008, however, the deduction has been claimed for the ....
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....essing officer. 14. The assessing officer observed that the assessee has claimed deduction of Rs. 2,88,50,633/-, u/s 80IC of the Income tax Act, 1961, in respect of profit of Rudrapur unit. The assessee has shown profit of Rs. 3,32,20,406/-. The assessee was asked to justify its claim of deduction u/s 80IC of the Act with reference to the provisions of section 80IC of the Act. During the assessment proceedings, the assessing officer asked the assessee, to submit the justification of the deduction claimed 80IC of the Act, to the tune of Rs. 2,88,50,633/-. 15. In response to the notice of the assessing officer, the assessee submitted its reply before the assessing officer, with documentary evidences. The assessee submitted that profit for the year was of Rs. 3,32,56,106/- and after reducing loss of Rs. 43,69,773/- for A.Y.2010-11, the assessee has claimed deduction u/s 80IC of the Act at Rs. 2,88,50,633/-. The assessee submitted that it is manufacturing auto parts for Tata Motors Ltd and other vehicle manufacturing industries, at Rajkot, as well as Rudrapur at Tata Vendor Park, which is duly approved, vide notification No. 283/2006. At Rudrapur undertaking of the assessee is al....
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....tificate etc, were submitted by the assessee. The assessee also cited the judgement of the Hon'ble Supreme Court in Textile Machinery Corporation, where in it was held that such a new industrially recognizable unit of an assessee cannot be said to be reconstruction of his old business since there is no transfer of any assets of the old business to the new undertaking, which takes place when there is reconstruction of the old business. The assessee submitted that for the purpose of section 80I, the industrial units set-up must be new in the sense that new plant and machinery are erected for producing either the same commodities or some distinct commodities. In order to deny the benefit of section 80I, the new undertaking must be formed by reconstruction of the old business. In the present case, there is no formation of any industrial undertaking out of the existing business since that can take place only when the assets of the old business are transfer substantially to the new undertaking. Just because the new undertaking is dependent to a certain extent on the existing undertaking should not deprive the new undertaking of the status of integrated unit by itself wherein articles are....
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....ufactures articles, not being any article or thing specified in the list in Eleventh Schedule. (vii). The Undertaking employs more than ten workers in a manufacturing process carried on with aid of power. (viii). The said Industrial Undertaking is not formed as a result of reconstruction or revival of the business. (ix). The production capacity of undertaking increased. (x). Production and Profit of the New industrial Undertaking is ascertainable. (xi). The undertaking is managed by independent managerial personnel. Hence, the assessee submitted, before the assessing officer that an interpretation to the words 'New Industrial Undertaking` in Section 15C of the Income-tax Act, so that in all bona fide cases, the concession would be admissible. The question is largely one of facts of each particular case. The broad principle which will, however, be borne in mind in this connection that which are calculated to make a substantial addition to the existing output. Minor extensions of the existing undertaking and replacements of the existing installed capacity would be of course, not be eligible for the concession. In support of the abov....
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....s at Rudrapur Unit: No Particulars F.Y. 2008-09 F.Y. 2009-10 1 Job Work 1364082 4096657 2 Electricity 1583260 5013311 3 Wages, Bonus & other allowances 2169111 2654049 4 Job Work Contract Salary 0 0 5 Freight and other Direct Expenses 99612 167075 Total 5216065 11931092 6 Provident Fund Contribution 78393 115255 7 ESIC Contribution 36125 84658 iv. As stated above and in the following various judgments deduction was allowed Therefore, assessee stated that deduction under section 80IC should be allowed. 19. Further, assessee has also submitted the reason for higher Gross profit (GP), net profit (NP) ratio of Rudrapur Unit as compared to Rajkot Unit, stating that assessee has started Rudrapur unit-1 for Tata Motors Limited. In Rudrapur Tata Motors limited have their plant for manufacturing of various types of vehicles, that is, mainly TATA ACE Mini Truck i.e. popularly known as Chhota Hathi. Tata Motors limited is enjoying various fiscal benefits/incentives by the government of India i.e. no excise duty, VAT and many other government benefit thereto. Hence,....
