TaxTMI 
TaxTMI 
2005 (12) TMI 212
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....That the learned CIT(A), on a proper consideration of the relevant material and basis, ought to have held that the appellant was entitled for full deduction under s. 80-IB of the IT Act, 1961, as claimed by it. 2. That neither the learned AO was justified in making a disallowance of Rs. 25,000 under the head subscription nor the learned CIT(A) was justified in confirming the disallowance. 3. That the appellant craves leave to submit any other ground(s) on or before the hearing of the appeal. 3. The assessee is a public limited company having its registered office at Birkuchi, Guwahati (Assam). It is engaged in the business of manufacture of electrical carbon and mechanical products. For the year under appeal, the assessee-company filed its return of income on 30th Nov., 2000 showing a total income of Rs. 28,19,760. The assessment was completed by the AO under s. 143(3) after making the following additions: Sr. No. Particulars of addition made Amount (Rs.) 1. Disallowance of generator subsidy 48,281 2. Disallowance of subscription 25,000 3. Disallowance of advertisement and publicity expenses 40,000 4. Disallowance of ex....
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....ransformed into a profit-making concern from the very first year of commercial production, i.e., 1993-94. This is clearly evident from the details of profit/loss of the company for financial years 1983-84 to 1998-99: Financial year Profit/Loss (Rs. in lakhs) 1983-84 (4.49) 1984-85 30.40 1985-86 37.11 1986-87 48.20 1987-88 59.32 1988-89 16.43 1989-90 (22.08) 1990-91 30.89 1991-92 (19.97) 1992-93 (88.14) 1993-94 149.41 1994-95 205.19 1995-96 210.38 1996-97 220.02 1997-98 382.07 1998-99 234.01 6.2 Unit-I, being a new industrial unit set up in the financial year 1993-94 for manufacture of intermediary product viz., NH coke, qualified for deduction under the erstwhile s. 80-IA. Accordingly, the company claimed deduction under s. 80-IA for 6 years upto financial year 1998-99 (relevant to asst. yr. 1999-2000). Sec. 80-IA was, however, substituted by ss. 80-IA and 80-IB by Finance Act, 1999, w.e.f. 1st April, 2000. Consequently, the company claimed deduction under corresponding s. 80-IB for 4 years w.e.f. asst. yr. 2000-01 ending with asst. yr. 2003-04. While claiming ....
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....hat had taken place in the country in support of the price claimed for deduction under s. 80-IB. He further observed that the proforma invoice from Morganite Electrical Carbonite Ltd. carried the name of the assessee as the consignee but no such sale had taken place and that the assessee had asked the said company to give invoice to support the price shown in the accounts. Further, since the proforma invoice did not carry any signature from Morganite Electrical Carbonite Ltd., no reliance could be placed on such paper by the assessee in support of its claim. The AO further observed that since the proforma invoice was dt. 17th Jan., 2000 the same could not be used to determine the value of goods transferred to finishing unit on various dates throughout the financial year. Accordingly, the profits derived from Unit-I and consequent deduction under s. 80-IB was recomputed by the AO as under: Deduction under s. 80-IB Amount (Rs.) Sales (export) 1,00,63,741 Value of captive consumption (82,822 kgs. x 137.45) 1,13,83,884 2,14,47,625 Less: Expenses claimed 1,83,26,828 Allowable deduction 31,20,797 7. Shri S.K. Tulsiyan, learned Authorised R....
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....ereinafter referred to as MCCP) entered into a joint venture agreement with the assessee-company and provided the technology to manufacture the Morgan grades of electrographite (EG) and resin bonded (RB) materials in return for a 30 per cent share of equity capital of the assessee-company. The technology specifically excluded the process for the manufacture of NH coke, the core base material for EG grades. The assessee imported NH cokes from Morgan Electrical Carbon Ltd. (hereinafter referred to as MECL), subsidiary of MCCP upto financial year 1992-93. This resulted in significant cost of production and low profitability. The assessee-company, however, had no other option since no other unit was manufacturing NH coke in India and as such, anybody who wanted to purchase NH coke from the open market had to import it from the Morgan group. The landed cost of NH coke imported from MECL for financial year 1992-93 was Rs. 298.70 per kg. Break-up of the said cost along with the invoice dt. 1st March, 1993 received from MECL are enclosed at pp. 161-163 of the paper book. 7.4 On 21st Sept., 1991, MCCP and the assessee-company signed a memorandum of understanding to the effect that subjec....
