TaxTMI 
TaxTMI 
2024 (11) TMI 1641
X X X X Extracts X X X X
X X X X Extracts X X X X
.... law in directing the AO to allow the claim of Rs. 1,07,08,000/- being excess claim made by the assessee over the amount approved by DSIR. (4) The Id. CIT(A) has erred in facts and law in allowing the claim of Rs. 8,65,000/- despite giving a finding that the same was incurred outside R&D facility. (5) The Id. CIT(A) has erred in facts and law in allowing the product registration expenses of Rs. 14,75,75,116/- [Net disallowance made by AO in assessment order is 19,67,66,821 less 4,91,91,705]. (6) The ld. CIT(A) has erred in facts and law in restricting the addition of Rs. 3,69,04,183/- made by the AO u/s.144 to Rs.7,158/-. (7) The Id. CIT(A) has erred in facts and law in directing the AO to allow additional claim of withdrawal of suo-moto disallowance of Rs. 2,97,07,492- notwithstanding that no such claim was made in the ROI. (8) The Id. CIT(A) has erred in facts and law in directing the AO to allow foreign currency loss of Rs. 40,42,60,000/-. (9) The Id. CIT(A) has erred in facts and law in deleting the disallowance of Rs. 1,22.60,093/- being cash salary payments. (10) The ld. CIT(A) has erred in facts and law in deleti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ar under consideration, the assessee has shown total turnover of Rs.933,61,64,163/- on which net profit of Rs. 19,77,87,586/- was declared. The return of income was filed on 23.11.2012 declaring loss of Rs.(-) 11,67,17,728/-. The return was duly processed under Section 143(1) of the Income Tax Act, 1961 and notice under Section 143(2) of the Act was issued on 06.08.2013 which was duly served upon the assessee. Notice under Section 142(1) of the Act along with detailed questionnaire was also issued on 04.12.2015 which was duly served upon the assessee. In response to notice under Section 143(2) of the Act, the assessee vide letter dated 22.08.2013 furnished details such as return of income, Audited Balance Sheet, Profit & Loss Account, Audited Report in Form No.3CD. In response to the notices, the General Manager (Taxation) of the assessee's Company as well as Deputy Manager (Taxation), and Assistant Manager appeared before the Assessing Officer and furnished the details/evidences. After considering the submissions of the assessee, a draft Assessment Order was passed under Section 144C(1) read with Section 143(3) of the Act and served upon the assessee on 31.03.2016. The assessee vi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al of the assessee. 5. Firstly, we are taking up the Revenue's appeal being ITA No.345/Ahd/2020 for Assessment Year 2012-13. Ground no.1 of the Revenue's appeal is relating to the deletion of Transfer Pricing Adjustment made in respect of Corporate Guarantee Fees amounting to Rs.60,83,440/- 6. The Ld. DR submitted that the extended guarantee should have not been allowed by the CIT(A). The Ld. DR relied upon the Assessment Order and TPO order. 7. The Ld. AR submitted that the issue is squarely covered in assessee's favour in Assessment Years 2010-11, 2004-05 & 2011-12 filed by the Department being ITA No. 74/Ahd/2020, order dated 01.07.2024 and ITA No.117/Ahd/2012, 848 &918/Ahd/2016 order dated 11.09.2017 . 8. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the Department/Ld. DR could not point out any distinguishing facts in the present Assessment Year to that of Assessment Year 2010-11 and, therefore, the issue is squarely covered by the decision of the Tribunal passed in Assessment Year 2010-11 and 2011-12. The Tribunal held as under: "13. We come to assessee's appeal. Its first grieva....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er dated 17.04.2024 as well as decided in 2010-11, 2004-05 & 2011-12 filed by the Department being ITA No.73/Ahd/2020, order dated 01.07.2024 and ITA No.117/Ahd/2012, 848 & 918/Ahd/2016 order dated 11.09.2017 . 