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TMI Blog2016 (12) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... twhile company and the TDS credit pertaining to the erstwhile company is being given credit to the assessee company, there is no reason why a different treatment should be given to the MAT credit available pertaining to the erstwhile company. We do not agree with the learned Commissioner of Income Tax (Appeals) that there is need for specific mention in this regard in Section 115JAA as the Carry forward of MAT credit of erstwhile company by amalgamated company is in-built in the scheme of amalgamation as well as the scheme of MAT credit. Hence, we set aside the order of learned Commissioner of Income Tax (Appeals) in this regard and decide the issue in favour of the assessee. Apportionment of expenses - assessee has claimed the entire expenses from Chennai Unit which is not eligible for deduction u/s 80IC - Held that:- During appeal, the ld. AR did not bring any evidence to prove that the expenditure was completely relatable to Chennai Unit. It appears from the nature of expenses listed in the assessment order that he expenditure was common expenditure incurred for the purpose of carrying on the business by the assessee of both the units. The expenditure cannot be identified it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth the assessment years. 5. During the assessment proceedings for assessment year 2010-11, the assessee made a fresh claim of depreciation for goodwill a sum of ₹ 1,16,80,000/-. The Assessing Officer refused the claim of the assessee since the claim was not made in the original return or by revised return. The Assessing Officer observed that no fresh claim can be made which results into reduction of income and it should be made through revised return income. Placing reliance on the judgment of Hon'ble Supreme Court in the case of Goetze India vs CIT, 284 ITR 323, the Assessing Officer rejected the claim. 6. Aggrieved by the order of the Assessing Officer, the assessee went on appeal before the CIT(A). During appellate proceedings, the CIT(A) entertained the claim of the assessee relying on Hon'ble Supreme Court judgment in the case of Jute Corporation of India Ltd vs CIT, 187 ITR 688, that the CIT(A) is permitted to admit any fresh claim which was not made during assessment proceedings. The CIT(A) found that amalgamation of M/s May India Laboratories Ltd. with the assessee-company resulted in goodwill of ₹ 584 lakhs and the scheme of amalgamation was sanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of the assessee on the ground that the payment does not fall within the meaning of know-how, patent or copyright. The Assessing Officer has not considered the judgment of Apex Court in SMIFS Securities Ltd. (supra). The Apex Court, after considering the provisions of Explanation 3 to Section 32(1) of the Act found that the word any other business or commercial rights of similar nature in clause (b) of Explanation 3 indicates that goodwill will fall under the expression any other business or commercial rights of similar nature . In view of the above judgment of Apex Court in SMIFS Securities Ltd., we are unable to uphold the orders of the lower authorities. Accordingly, we set aside the orders of the lower authorities. The Assessing Officer is directed to allow depreciation at the applicable rate on the payment relatable to goodwill. 9. The facts are identical on the above issue and the ld. DR did not bring any other judgment of Hon'ble High Court or any other higher forum to controvert the above decision. Therefore, we do not find any infirmity in the order of the CIT(A) on this issue and the same is confirmed. Ground No.2 is dismissed. 10. Ground No.3 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , after amalgamation the assessee company is entitled to all the assets, claims, etc. of the erstwhile company, which is also supported by Hon'ble High Court order in this regard. Further, when the assessee company is now being assessed in place of erstwhile company and the TDS credit pertaining to the erstwhile company is being given credit to the assessee company, there is no reason why a different treatment should be given to the MAT credit available pertaining to the erstwhile company. We do not agree with the learned Commissioner of Income Tax (Appeals) that there is need for specific mention in this regard in Section 115JAA as the Carry forward of MAT credit of erstwhile company by amalgamated company is in-built in the scheme of amalgamation as well as the scheme of MAT credit. Hence, we set aside the order of learned Commissioner of Income Tax (Appeals) in this regard and decide the issue in favour of the assessee. 