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TMI Blog2015 (1) TMI 963X X X X Extracts X X X X X X X X Extracts X X X X ..... AA had directed the AO make verification about the liabilities claimed by the assessee. He held that if the liabilities were ascertainable, he should allow the deduction and not otherwise. It was duty of the assessee to prove before the AO that the liabilities in question were not unascertainable. The assessee before us has not demonstrated as to how he proved his claim before the AO. So, we are of the opinion that the order of the FAA does not suffer from any legal infirmity. - Decided against assessee. Transfer Pricing adjustment - Held that:- The assessee has adopted that external CUP method, that it relied upon the Bhun database, that the FAA had partly allowed the appeal filed by the assessee. Considering the peculiar facts and circumstances of the case, we are remitting the issue of TP adjustment to the file of the AO for fresh adjudication. - Decided in favour of assessee for statistical purposes. Delay in depositing contribution to Provident Fund (PF)account under both the categories-i. e. Employer’s contribution and Employees’ contribution - Held that:- Even if some of the payments were made late but within the grace period no disallowance should be made. - Decided i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned AO's action of making a reference to the Transfer Pricing Officer (TPO'), which is not in accordance with the provisions of Section 92CA(1) of the Act. It is prayed that the proceedings initiated by the learned TPO under Section 92CA of the Act on the basis of the said reference be held as void ab initio and thus the order passed by the learned TPO under Section 92CA(3) of the Act and the consequent action of the AO be cancelled. Adjustment made on account of export of Dicamba 6. Without prejudice to the above, on the facts and in the circumstances of the case, the learned CIT (A) has legally erred in not deleting the entire adjustment made by the AO based on the fact that the Appellant's Associated Enterprise ('AE') (to whom Dicamba was exported) has incurred losses and thereby there is no avoidance of tax by the Appellant in respect of the said transaction. It is prayed that the learned AO be directed to delete the addition of ₹ 1, 30, 80, 722. 7. Without prejudice to the above, on the facts and in the circumstances of the case, the learned CIT (A) has legally erred in determining the Arm's Length Price ('ALP') of the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the circumstances of the case, the learned CIT(A) has legally erred in not deleting the disallowance of ₹ 31, 12, 541 made for payment of usage charges for registration rights. It is prayed that the disallowance of ₹ 31, 12, 541 be deleted. The Appellant craves leave to add, alter, amend or withdraw all or any of the Grounds of Appeal herein and to submit such statements, documents and papers as may be considered necessary either at or before the appeal hearing. The assessee has also filed below mentioned additional grounds of appeal: 1. The appellant submits that the learned Commissioner (Appeals) ought to have allowed an additional deduction under section 35(2AB) of ₹ 3, 49, 93, 461, being 50% of the total in-house research and development expenditure of ₹ 6, 99, 86, 922 incurred by the appellant during the previous year. We have gone through the additional ground and find that it is a pure legal issue and does not require examination of facts. Therefore, additional ground is taken on record. ITA No. 4405/Mum/2007: AO had filed following grounds of appeal: 1. On the facts and in circumstances of the case and in law the CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case and in law CIT(A) erred in restricting to 40% the adjustment u/s 92CA fo ₹ 3, 27, 01, 804/made by the A. O. without appreciating the facts of the case. 10. On the facts and in circumstances of the case and in law the CIT(A) erred in not confirming the action of the A. O. in making disallowance of payment of usage rights of registration charges paid at ₹ 31, 12, 541/on account of transfer pricing adjustments as per TPOs order and in giving directions to A. O. regarding deletion of the addition without complying with Rule 46A of Income Tax Rules 1962. 11. The appellant prays that the order of the CIT(A) on the grounds be set aside and that of the ITO/AC/DC be restored. 12. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary. Assessee-company, engaged in the business of manufacturer of agro chemicals and polymer, filed its return of income on 01. 12. 2003 declaring total income at ₹ 24, 37, 07, 329/- under the regular provisions of the Act and the same was reduced to Nil, after setting off the brought forward unabsorbed depreciation. The AO completed the assessment u/s 143(3) of the Act on 27. 02. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Before us, Authorised Representative(AR)stated that the Tribunal vide order dated 30. 11. 2009 (ITA2242/Mum/2006/-AY. 2002-03)had restored back the matter to the file of the AO, that the AO did not give effect to the order of the Tribunal in the manner it was argued, that the assessee had approached the FAA, that he allowed the relief sought for, that the AO had challenged the order of the FAA before the Tribunal, that the Tribunal had dismissed the appeal of the AO on 22. 05. 2013, that matter could be restored to the file of the AO for the year under appeal also. He relied upon the decision of jurisdictional High Court delivered in the case of Mahalakshmi Glass Works(P)Ltd. (381ITR116). He referred to page no. 1 to 4 of the paper book. Departmental Representative(DR)stated that he had no objection if the matter was sent back to the AO. 2. 3. We have heard the rival submissions and perused the material before us. We find that at page no. 4 of the paper book, the assessee has given the impact of the adjustment of Modvat Credit to the Profit Loss Account for the year under consideration. In our opinion, in the interest of justice matter should be restored back to the file of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit as discussed above the assessee company is not entitled for deduction u/s. 80HHC. 4. 1. In the appellate proceedings, the FAA held that in light of the judgment of Ipca Laboratories Ltd. (supra), order of the AO had to be upheld. 4. 2. Before us, the AR fairly conceded that the issue is decided against the assessee by the order of the Tribunal dated 30. 11. 