11. We have heard both the parties and perused all the relevant material available on records. It is pertinent to note that there is no discrepancy pointed out by the Ld. DR towards the submissions that there were no interest-free funds available in this particular year. The Tribunal in A.Y. 2011-12 held as under: "14. The assessee's second substantive ground challenges Section 36(1)(iii) interest disallowance of Rs.1,68,88,558/- as made by both the lower authorities. The assessee's balance sheet schedule 10 revealed it to have advanced a gross amount of Rs. 5,40,74,507/- to its nine domestic and overseas sister concerns namely M/s. Casil Health Products Ltd., CPL Infrastructure Ltd., Apollo Hospitals International Ltd., Kadera Yakuhin Ltd., IRM Enterprise Pvt. Ltd., SOHL (UK), Cadila Pharmaceuticals (Ethopia) PLC, CPL Holdings Pvt. Ltd. and CPL Agro Products Ltd. The Assessing Officer observed in assessment order that "it may be true that the nature of a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ved by the DSIR. The Ld. DR submitted that the facilities were not located as prescribed by the DSIR and, therefore, the disallowance was rightly made by the Assessing Officer. As regards ground no.4 relating to the claim of Rs.8,65,000/- related to R&D facility outside India, the Ld. DR submitted that this fact was not taken into account by the CIT(A) and, therefore the ld. DR relied upon the Assessment Order. 13. The Ld. AR submitted that the factual aspect of this year is similar to the Assessment Year 2009-10 & 2008-09. The Ld. AR relied upon the decision of the Tribunal in ITA No.76/Ahd/2020, order dated 17.04.2024 and ITA No. 73/Ahd/2020, order dated 17.04.2024. 14. We have heard both the parties and perused all the relevant material available on record. The facts of the present Assessment Year are identical to that of Assessment Year 2008-09 & 2009-10. The Tribunal in A.Y. 2011-12 held as under: "18. Heard both the learned representatives. Relevant findings perused. It is evident that the DRP has worked out the impugned disallowance merely because the assessee has mentioned in its reconciliation an amount of Rs.4,67,54,326/- is to be disallowed as per DSIR'....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... capital in nature. 16. The Ld. AR submitted that this issue was decided by the Tribunal in Assessment Year 2008-09 being ITA No.73/Ahd/2020, order dated 17.04.2024 and ITA Nos. 1146/Ahd/2011 and 1518/Ahd/2011 order dated 11.07.2014 for A.Y. 2006- 07 in assessee's favour. 17. We have heard both the parties and perused all the relevant material available on record. The Tribunal in A.Y. 2006-07 held as under: "27. Ground No.2 is against the deletion of Rs.1,43,79,597/- being product registration expenses treated as capital expenditure with a direction to withdraw depreciation already allowed. The ld. Sr. DR supported the order of the AO. On the contrary, the ld. counsel for the assessee submitted that there is no illegality in the order of the ld. CIT(A). He submitted that the issue is squarely covered by the judgement of Hon'ble Gujarat High Court rendered in the case of Commissioner of Income Tax vs. Torrent Pharmaceuticals Ltd. reported at (2013) 263 CTR 683(Guj.):: (2013) 29 taxmann.com 405 (Gujarat). 27.1. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The ld. counsel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he relevant material available on record. The issue is squarely covered by the Assessment Year 2008-09 and the assessee in fact has made suo-moto disallowance for the present Assessment Year and after calculating the same and verifying the calculation given by the assessee, the CIT(A) was right in restricting the addition to Rs. 3,69,04,183/- to Rs. 7,158/-. Thus, Ground no.6 of Revenue's appeal is dismissed. 21. As regards Ground no.7, the Ld. DR submitted that the CIT(A) was not right in directing the Assessing Officer to allow additional claim of withdrawal of suo-moto disallowance of Rs. 2,97,07,492/- notwithstanding that no such claim was made in return of income. 22. The Ld. AR relied upon the order of the Tribunal for Assessment Year 2008-09 being ITA No.73/Ahd/2020, order dated 17.04.2024, as facts of the present Assessment Year are identical. 23. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the disallowance made by the assessee is properly reflected in return of income as it is a suo-moto disallowance on the part of the assessee and after taking cognisance the CIT(A) has rightly directed the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... customers, this currency settlement took time after lodgment to be realized resulting in fluctuation loss as is the case herein. We notice in this backdrop that hon'ble jurisdictional high court's decision in CIT vs. Friends & Friends Shipping Pvt. Ltd. (2013) 35 taxmann.com 553 (Guj) holds losses arising from similar foreign exchange contracts to be business losses than speculative