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....peration to be carried out by Tata Motors -Puna, at Rs. 152.42 and if assessee add 50% other overhead charges incurred by Tata Motors Ltd, that is, 50% of Rs. 152.42, which is Rs. 76.21 it comes to Rs. 228.63 (Rs. 152.42 + Rs. 76.21). Hence there price difference of Rs. 70.41, that is, 30.80%. The total sales turnover of these two items are of Rs. 694.89 lacs (414.72 + 280.17) and total turnover of Rudrapur unit-1 are of Rs. 1453.28 lacs. Hence total turnover of these two items are 47.81%. In the same manner there is difference of prices i.e. 15-20% for other items, which manufactured at Rudrapur unit and supplied to Tato Motors Ltd., Rudrapur. Hence, there is more G.P. margin that is, of 41.96%, as compare to Rajkot unit of 35.71% and accordingly assessee claimed deduction u/s. 80IC for Rudrapur unit-1. Further in there are other benefits offered by the state government as well as central government i.e. in cheap power tariff rate etc. 21. In addition to that the assessee was asked in the notice of AO dated 14.12.2015 to give item-wise and consignment wise details of transfer of goods from one unit/ premises to another unit/premises in the tabular format. Similar details regard....
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....the activity at Rudrapur Unit would not fall within the ambit of definition of manufacturing. Therefore, assessing officer held that the assessee has neither manufactured nor produced articles or things at Rudrapur unit, therefore, the claim of the assessee u/s 80IC of the Act was disallowed, and the corresponding amount of Rs. 2,88,50,633/- which was added to the total income of the assessee. 24. Aggrieved by the order of the assessing officer, the assessee carried the matter, in appeal before learned CIT (A), who has allowed the reduction under section 80IC of the Act. The ld.CIT(A) considered the AO's findings and submission made by the assessee and also followed Hon'ble ITAT's order in assessee's own case, which was passed by the ITAT, on merit, wherein facts and law position is similar for this assessment year, under consideration. The ld.CIT(A) held that AO was not justified in denying deduction u/s 80IC of the Act and directed the assessing officer to delete the addition. 25. Aggrieved by the order of the Ld.CIT(A), the Revenue is in appeal before us and assessee has also filed cross appeals, in respect of protective addition and various disallowances m....
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.... The Learned DR for the revenue contended that by and large, these conditions were not satisfied by the assessee, under consideration. 29. The Ld. CIT-D.R. for the Revenue also submitted written submissions before the Bench, on the terminology and definition of the term "Manufacture" which we have gone through. The sum and substance of the written submission of the ld. CIT-DR for the revenue is that since the goods retain the same name, character, and use, the process does not meet the definition of "manufacture" under Section 2(29BA)(a) of the Act. The lack of transformation into a new and distinct object with different properties means the activity is not manufacturing for tax exemption purposes. The definition of "manufacture" under Section 2(29BA)(a) is exclusive and requires a cumulative change in name, character, and use. Legal precedents support the interpretation that all three elements must undergo transformation for an activity to qualify as manufacturing. In the given scenario, since the goods retain the same name, character, and use, the process does not constitute manufacturing under the Income Tax Act. 30. The Ld. CIT-DR for the Revenue also submitted that prote....
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.... the assessment order that 99% of the products are transferred from Rajkot Unit, therefore, Rudrapur Unit is not independent Unit. In this regard, it was submitted that Rudrapur is underdeveloped area where capex oriented infrastructural facilities are not developed hence such facilities are not available. In such situation it is required to get the raw material and getting carried out other process from out siders. As consistent quality is prime object of the assessee- firm therefore, it is decided to purchase Raw Material and get it forged in Rajkot through Rajkot Unit. Therefore, purchasing most of Raw Material from Rajkot Unit does not mean that Rudrapur Unit is not an independent Unit. 32. The ld. Counsel for the assessee, further stated that activity at Rudrapur Unit falls within the ambit of definition of manufacturing and Production. The ld Counsel submitted the List of machineries installed, and various process carried out by the Rudrapur Unit. The ld. Counsel also submitted that the details manufacturing expenses incurred by the assessee- firm at Rudrapur Unit. Further the details manufacturing process carried out at Rudrapur Unit, on each part was submitted by the ass....
