9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2010 (12) TMI 1225 - AT - Income TaxDeduction u/s 80HHC on unite-wise - HELD THAT - We find that the plea made by assessee that it is maintaining separate books of account for each unit i.e. units engaged in exports and units engaged in domestic sales have not been considered. In case the assessee is maintaining the separate books of account for both the units and export profit can be deduced separately, the deduction u/s 80HHC should be computed accordingly. The Assessing Officer will also consider the case laws cited by the Ld. counsel for the assessee in the cases of Eastern Leather Products (P) Ltd. v. DCIT 1998 (6) TMI 114 - ITAT DELHI-A ; CIT v. Rathore Brothers 2001 (10) TMI 72 - MADRAS HIGH COURT . Accordingly, this issue of assessee is set aside to the file of Assessing Officer and allowed for statistical purposes. In the result, assessee s appeal is partly allowed for statistical purposes.
Issues Involved:
1. Addition on account of inflated purchases of material. 2. Exclusion of 90% of interest income while quantifying business profits under Section 80HHC. 3. Exclusion of 90% of income from the sale of advance licenses for computation of deduction under Section 80HHC. 4. Deduction under Section 80HHC on a unit-wise basis. 5. Adjustment to the arm's length price on transfer pricing. 6. Disallowance of interest expenditure under Section 36(1)(iii). 7. Disallowance of Provident Fund contribution. Detailed Analysis: 1. Addition on Account of Inflated Purchases of Material: The assessee contested the addition of Rs. 69,50,182/- for inflated purchases and Rs. 58,73,469/- under Section 69 for unexplained investment in raw materials. The Tribunal found that the facts were identical to previous years (2002-03 and 2003-04), where the issue was resolved in favor of the assessee. The Tribunal noted that the assessee had adhered to the standard input-output norms prescribed by the Government of India. The Tribunal allowed the assessee's appeal, following the precedent set in earlier years. 2. Exclusion of 90% of Interest Income While Quantifying Business Profits Under Section 80HHC: The CIT(A) confirmed the exclusion of 90% of interest income amounting to Rs. 61,864/-. The Tribunal referred to the Delhi High Court's decision in CIT v. Shri Ram Honda Power Equip, which held that only net interest should be excluded from business profits for Section 80HHC purposes. The Tribunal restored the issue to the Assessing Officer (AO) to decide according to this principle. 3. Exclusion of 90% of Income from Sale of Advance Licenses for Computation of Deduction Under Section 80HHC: The CIT(A) confirmed the exclusion of 90% of income from the sale of advance licenses amounting to Rs. 5,19,709/-. The Tribunal referred to the Mumbai Special Bench decision in Topman Exports v. ITO, which held that only the net profit from DEPB should be excluded for Section 80HHC computation. The issue was restored to the AO for re-verification in light of this decision. 4. Deduction Under Section 80HHC on a Unit-Wise Basis: The CIT(A) denied the claim for unit-wise deduction under Section 80HHC, stating that the assessee's business was the same across all units. The Tribunal noted that if the assessee maintained separate books for each unit, the deduction should be computed accordingly. The issue was set aside to the AO for verification. 5. Adjustment to the Arm's Length Price on Transfer Pricing: The CIT(A) deleted the addition of Rs. 11,75,958/- made by the AO on account of adjustments to the arm's length price. The Tribunal upheld the CIT(A)'s decision, noting that the assessee's PBIT was comparable and better than the industry average. The Tribunal found that the facts were identical to previous years where the TNMM method was accepted, and the CUP method adopted by the AO was rejected. 6. Disallowance of Interest Expenditure Under Section 36(1)(iii): The CIT(A) deleted the disallowance of Rs. 56,78,696/- made by the AO under Section 36(1)(iii). The Tribunal noted that the loans were old advances and no disallowance was made in earlier years. The Tribunal also observed that the assessee had sufficient interest-free funds, and the advances were for business purposes. The Tribunal upheld the CIT(A)'s decision. 7. Disallowance of Provident Fund Contribution: The CIT(A) deleted the disallowance of Rs. 35,031/- for Provident Fund contributions paid within the grace period. The Tribunal referred to the Delhi High Court's decision in CIT v. P.M. Electronics Ltd., which allowed such contributions. The Tribunal dismissed the Revenue's appeal on this issue. Conclusion: The assessee's appeal was partly allowed for statistical purposes, and the Revenue's appeal was dismissed. The Tribunal's decisions were largely based on precedents and principles established in previous years and higher court rulings.
|