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.... you or procured from third parties in years prior to remittance of dividend or in the year of dividend. For remittance of dividend, you may approach Calcutta Regional Office of the Exchange Control Department." 7.7 The export of impugned goods viz., NH coke at a price of Rs. 137.45 per kg. to MCCP, UK, took place in the aforesaid backdrop. The said price was not determined by the law of demand and supply but was imposed and dictated by MCCP. As stated above, for the purpose of computing the deduction allowable under s. 80-IB in case of captive consumption of goods, s. 80-IA(8) provides that the market value of such goods as on the date of transfer has to be determined. The Explanation appended to s. 80-IA(8) defines 'market value' as under: "'market value', in relation to any goods, means the price that such goods would ordinarily fetch on sale in the open market." 7.8 The term 'open market' has been defined in the Advanced Law Lexicon by P. Ramanatha Aiyar, 3rd Edition, 2005 (Book 3) at page No. 3349 as under: "Open market-Market in which goods are available to be brought and sold by anyone who cares to Prices on an open market are ....
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....mpany would never sell Morgan grade NH coke outside the group to any other concern at the said price. 7.11 As such taking into consideration the totality of the facts and circumstances of the assessee's case, the price at which it actually exported goods to MCCP can in no way be termed as indicative 'market value' in terms of the Explanation to s. 80-IA(8). The price at which the goods were actually exported to MCCP was dictated/imposed by the latter. It is not the price which the impugned product would ordinarily fetch on sale in the 'open market' between a willing buyer and a willing seller. The impugned export transactions were not effected under conditions enabling every person desirous of purchasing the goods to place orders with the manufacturing unit and obtain supplies. As such, the impugned export did not constitute open market transaction. If the said price is taken to be the 'market value' in terms of Explanation to s. 80-IA(8), the whole purpose of enacting the said section i.e., to value goods in case of captive consumption at the 'open market value', will be rendered nugatory. Reliance in this connection is placed on the ratio of....
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....the objection of the AO that the invoice was not signed, it was submitted that computerized quotations and enquiries are generally, not signed. The appellant, however, produced before the learned CIT(A) an authenticated copy of the proforma invoice in original. The learned CIT(A) refused to take the same into consideration on the pretext that the said document was not produced before the AO. In this regard, it is submitted that the AO never required the assessee to produce authenticated and signed copy of proforma invoice at the time of assessment proceedings. As such, the assessment order was passed without allowing sufficient opportunity to the assessee to adduce the impugned evidence. Thus, the learned CIT(A) should have admitted the additional evidence under r. 46A(1)(d). Copy of the authenticated and signed copy of proforma invoice dt. 17th Jan., 2000 is enclosed at p. 140 of the paper book. 7.14 Furthermore, regarding the objection of the AO as to how the assessee relied on the proforma, invoice of one date while speaking of the value of transfer of goods to its finishing unit on various dates, it was submitted before the learned CIT(A) that for all bulk purchases, the ass....
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....t year it is open for the AO to take a different view in the matter. Of course, he can take a different view if some fresh material is placed before him. The CIT(A) and also the Tribunal have found that no fresh material is placed before the AO." 7.16 Similar view was taken by the Hon'ble Delhi High Court in the case of CIT vs. Neo Poly Pack (P) Ltd. (2000) 245 ITR 492 (Del) wherein it was held as under: "the doctrine of res judicata does not apply to income-tax proceedings since each assessment year is independent of the other but where an issue had been decided consistently in a particular manner for earlier assessment years, for the sake of consistency the same view should continue to prevail for subsequent years unless there is material change in the facts. Since in the instant case there was no single distinguishing feature prompting a different view, the income was liable to be assessed as business income." 7.17 The aforesaid view is further fortified by the direct authority of the Hon'ble Supreme Court in the case of Radhasoami Satsang vs. CIT (1991) 100 CTR (SC) 267: (1992) 193 ITR 321 (SC). Held as under: "We are aware of the fact that, stri....