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....turing Plant for manufacturing of various types of vehicles, that is, mainly TATA ACE mini truck which is popularly known, as Chhota Hathi. At Rudrapur Tata Motors Ltd is enjoying various fiscal benefits/incentives by the government of India as well as by Uttaranchal state government, that is, excise duty exemption, subsidy, and many other government benefit and incentive. Hence, Tata Motors is saving approx. 25-30% manufacturing cost at Rudrapur compared with their manufacturing units situated at other parts of India. Hence, Tata Motors has invited their parts suppliers like assessee -firm and many others to manufacture their parts at Rudrapur and to supply them at Rudrapur. But to start a manufacturing unit at Rudrapur a very remote place. As huge investments in land, factory building, and plant and machinery are required, hence no one were ready to invest there. So, Tata Motors offered to share their tax and other benefits/ incentives etc. between supplier of parts and themselves, that is, offering attractive pricing of its parts. In view of the same assessee also decided to start a separate unit at Rudrapur and Tata Motors has given a lease land from its Tata Vendor Park to the....
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....erence was given for assessment year 2010-11. 37. We note that assessee- firm is having following separate registration numbers and licenses for Rudrapur Unit. The Rudrapur Unit has made huge investments in fixed assets, and in plant and machinery, and it has incurred direct or indirect expenses for manufacturing activities, therefore, we find that Rudrapur unit falls in the definition of "manufacture" and it is an independent unit. The various data mentioned below explain this position. Appellant firm having following separate registration numbers and licenses for Rudrapur Unit. Financials submitted that the appellant firm has invested huge amount in land, building, machinery etc. and also have its own administrative staff and also having own vehicles and other equipment etc. Summary of the same is as under: Cost of investments in Fixed assets at Rudrapur Unit (Without Depreciation): WDV No Particulars FY 08-09 FY 09-10 1 Land & Development 83,19,191 83,24,991 2 Building & staff quarters 4,27,63,445 5,11,25,648 3 Plant & machinery 4,09,85,763 6,48,10,075 4 Electrical fittings 31,91,778 34,27,....
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....xpenses, it may be noted that expenditure like electric expenses, labour expenses etc, which is required for manufacturing the goods are incurred by Rudrapur Unit. Further the details of manufacturing process carried out at Rudrapur Unit on each part is submitted by the assessee. Besides, the reason for nomenclature of the goods supplied by Rajkot Unit to Rudrapur unit is same that of finished goods supplied by Rudrapur Unit to Tata Motors, which is meant for identification of the finished parts corresponding to Purchase order of the customer i.e. TML. In other words to identify the raw material and parts with respect to finished goods similar nomenclature has been used and accepted by the customer TML and others. It is submitted that one should go with process carried out instead nomenclature of the goods. We note that raw goods (ram material) received from Rajkot- Unit, thereafter many process are being carried out at Rudrapur Unit and there is substantial value addition in the goods. Therefore, there is price difference between Rajkot Unit charged for raw material and Rudrapur Unit Charged for finished goods. We note that after getting the raw material from Rajkot unit, further ....
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....ny other government benefit thereto. Hence they are saving about 25-30% at Rudrapur. They have invited their parts supplier like us and many other to manufacture their parts there are supply to them, but there are huge investment in land, factory building and plant and machinery at such remote places no manufacturar are ready to invest there. Hence they offered to share their above tax benefits between supplier of part and themselves i.e offering attractive pricing of its part and it resulting in more profit about 10 to 15% by parts suppliers. With these intention to optimize our profitability. We had planned to set up dedicated unit at Rudrapur exclusively for Tata Motors Ltd Rudrapur and our investment in land factory building and plant machinery etc are of Rs. 12,92,60,168/- (W.D. V as at 30/03/2011)." 17.2 The assessee has also made available to the AO the copies of the sales bills and other supporting evidences to justify the higher amount of gross profit. Such details can be verified from pages 24 to 25 of the paper book. 17.3 All the above details were available but the same was not doubted by the AO during the assessment proceedings. Furthermore, we find t....
