2013 (2) TMI 907 - AT - Income Tax

Issues Involved:
1. Computation of income from house property.
2. Addition u/s 92 regarding purchase of raw materials.
3. Disallowance of Computer Software Expenses as Capital Expenditure.
4. Disallowance of depreciation on obsolete assets.
5. Determination of fair market value for long-term capital gain.
6. Disallowance of expenses u/s 14A related to tax-free income.
7. Addition on account of Modvat Credit u/s 145A.
8. Reduction of 90% of processing charges, sales tax refund, and set off from profit u/s 80HHC.
9. Attribution of Hyderabad sales office expenses to export of trading goods.
10. Disallowance of amalgamation expenses.
11. Inclusion of Excise Duty in total turnover for deduction u/s 80HHC.
12. Re-computation of indirect cost attributable to export of trading goods.
13. Adjustment u/s 145A.

Summary:

1. Computation of Income from House Property:
The assessee contested the computation of income from house property at Hoechst House. The Tribunal, following its earlier decisions, allowed the assessee's claim to adopt the Municipal Rateable Value as the annual value.

2. Addition u/s 92 Regarding Purchase of Raw Materials:
The AO's addition u/s 92 for inflated purchase prices of Cefotaxime Sodium and Roxithromycin was contested. The Tribunal, referencing its prior rulings, set aside the AO's decision, stating the transactions were not arranged and no excess price was paid.

3. Disallowance of Computer Software Expenses as Capital Expenditure:
The AO treated part of the software expenses as capital expenditure. The Tribunal, citing previous decisions and judgments, treated the expenditure as revenue in nature and allowed the assessee's claim.

4. Disallowance of Depreciation on Obsolete Assets:
The AO disallowed depreciation on obsolete assets. The Tribunal, following its earlier decision, allowed the depreciation on the block of assets, including obsolete ones.

5. Determination of Fair Market Value for Long-term Capital Gain:
The AO's adoption of Rs. 23.52 per Sq.Ft. as the fair market value for land as on 01.04.1981 was upheld by the Tribunal, following its decision in the previous year.

6. Disallowance of Expenses u/s 14A Related to Tax-free Income:
The Tribunal allowed the assessee's claim regarding disallowance of expenses u/s 14A for investments in shares, following its earlier decisions.

7. Addition on Account of Modvat Credit u/s 145A:
The Tribunal set aside the CIT(A)'s order and remanded the matter to the AO for fresh examination of adjustments on account of Modvat Credit u/s 145A.

8. Reduction of 90% of Processing Charges, Sales Tax Refund, and Set Off from Profit u/s 80HHC:
The Tribunal held that processing charges and sales tax refund should be reduced by 90% from the profit of business as per Explanation (baa) u/s 80HHC, following relevant judgments.

9. Attribution of Hyderabad Sales Office Expenses to Export of Trading Goods:
The Tribunal upheld the CIT(A)'s decision that expenses at the Hyderabad branch, not directly related to domestic sales, should be considered as part of indirect cost for computing deduction u/s 80HHC.

10. Disallowance of Amalgamation Expenses:
The Tribunal, following its earlier decision and relevant judgments, upheld the CIT(A)'s decision to allow the amalgamation expenses as revenue expenditure.

11. Inclusion of Excise Duty in Total Turnover for Deduction u/s 80HHC:
The Tribunal confirmed the CIT(A)'s decision to exclude excise duty from the total turnover for computing deduction u/s 80HHC, following the Supreme Court's judgment.

12. Re-computation of Indirect Cost Attributable to Export of Trading Goods:
The Tribunal directed the AO to compute the indirect cost in light of its decision in the previous year, favoring the revenue.

13. Adjustment u/s 145A:
The Tribunal remanded the issue of adjustment u/s 145A to the AO for fresh decision, following its earlier ruling.

Conclusion:
Both appeals were partly allowed, with several issues remanded for fresh examination by the AO. The Tribunal's decisions largely followed its earlier rulings and relevant judicial precedents.

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