2009(supra). We find that the Tribunal has, at page 2 para 4 of the order, held as under: 4. Ground No. 2 is against confirmation of disallowance of deducton under section 80HHC. At the very outset, the ld. counsel for the assessee fairly conceded that in the absence of any profit available to the assessee from exports, the benefit of deduction under section80 HHC was rightly not available. In our considered opinion the ld CIT(A)was justified in rejecting the ground of the assessee on the claim of deduction under section 80HHC in the absence of any ehgihle profit. This ground is therefore, not allowed. Respectfully, following the above, we dismiss the ground no. 3 against the assessee. 5. Ground no. 4 deals with provision for doubtful debts for purpose of calculating book profit u/s. 115 JB of the Act. During ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prove before the AO that the liabilities in question were not unascertainable. The assessee before us has not demonstrated as to how he proved his claim before the AO. So, we are of the opinion that the order of the FAA does not suffer from any legal infirmity. As far as cases relied upon by the assessee are considered, we want to state that they lay down general principles. The assessee has not proved that the facts of case under appeal were identical to the facts of the cases relied upon by it. Therefore, following the above mentioned order of the Tribunal i. e. -ITA2747/Mum/2006/dated 16. 07. 2010-we decide ground no. 4 against the assessee. 6. Grounds no. 5 to 11 pertain to Transfer Pricing(TP)adjustment. Before us, the AR did not press ground on 5, hence same is dismissed as not pressed. He further stated that grounds no. 6 to 10 were arguments support of the effective ground and do not require separate adjudication, that effective ground was ground no. 11 and same was to be decided. Accordingly, we are deliberating upon the ground no. 11. 6. 1. During the assessment proceedings the AO found that the assessee had filed Report-in Form No. 3CEB alongwith the return deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld also have considered the resale price method. Finally, partly allowing the appeal, the FAA directed the AO to restrict restrict the addition to 40% of Rs, 3, 27, 01, 804/-. 6. 3. Before us, the AR stated that the assessee had applied the external CUP method for benchmarking the particular transaction with the AE, that it has used the Bhun database, that the TPO had rejected the method adopted by the assessee, that he applied the internal CUP method to determine the ALP, that the Tribunal had rejected the internal CUP method applied by the AO and had restored back the matter to his file. DR stated that matter could be sent to the AO for deciding the issue of TP adjustment. 6. 4. We have heard the rival submissions and perused the material before us. We find that while deciding the TP adjustment issue, the Tribunal had restored back the matter to the file of the AO on 30. 11. 2009(ITA2242/Mum/2006/-AY. 2002-03)We would like to mention that in the AY. 2002-03, identical issue had arisen and the Tribunal had after considering the issue at length and after deliberating the arguments of both the sides had held as under: 18. The ld. counsel for the assessee has placed on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. In the return of income filed by it for the year it claimed a deduction for 100% of the expenditure incurred by it which qualified for deduction u/s. 35(2AB) of the Act. It was argued before us, that all details relating to the said expenditure were available in the Tax Audit Report filed by it, that deduction was allowable at the rate of 150% of the expenditure for the year under consideration, that the AO should be directed to al low the difference. After going through the submissions made by the assessee, we are of the opinion that the matter should be restored back to the file of the AO. He is directed to decide the allowability of the claim made by the assessee after affording a reasonalbe opprotunity of hearing to it. Additional ground of appeal is decided in favour of the assessee, in part. ITA/4405/Mum/2007-AY. 2003-04(Appeal filed by the AO) 9. Ground no. 1-3 raised by the AO, deal with interest expenses of ₹ 44, 06, 055/-. From the observation of the balance sheet, the AO found that an amount of ₹ 2, 93, 73, 699/- was shown as capital work-in-progress(WIP)as on 31. 3. 2003, that the assessee had charged a sum of ₹ 27, 04, 86, 000/- towards int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment years 2000-01 and 2001-02. Respectfully following the above, we decide ground. no. 1-3 against the AO. 10. Ground no. 4-5 are about delay in depositing contribution to Provident Fund(PF)account under both the categories-i. e. Employer s contribution and Employees contribution. A perusal of the Tax Audit Report by the AO revealed that the assessee had delayed the payment of Employer's and Employees' Contribution to P. F. to the extent of ₹ 31, 67, 767/- each. He held that if the employee contribution to PF was not deposited into the respective funds before the stipulated due dates same was not allowable as deduction and was taxable as income in the hands of the employer as per the provisions of section 36(1)(va) r. w. s. 2(24)(x) of the Act. Similarly as per the provisions of section 43B of the Act, the employer's contribution to the PF was allowable as expenditure only if the said amount was paid within the stipulated due dates. He relied upon the decisions Hitek India P. Ltd. (227ITR446)and South India Corporation (242ITR 114), wherein such disallowances were confirmed. He further mentioned that he had examined the issue of Provident Fund contribut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was submitted by Ld DR that the judgment of the Hon ble Gujarat High Court was not brought to the notice of the Hon ble Bombay High Court when the appeal in the case of Ghatge Patil Transport Ltd. was being heard. But, as on today we are bound by the order of the jurisdictional High Court. Therefore, respectfully, following the order of Ghatge Patil Transport Ltd. (supra), we decide ground no. 4-5 against the AO. 11. Ground no. 6 is about addition of ₹ 2. 60 Crores of unutilised Modvat credit to Closing stock. While dealing with the ground no. 1 of the appeal filed by the assessee, we have restored back the matter to the file of the AO for fresh adjudication. Following the same, we decided ground no. 6 in favour of the AO, in part. 12. Next ground of appeal pertains to deduction u/s. 80 HHC of the Act for purpose of calculating book profits u/s. 115JB of the Act. While deciding GOA no. 4 filed by the assessee, we have narrated the facts related with the question under consideration. 12. 1. Before us, Representative of both the sides conceded that issue was decided by the Tribunal in favour of the assessee. We find that originally the question was decided agaisnt t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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