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....tion was accounted for in the respective units. All these submissions were made available during the assessment proceedings which can be verified from the paper book. However the AO has not pointed out any defect in the submission filed by the assessee. 17.8 At the time of hearing, the learned DR has not pointed out any infirmity in the finding of the learned CIT(A). Thus in view of the above and after considering the facts in totality, we do not find any reason to interfere the finding of the learned CIT(A). Accordingly, we uphold the same. Hence, the ground of appeal of the revenue is hereby dismissed." 42. We find that above findings of the Tribunal, in assessee's case is on merit, and not by a covered case, and following ITAT's order in assessee's own case as discussed above, wherein facts and law position is similar for this assessment year under consideration, the learned CIT(A) deleted the disallowance of deduction u/s 80IC of the Act, to the tune of Rs. 2,88,50,633/-. Besides, we have examined the assessee's facts independently, on merit, and noticed that disallowance made by the assessing officer, deserve to be deleted. On a careful reading of the Ld.CI....
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....isallowed the amount which pertains to transfer of raw-products/articles from non-eligible unit Rajkot to eligible Rudrapur unit of Rs. 1,18,45,693/-. Therefore, the amount of Rs. 1,18,45,693/-, is a part of the deduction claimed by the assessee to the tune of Rs. 2,88,50,633/-. The Assessee, as well as Revenue, are not claiming that it is a separate disallowance of Rs. 1,18,45,693/-, u/s 80IC of the Act. Since the Assessing Officer has disallowed this amount on the view that there is transfer of raw-products/articles from non-eligible unit Rajkot to eligible unit Rudrapur to the extent of Rs. 1,18,45,693/- and therefore the Assessing Officer wants to reduce the deduction of the assessee, which is claimed by the assessee to the tune of Rs. 2,88,50,633/-. Therefore, we find that the disallowance of Rs. 1,18,45,693/- is in real sense, is not a protective addition made by the Assessing Officer, in fact, it is part of the main disallowance of deduction to the tune of Rs. 2,88,50,633/-. Therefore, both the issues are inter-connected and mix and hence, if the ld.CIT(A) deleted the main disallowance of Rs. 2,88,50,633/-, then separate disallowance of Rs. 1,18,45,693/-, which is very much ....
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.... Rudrapur. Therefore, we find that the amount of Rs. 1,18,45,693/- is part and parcel of the main deduction claimed by the assessee to the tune of Rs. 2,88,50,633/-. Since the main disallowance of the deduction of Rs. 2,88,50,633/- has been deleted by Ld.CIT(A), therefore, Ld.CIT(A) ought to have deleted the said addition of Rs. 1,18,45,693/-. 46. However, as we have noted earlier, in this order that assessee is manufacturing 235F REVGEAR SHIFTER SLEEVE and 236F SHIFTER SLLEVE (3RS/4 TH SPEED), which is manufactured at Rudrapur as well as Rajkot and supplying to Tata Motors Limited. Further all other parts as per list of Rudrapur which, are manufactured at Rudrapur only and supplied to Tata Motors Limited-Rudrapur. The Rate of 235F REVGEAR SHIFTER SLEEVE, which is finished product and its average price comes to Rs. 299.04 per piece and Rajkot 235C REVGEAR SHIFTER SLEEVE, which is semi- finished product and average price of said item comes to Rs. 152.42 and supplied to Tata Motors Limted-Pune. In the same manner Rate of 236F SHIFTER SLLEVE (3RS/4 TH SPEED), which is finished product, average price comes to Rs. 192.91 per piece and Rajkot 236F SHIFTER SLLEVE (3RS/4 TH SPEED), whic....
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....ls of the products which are transferred from Rajkot Unit to Sanand Unit. And similarly the list containing details of the products transferred from Sanand unit to TATA Motors. (d) Item-wise details of the products and components which are transferred from Rajkot unit to Gurgaon unit and thereafter from Gurgaon unit to Maruti Suzuki. These details were submitted by the assessee, before the assessing officer. 47. Further, we also find that in subsequent assessment years, the assessing officer/ transfer pricing officer, has accepted the above price at arm`s length price, based on the same facts and circumstances, and did not make any addition in the hands of the assessee. Therefore, taking into account this factual position also, the disallowance restricted by the learned CIT(A) to the tune of Rs. 1,18,45, 693/- should be deleted, accordingly, we delete the same. 48. In the result, following grounds of the assessee, are allowed. (i) Ground No.2 in assessee's appeal in ITA No.254/RJT/2024, for assessment year 2010-11, (ii)Ground No.2 in assessee's appeal in ITA No.255/RJT/2024, for assessment year 2012-13, (iii)Ground No.2 in assessee's appeal....
