2012 (8) TMI 1047 - AT - Income Tax

Summary

Issues Involved:
1. Assessment of DEPB benefits.
2. Addition on account of sales made to sister concerns.
3. Addition made in respect of Carton business.
4. Disallowance of claim of deduction u/s 80IB of the Act.
5. Rejection of additional claim of deduction u/s 80HHC of the Act.
6. Validity of charging of interest u/s 234D of the Act.
7. Set off of loss from manufacturing section against profits from trading section for deduction u/s 80HHC.
8. Computation of indirect costs attributable to the export of trading goods.

Summary:

1. Assessment of DEPB benefits:
The issue of assessment of DEPB benefits was settled by the Hon'ble Supreme Court in the case of Topman Exports Vs. CIT. The Tribunal set aside the order of Ld CIT(A) and restored the issue to the AO for fresh consideration in line with the Supreme Court's decision.

2. Addition on account of sales made to sister concerns:
The AO added the difference to the total income of the assessee, observing that the sales to sister concerns were underpriced. The Ld CIT(A) confirmed the addition. The Tribunal upheld the decision, noting that the assessee failed to provide convincing explanations for the underpricing, suggesting a device to shift profits to sister concerns.

3. Addition made in respect of Carton business:
The AO added the difference in income from the carton business, observing that sales to sister concerns were below the cost of production. The Ld CIT(A) confirmed the addition, and the Tribunal upheld the decision, noting the absence of convincing explanations from the assessee.

4. Disallowance of claim of deduction u/s 80IB of the Act:
The issue was set aside to the AO for fresh examination in light of the principles given in the case of T.C. Usha Vs. ACIT by the co-ordinate bench of Cochin ITAT.

5. Rejection of additional claim of deduction u/s 80HHC of the Act:
The assessee's claim for enhancement of deduction u/s 80HHC was rejected by the AO and confirmed by the Ld CIT(A), citing the Supreme Court's decision in Commissioner of Income tax Vs. Sun Engineering Works Pvt Ltd. The Tribunal upheld the decision.

6. Validity of charging of interest u/s 234D of the Act:
The issue was settled by the Hon'ble Jurisdictional Kerala High Court in the case of CIT Vs. Kerala Chemicals and Proteins Ltd. The Tribunal directed the AO to charge interest u/s 234D in accordance with this decision.

7. Set off of loss from manufacturing section against profits from trading section for deduction u/s 80HHC:
The Ld CIT(A) followed the Supreme Court's decision in IPCA Laboratory Vs. DCIT. The Tribunal upheld the decision, noting the absence of any record to support the assessee's contention.

8. Computation of indirect costs attributable to the export of trading goods:
The Tribunal set aside the order of Ld CIT(A) and restored the issue to the AO for re-examination, directing the AO to determine the quantum of indirect costs as per the decisions relied upon by the assessee and the discussions made by the Tribunal.

Conclusion:
The appeals of the assessee were partly allowed, and the appeals of the revenue were allowed for statistical purposes. The judgment was pronounced on 10-08-2012.