ones. Their lordships A.Ys. 2004-05 & 2011-12 conclude that such exchange transactions are hedging transactions instead of being speculative transactions in nature. Next comes hon'ble Bombay high court's decision in CIT vs. D. Chetan & Co. (2016) 75 taxmann.com 300 (Bom.) holding that forward contracts in the nature of hedging transactions in course of normal import export activities to cover up losses on account of foreign exchange valuation difference results in business losses and not speculative one. We find that hon'ble jurisdictional high court's decision in Pankaj Oil Mills vs. CIT (1978) 115 ITR 824 (Guj) (Full Bench) also holds inter alia that hedging contracts; in order to be out of speculative transactions, must be in respect of raw materials only in manufacturers'....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of Section 40A(3) of the Act. The Ld. AR relied upon the decision of Hon'ble Gujarat High Court in the case of Anupam Tele Services vs. ITO, 366 ITR 122. 29. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the CIT(A) categorically observed that for the genuineness of incurrence of expenditure in the nature of reimbursement driver's and helper's salary paid to employees for which the assessee submitted vouchers signed by the employees. The Assessing Officer has not pointed out any discrepancy in the evidence put up by the assessee. Thus, the CIT(A) has rightly deleted the said addition. There is no need to interfere with the findings of the CIT(A). Besides, this, there is no violation of Section 40A(3) of the Act and the decision relied by the Ld. AR in the case of Anupam Tele Services (supra) is squarely applicable in assessee's case. Hence, Ground no.9 of Revenue's appeal is dismissed. 30. As regards to Ground No. 10 relating to freebies, the Ld. DR submitted that this issue is covered in favour of Revenue by the Hon'ble Supreme Court decision in case of M/s Apex Laboratories Pvt.. Ltd. vs. DCIT 135 taxma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sment Year 2011-12 and no distinguishing facts were pointed out by the Ld. DR in the present Assessment Year. The Tribunal held as under: "24. We have heard both the parties at length. The assessee admittedly has three production divisions at Jammu, Ankleshwar and Dholka; respectively. Case records at page 396 indicate the same to be operating exclusively for formulation (domestic sales), bulk drugs (domestic and export sales) and formulations (domestic and international sales); respectively. The assessee pleaded before the DRP at page 409 that it had not done any research and development for any of the formulation product manufactured in Jammu unit in relevant previous year. The same has neither been specifically rebutted nor accepted in DRP's directions. Nor is there any specific material quoted to disturb assessee's accounts separately maintaining each and every minute detail pertaining to these three units in question. It thus emerges that the authorities below have adopted adhocism in applying the above turnover formula for allocating the impugned expenditure. Hon'ble Bombay high court's decision in Zhandu Pharmaceutical Works Ltd. vs. CIT (2013) 350 I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....taxpayer is not introducing new evidence at the appeal stage but is instead relying on information already submitted during the assessment, the CIT(A) may rely on the existing records to grant relief. In the absence of fresh evidence, the CIT(A) is within his discretion to resolve the matter without a remand report. Therefore, the CIT(A) has rightly allowed the sum of Rs. 2,94,67,574/- under Section 43B of the Act on account of gratuity and there is no need of remand report. The CIT(A) has examined these issues. Thus, Ground no.13 is dismissed. 42. As regards Ground no.14, the Ld. DR submitted that the CITA) erred in allowing the depreciation on assets of Rs. 27,38,895/- which was not made in return of income. The Ld. DR relied upon the Assessment Order. 43. The Ld. AR relied upon the decision of Hon'ble Gujarat High Court in the case of Mitesh Impex, 367 ITR 85 and further submitted that this issue has been decided in Assessment Year 2010-11 being ground no.8 therein and the Tribunal has directed the Assessing Officer to allow this claim after verification. 44. We have heard both the parties and perused all the relevant material available on record. The facts of the prese....