TaxTMI 
TaxTMI 
2026 (4) TMI 1319
X X X X Extracts X X X X
X X X X Extracts X X X X
....return of income was processed and the total income was determined at Rs. 66,00,775/- as per Book Profits under Section 115 JB of the Act. 2. The case was selected for scrutiny under Section 143(2) of the Act. As the aggregate value of the foreign transactions made by the assessee exceeded Rs. 5 crores, the case was referred to the Transfer of Pricing Officer (TPO). Pending scrutiny, the assessee filed a revised return on 31.03.2005, increasing its returned loss to Rs. 53,63,91,013/-. The increase in loss explained as being due to write-off of unrealised sales. For the request of the Assessing Officer to furnish evidence relating to such unrealised sales, the assessee failed to provide evidence to prove such unrealised sales. Hence, the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....90,639/- accounted under the head "Other Income" comprising of sale of brochures, scrap, AMC income etc. were held to be not in the nature of profits and gains derived from export unit and hence not eligible for deduction under Section 10A of the Income Tax Act. Accordingly, the same were brought to tax under the head "Income from Other Sources". (c) Depreciation claim of Rs. 50,80,94,257/- on intangible assets of the non-STP units (in the form of goodwill) was held inadmissible for reasons elaborated in Assessment Order for assessment year 2002-03. (d) As the break up of rates and taxes amounting to Rs. 38.07 lakhs was not furnished, the entire amount was disallowed as the capital expenditure by holding it as the fee paid....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eved by the additions/disallowance/adjustments made in the assessment order, filed appeal before the Commissioner of Income Tax (Appeal)-V, Chennai. The Appellate Authority, taking into account the grounds of appeal, partly allowed the assessee's appeal. Insofar as the plea to exclude the foreign exchange expenditure from the total turnover for the purpose of computation of deduction under Section 10 A. It is further directed the Assessing Officer to allow the claim of write-off of unrealised sales to the extent of Rs. 23,53,51,174/- from the profits of the assessee company. The Assessing Officer directed to verify the depreciation claim of the assessee's STP units as per the Income Tax Rules and to allow the same in proportion to the incom....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ture incurred in foreign exchange both from the total turnover and from the export turnover. The ITAT upheld the view of the Commissioner of Income Tax (Appeal) in respect to the proportionate allowability of depreciation on the assessee's STP units. Also, in respect of deleting the disallowance of Rs. 8,90,35,174/- being the proportionate interest relating to interest free advances to subsidiaries, held in favour of the assessee by holding that, the aforesaid amount was due from wholly owned subsidiaries. It was reflected under the caption 'Sundry debtors'. It was transferred by the assessee to the "Loans and Advances" account, since the assessee was contemplating to obtain shares in those subsidiaries in lieu of the prevailing debt. The a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....TP Activities and allow the amounts relating to STP Activities? 4. Whether in the facts and circumstances of the case, the Tribunal was right in deleting the addition of interest of Rs. 8,90,35,174/- made towards diversion of interest bearing funds to subsidiaries without interest? Substantial Question of Law: No.1 The identical substantial question of law came up before the Hon'ble Division Bench of this Court in respect of the same assessee, formerly M/s.Pentamedia Graphics Ltd. This Court, following the dictum laid down in Commissioner of Income-Tax, Central-III vs. HCL Technologies Limited, reported in [2018] 404 ITR 719 (SC), held as follows: "20. Even in common parlance, when the object of the formula is to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....case (cited supra). Substantial question of law No.3 As far as this question is concerned, we find that the Appellate Authority as well as the Tribunal has held that disallowance in toto by the Appellate Authority is improper and, therefore had directed the Assessing Officer to apportion the total disallowance amount of Rs. 27.88 lakhs between STP / Non- STP units. The Learned Counsel for the Department relied upon the judgment of the Hon'ble Supreme Court in Punjab State Industrial Corporation Limited vs. Commissioner of Income Tax reported in [1997] 93 Taxman 5 (SC), wherein it has held that the amount paid by the Company to the ROC as filing fees for enhancement of capital base of the Company cannot be allowed as revenue exp....