9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (7) TMI 769 - AT - Income TaxExemption under section 80IB(10) - whether he duty drawback and other investments as received by the appellant form part of the income derived from the industrial undertaking qualifying for exemption under section 80IB(10)? - Held that - In the appeal of the assessee for assessment year 2009-2010 2015 (7) TMI 770 - ITAT LUCKNOW the issue regarding allowability of deduction u/s 80IB out of Duty Drawback has been decided by us against the assessee by following the judgment of Liberty India 2009 (8) TMI 63 - SUPREME COURT after considering the arguments of the assessee i.e. regarding the judgment CIT vs. Dharam Pal Prem Chand Ltd. 2008 (11) TMI 231 - DELHI HIGH COURT and Topman Exports vs. CIT 2012 (2) TMI 100 - SUPREME COURT OF INDIA and therefore, in the present case also, this issue is decided against the assessee. Disallowance invoking the provisions of section 14A - Held that - In assessment year 2009-2010, this issue was decided by us on the basis that the Assessing Officer should recompute the disallowance u/s 14A after excluding the investment in foreign subsidiaries because income from investment in foreign subsidiaries is taxable. In the present year also, there are some investments in foreign subsidiaries; for example, ₹ 1,62,645/- in Super Tannery U.K. (Ltd.). Hence, in the present year also, we decide this issue on similar line and restore the issue to the file of the Assessing Officer for recomputing the disallowance after excluding the investment in foreign subsidiary. - Decided in favour of assessee for statistical purposes. Transfer pricing adjustment - adoption of most appropriate method - selection of comparable - Held that - CIT(A) has adopted the same comparables which were adopted by TPO in the next year and hence, the selection of comparables is proper. Regarding the exclusion of Duty Drawback from operating profit of the assessee company, this finding is given by learned CIT(A) that export entitlements are an integral part and parcel of the operating profits of a company and therefore, export entitlements are not an extraordinary item of income or an item of income which is unrelated to the ordinary activities of the assessee company. Apart from this, this is also very important that even if the export incentives entitlement is excluded from the operating income of the assessee company, such exclusion has to be made from the operating income of the comparables company also. Without excluding the export incentives entitlement from the operating income, the average PLI of the comparable company in the present case is 7% as compared to 3.67% of the assessee company which is within the tolerance range of 5% as stipulated in the Income Tax Act, 1961. Since this is not the case of the Assessing Officer or TPO that the operating income of the comparable companies is after reducing the export incentives entitlements, such exclusion of export incentives entitlement from the operating profit of the assessee company is not justified and hence, we find no infirmity in the order of learned CIT(A) on this issue. We, therefore, decline to interfere in the order of learned CIT(A). - Decided against revenue. Deleting the adjustment for transfer pricing under section 92CA(3) - Whether CIT(A)not have relegated the assessee/respondent to the stage of the Assessing Officer/Transfer Pricing Officer by observing tha the AO/TPO may reverify the above calculations and if found to be correct, give relief to the assessee as directed above? - Held that - We find force in the contentions of Learned A.R. of the assessee that this direction of CIT(A) is amounting to restoring the matter back to the file of the Assessing Officer which is not permissible and even if he considered that some recalculations of calculations is necessary, he should have done so himself or he should have obtained remand report but after giving this finding that he himself has verified the calculations from the balance sheet of each of the comparables and they are part of the record and also in public domain, this direction of CIT(A) is uncalled for. We, therefore, hold that this unnecessary direction of CIT(A) is not proper particularly when there is no power available with the CIT(A) to remand the matter to Assessing Officer. We, therefore, modify the direction of CIT(A) by holding that since CIT(A) has already verified the calculations on the basis of material available on record and available in public domain, the Assessing Officer should give relief to the assessee as decided by CIT(A) of ₹ 1,00,47,451/- and there is no necessity of recalculation of the calculations. - Decided in favour of assessee.
Issues Involved:
1. Allowability of deduction under section 80IB(10) for duty drawback. 2. Disallowance under section 14A of the Income Tax Act. 3. Transfer pricing adjustment and method adopted by the TPO. 4. Direction by CIT(A) to reverify calculations after deleting transfer pricing adjustment. 5. Exclusion of export entitlement from computation of eligible profit for section 80IB. Issue-wise Detailed Analysis: 1. Allowability of Deduction under Section 80IB(10) for Duty Drawback: The assessee contended that the "duty drawback" received should be considered as part of the income derived from the industrial undertaking, qualifying for exemption under section 80IB(10). The Tribunal noted that this issue was identical to a previous case for the assessment year 2009-2010, where the deduction under section 80IB for duty drawback was denied based on the Supreme Court judgment in Liberty India. The Tribunal followed the same reasoning and rejected the assessee's grounds, deciding against the assessee. 2. Disallowance under Section 14A of the Income Tax Act: The assessee challenged the disallowance of Rs. 4,80,455/- made under section 14A, arguing that no such expenditure was incurred. The Tribunal observed that this issue was similar to a previous year's case, where it was decided that the Assessing Officer should recompute the disallowance after excluding investments in foreign subsidiaries. The Tribunal restored the issue to the Assessing Officer for recomputation, allowing these grounds for statistical purposes. 3. Transfer Pricing Adjustment and Method Adopted by the TPO: The Revenue appealed against the CIT(A)'s decision to allow relief of Rs. 1,00,47,551/- on account of transfer pricing adjustment. The Tribunal noted that CIT(A) had adopted comparables used by the TPO in the next assessment year and found that the exclusion of duty drawback from operating income was not justified unless done for comparables. The Tribunal upheld CIT(A)'s decision, finding no infirmity in it, and dismissed the Revenue's appeal. 4. Direction by CIT(A) to Reverify Calculations: The assessee's cross-objection argued that CIT(A) should not have directed the Assessing Officer/TPO to reverify calculations after deleting the transfer pricing adjustment. The Tribunal agreed with the assessee, stating that CIT(A) had already verified the calculations and such a direction was unnecessary. The Tribunal modified CIT(A)'s direction, holding that the Assessing Officer should give relief to the assessee as decided by CIT(A) without further recalculations. 5. Exclusion of Export Entitlement from Computation of Eligible Profit for Section 80IB: The assessee contested the exclusion of export entitlement from eligible profit under section 80IB, citing earlier and subsequent Supreme Court judgments. The Tribunal noted that this issue was identical to the one decided for the assessment year 2008-09, where the Supreme Court judgment in Liberty India was followed. The Tribunal upheld CIT(A)'s decision, rejecting the assessee's ground. Conclusion: The Tribunal dismissed the Revenue's appeal, partly allowed the assessee's cross-objection, and dismissed the assessee's appeal for the assessment year 2008-09. The order was pronounced in the open court.
|
