2014 (9) TMI 1269 - AT - Income Tax

Deduction u/s 80IB/80IC/80IE/10B - exclusion of the receipt by way of DEPB credit as they are not qualify to be included in the profits derived from the undertaking - HELD THAT - The issue raised vide this ground has been decided against the assessee by the judgment of the Hon ble Supreme Court in the case of Liberty India Ltd. 2009 (8) TMI 63 - SUPREME COURT . As the receipts do not have a first degree nexus with the profit derived from the undertaking respectfully following the judgment of the Hon ble Supreme Court ground No. 1 is dismissed. Deduction from the income of the assessee being amount of credit under DEPB scheme - HELD THAT - As in identical issue was considered by the Tribunal in assessee s own case 2014 (7) TMI 1372 - ITAT MUMBAI - We find that the Tribunal has decided this issue at para No. 5 of its order wherein it has followed the judgment of the Hon ble Supreme Court in the case of CIT vs. Excel Industries Limited. 2013 (10) TMI 324 - SUPREME COURT Respectfully following the decision of the co-ordinate Bench ground No. 3 raised by the assessee is allowed. Bogus purchases - HELD THAT - We find that the Tribunal has considered this issue in assessee s own case 2014 (7) TMI 1372 - ITAT MUMBAI for A.Y. 2009-10 wherein it has followed the decision for A.Y. 2008-09 and accordingly the Tribunal has remanded this matter to the file of the A.O. for fresh adjudication after affording a reasonable opportunity of being heard to the assessee. As no distinguishing fact has been brought before us respectfully following the findings of the co-ordinate Bench we restore this issue to the file of the A.O. for fresh adjudication after hearing the assessee. Ground No. 4 is accordingly allowed for statistical purpose. Weighted deduction u/s 35(2AB) - HELD THAT - We restore this issue to the file of the A.O. for adjudicating the issue afresh as per the provisions of law after affording a reasonable opportunity of being heard to the assessee. Deduction u/s 80IB of the Act on miscellaneous receipts sale of scrap miscellaneous sales/processing charges - HELD THAT - We set aside the issue relating to the sale of scrap to the file of the A.O. The A.O. is directed to decide the issue afresh in the light of direction given in A.Y. 2008-09. In so far as the other receipts are concerned respectfully following the decision of the Tribunal in A.Y. 2008-09 the A.O. is directed to allow the claim of deduction u/s 80IB of the Act. Ground No. 3 is accordingly allowed in part for statistical purpose. Adjustment to value of opening stock in A.Y. 2010-11 in consonance with the adjusted valuation of closing stock in A.Y. 2009-10 - HELD THAT - The fact of this issue is that the A.O. has enhanced the closing stock of A.Y. 2009-10 which was not contested by the assessee. The only point raised by the assessee was that corresponding effect should be given to the opening stock of A.Y. 2010-11 which the ld. CIT(A) directed to the A.O. We do not find any error or infirmity in this direction of the ld. CIT(A) as the value of the closing stock of one year has to be taken as the value of opening stock of the immediately succeeding year. This ground is accordingly dismissed.

Summary

Issues involved:
1. Exclusion of DEPB credits from profits under sections 80IB/80IC/80IE/10B.
2. Denial of deduction for unutilized DEPB credit.
3. Disallowance of alleged bogus purchases.
4. Denial of weighted deduction under section 35(2AB).
5. Double taxation issue related to exchange fluctuations.
6. Dispute over computing 80IB deduction for eligible units.
7. Eligibility for deduction under section 80IB for work done through Lease and License manufacturers.
8. Claiming deduction under section 80IB for miscellaneous receipts and sales.
9. Adjustment to opening stock based on adjusted closing stock.

Detailed Analysis:

1. The first issue concerns the exclusion of DEPB credits from profits under sections 80IB/80IC/80IE/10B. The Tribunal dismissed the appeal citing the Supreme Court's judgment in Liberty India Ltd., emphasizing the lack of a direct nexus between the receipts and profits derived from the undertaking.

2. The second issue involves the denial of deduction for unutilized DEPB credit. The Tribunal allowed this deduction, following a previous decision in the assessee's case for A.Y. 2008-09 and the Supreme Court's judgment in CIT vs. Excel Industries Limited.

3. The third issue pertains to the disallowance of alleged bogus purchases. The Tribunal remanded this matter to the Assessing Officer for fresh adjudication based on a previous decision for A.Y. 2009-10, allowing the appeal for statistical purposes.

4. The fourth issue relates to the denial of weighted deduction under section 35(2AB). The Tribunal remanded this issue to the Assessing Officer for fresh adjudication, similar to the approach taken for A.Y. 2009-10, allowing the appeal for statistical purposes.

5. The fifth issue addresses the double taxation concern regarding exchange fluctuations. The Tribunal dismissed this ground as infructuous, citing a previous decision that allowed mark-to-market losses.

6. Moving to the Revenue's appeal, the sixth issue involves the computation of 80IB deduction for eligible units. The Tribunal dismissed this ground based on previous decisions and the principle of following co-ordinate Bench findings.

7. The seventh issue concerns the eligibility for deduction under section 80IB for work done through Lease and License manufacturers. The Tribunal dismissed this ground, following previous findings in the assessee's case for A.Y. 2008-09.

8. The eighth issue is about claiming deduction under section 80IB for miscellaneous receipts and sales. The Tribunal allowed this claim in part, remanding the issue of sale of scrap to the Assessing Officer for fresh adjudication.

9. The final issue involves the adjustment to opening stock based on the adjusted closing stock. The Tribunal upheld the direction to make this adjustment, emphasizing the continuity in stock valuation between years.

In conclusion, the Tribunal partly allowed both the assessee's and the Revenue's appeals for statistical purposes, addressing various complex tax issues and providing detailed reasoning based on legal precedents and previous decisions.