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...., our clarifications are as under: Our above assessee have various wind mill units since last A.Y. 2005-06, as per section 80IA, they were not claiming deduction on the basis that: Losses of pertaining to period earlier to initial assessment year have been set off against brought forward fosses notionally from the respective profit of the year while computing deduction u/s 80IA. Hence, above named assessee have not claimed deduction u/s 80IA for various wind mill units during the year under consideration. As held in judgment of Madras High Court in the case of Velayudhswami Spg. Mills v Asst. CIT (2012) 340 ITR 477, It was held that losses already set off pertaining to period earlier to initial assessment year cannot again brought back notionally while computing deduction u/s. 80IA. Assessee has claimed deduction u/s. 80IA, relying on judgment of Madras High Court in the case of Velayudhswami Spg. Mills v Asst. CIT (2012) 340 ITR477 and opinion on the basis of Saurabh N. Soparkar, Advocate for various units, for claiming amount of deduction u/s 80IA for various wind mill units, copy of Audit Report in Form 10 CCB, as per Annexure 4, are as under: ....
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....reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. We note that assessee is eligible for deduction u/s 80IA for windmill and for that copy of Audit Report in Form 10 CCB were submitted by the assessee during the course of assessment proceedings. We note that ld.CIT(A) has already held that assessee is engaged in manufacture and production activities at the eligible units. We also find merit in the conclusion reached by the learned CIT(A) to the effect that appellate authorities can entertain claim of the assessee, even though, same is not claimed in the original return of income filed. That being so, we decline to interfere with the order of Id. CIT(A) in allowing the deduction. His order on this issue is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. 58. In the result, summarised and concise ground No.3, raised by the revenue, is dismissed, in the following years: (i) Ground No.3 in ITA No.260/RJT/2024 for A.Y.2010-11, (ii) Ground No.3 in ITA No.247/RJT/2024 for A.Y.2012-13, (iii) Ground No.3 in ITA No.248/RJT/2024 for A.Y.2....
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....dent appointed managerial personal, hence no proportionate remuneration to partners are allocated to the said unit, as per I.T. Rules of the Act. Further, plant head has been appointed with all the powers like day to day affairs and to appear against all the government authorities and power to sign bank cheques for Industrial undertaking of Rudrapur, copy of Letter of mandate, Letter of Authority etc. are attached as per Annexure 4. Despite of the same, if your good- self calculate proportionate remuneration to partners for industrial undertaking at Rudrapur, it will be exempted in the hands of partners. For the said our clarifications are as under: (a) Prior to 01.04.93. (1) Section 40(b): As per above section in case of the firm, any payment of Interest, Salary, Bonus, Commission or remuneration made by the firm to any partner of the firm shall not be deducted in computing the income chargeable under the head Profit and gains of business of profession. Thus interest/remuneration paid to partners in case of firm were added to the total income of the firm. (ii) Section 67: As per section 67 interest/remuneration etc paid to part....
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....80HHC or section 80HHD or section 80I or section 80IA or section 80J or section 80JJ are allowable in case of the partner also. Which prior to 01.04.1993 were not allowable. Further two new sections has been inserted into the Act. i.e. section 10(2A) and section 28(v) of the Act. As per section 10(2A) of the Act share of profit of the firm has been exempt in case of the partner. Whereas as per section 28(v) of the Act any interest/remuneration etc. paid to partner and allowed u/s 40(b) of the Act as deduction in case of the firm has to be assessed under the head of business and profession of the Act. Thus after 01.04.93 as per new scheme of assessment of the firm interest remuneration etc. paid to partner has to be allowed as deduction allowable up to the allowable limit laid down in section 40(b) of the Act in case of the firm whereas share of profit received is exempted in case of the partner and interest/remuneration received by the partner is assessable as business and/or professional income in case of the partner. Thus, prior to 01.04.93 there was a double taxation inclusive of interest & remuneration etc. paid to partner in case of....
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....ugh it has same attributes of personality. In Income Tax law a firm is a unit of assessment by special provision but, it is not a full person. These cannot be a contract of service, in contract law between a firm and one or more of its partners. Thus the payment of salary to a partner would represent a special share of profit and would retain the same character of the income of the firm. Likewise interest, salary, bonus, commission or remuneration due to or received by a partner of a firm etc. also represent a special share of profit and would represent a same character of the income of the firm. (b) Therefore, all above allocation between partners are assessable under the head of "business and profession" even when there was no specific provision prior to 01.04.93 in section 28 of the Act and after 01.04.93 by virtue of section 28(v) now specifically brought the interest/remuneration paid to partner as income under the head of business & profession up to the extent allowed u/s 40(b) of the Act in case of firm. And the character of the said interest/remains the same as that of the firm. (d) We rely on the following judgements (i) CIT Vs. R.M. Chidambaram ....
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....e following High Court judgments have held that (a) Chhotalal Keshavram Vs. CIT (1978) CTR (MP) 118/ (1998) 115 ITR 347(MP) (b) CIT VS. Maharani Lalita Raiya Laxmi Sahe(1979) CTR (PAT) 215/(1980) 121 ITR1012 (PAT) and also relying on the CBDT circular/letter No F.178/152/91-ITA-1 dated 31st July, 1992 i.e. after amendment made per Finance Act 1992 w.e.f. 1st April 1993 and also considering various sections of the Act as above mentioned has held that Interest received from firm by partner had the chartered of business income being the allotted share of profit by the firm interest received by partners from firm was not liable to be taxed in their hand. Deduction allowed to the firm would be available to partners in computing their income. Considering above facts and various judgments, if your good- self calculate, proportionate remuneration to partners for industrial undertaking at Rudrapur, it will be exempted in the hands of partners. Hence, your good self are requested to give consequential effect for the same i.e. to consider exempt income i.e. remuneration in the hands of the partners. Liasion Expenses As regard liai....
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....ed in our earlier submission Dtd. 16/12/2015. In notice u/s. 142(1) of the Act dated 27.05.2015 the assessee was asked vide question number 7 which is reproduced below: "The units in Rudrapur are managed, controlled and financed by the management sitting at Rajkot. The units are also under the same PAN number which is assessed at Circle-2(1) Rajkot. In view of this you are requested to submit why the "Administrative Staff Expenses" should not be allocated to Rudrapur Units also on proportionate basis?" In response to which the assessee submitted that "It is clarified that the Rudrapur unit of Bhavani Industries is located at Rudrapur and independent unit for manufacturing of automobile parts for TATA ACE being managed by independent duly appointed plant head and key managerial personnel as well administrative personnel. The unit has also appointed consultant for looking after the affairs of Pollution control, Provident Fund, ESI, Electricity board, and other government department etc. The branch has separate sanction of term loan of Rs. 439 lacs from the Andhra Bank as per sanction letter for purchase of plant and machinery. All the expe....
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.... the Act, to the extent of Rs. 28,21,215/-. As the assessing officer had already disallowed the entire deduction u/s 80IC of the Act, therefore this disallowance was without prejudice to the same. 64. On appeal, by the assessee, the learned CIT(A) allowed the claim of the assessee, by following the ITAT's order in assessee's own case. 65. Aggrieved by the order of the learned CIT(A), the revenue is in appeal before us. 66. We have heard both the parties. The facts relating to this group have already been narrated above, therefore we do not repeat them for the sake of brevity. The learned Counsel for the assessee, in respect of this issue, relied on the findings of the learned CIT(A). On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. We note that assessee -firm maintains the books of account of each unit separately. The assessee, accounts for the expenses of each unit in their respective books of account. There is no expenditure which are incurred for one unit is accounted for in the books of another unit e....
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....y assessing officer. The assessing officer did not allow the set -off of losses, therefore, the assessee carried the matter in appeal before the learned CIT(A), who has allowed the set- off of losses, therefore, the revenue is in appeal before this Tribunal. 70. We have heard both the parties. The facts relating to this group have already been narrated above, therefore we do not repeat them for the sake of brevity. The learned Counsel for the assessee, in respect of this issue, relied on the findings of the learned CIT(A). On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. We note that assessee, during the appellate proceedings, submitted before the learned CIT(A) that assessee- firm has another independent unit-II, at Rudrapur, which started function during the year under consideration. In the year under consideration another Unit has incurred the loss of Rs. 40,17,063/-. The learned AO has set off the said loss of Rs. 40,17,063/- against the profit of Rudrapur Unit-1. In this regard, it is submitted that each unit is d....