12. The ld. CIT(Appeals), by following the above of the Tribunal, directed the Assessing Officer to allow the claim of the assessee. Moreover, the ld. DR could not controvert the above findings of the Tribunal or filed any higher Court s decision to ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sional charges, advertisement charges, ECGC charges and other expenses debited to the Profit Loss Account and claimed only from the non- 80IC unit. The assessee could not place any evidence to prove that the entire expenditure was related to the Chennai Unit and no other expenditure was related to the Baddi Unit. Therefore, the Assessing Officer disallowed proportionate expenditure amounting to ₹ 16,30,182/- on the basis of turnover. 22. Aggrieved by the order of the Assessing Officer, the assessee went on appeal before the CIT(A) and the CIT(A) has confirmed the addition made by the Assessing Officer as per the following discussion made in para 5.2 of his order against which the assessee is in appeal before us: I have carefully considered the facts and circumstances of the case. It is seen from the assessment order that A.O has made the disallowance after thorough verification of the above expenses. The apportionment made by the A.O appears to be logical and I am in agreement with the A.O s view. The appellant, even though, opposed the apportionment of the expenses, he has not proved in any way that such expenses were not incurred by Baddi unit at all. Therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26. Aggrieved by the order of the Assessing Officer, the assessee went on appeal before the CIT(A) and the CIT(A) sustained the addition made by the Assessing Officer placing reliance on the judgments of the Apex Court in the case of CIT vs K. Ravindranathan Nair, 295 ITR 228 and also CIT vs Sterling Foods Ltd, 237 ITR 579 and Liberty India vs CIT, 317 ITR 218, wherein it was held that duty draw back receipts, DEPB benefits and import entitlement benefits etc are not entitled for the said deduction. They constitute independent source of income beyond first degree nexus between the profits and the industrial undertaking. Aggrieved by the order of the CIT(A), the assessee is in appeal before the Tribunal. 27. Appearing for the assessee, the ld. AR argued that the DEPB entitlement and duty draw back are inextricably linked with the profits derived from industrial undertaking, therefore, entitled for deduction u/s 80IC of the Act. The DEPB entitlement and duty draw back are required to be included in the computation of deduction for the purpose of deduction u/s 80IC of the Act. Similarly, he has argued that focus marketing scheme expenses is to offset high freight cost and other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Industrial Estate or Industrial Park or Software Technology Park or Industrial Area or Theme Park, as notified by the Board in accordance with the scheme framed and notified 30 by the Central Government in this regard, in the State of Himachal Pradesh or the State of Uttaranchal; or (iii) on the 24th day of December, 1997 and ending before the 1st day of April, 2007, in any Export Processing Zone or Integrated Infrastructure Development Centre or Industrial Growth Centre or Industrial Estate or Industrial Park or Software Technology Park or Industrial Area or Theme Park, as notified 30 by the Board in accordance with the scheme framed and notified by the Central Government in this regard, in any of the North-Eastern States; (b) which has begun or begins to manufacture or produce any article or thing, specified in the Fourteenth Schedule or commences any operation specified in that Schedule, or which manufactures or produces any article or thing, specified in the Fourteenth Schedule or commences any operation specified in that Schedule and undertakes substantial expansion during the period beginning- (i)on the 23rd day of December, 2002 and ending before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was to give 10 year tax holiday to set up industries in the state of Meghalaya which is back ward area. Subsidies were given either for partial or complete reduction of costs as reimbursement. 31. In the assessee s case, the issue is not relating to the subsidies received from Government in the Meghalaya State a backward state towards the reimbursement of expenses ,which has a direct nexus to the manufacturing activity but it is related to the issue of DEPB entitlement and reimbursement of focus market scheme which are in the form of grants from the Government. The immediate source of income was from the Government and not the business of the assessee. This being the case we are of considered opinion that the amounts received on account of DEPB entitlements and the export incentives in the form of Focus marketing are not qualified for the deduction u/s 80 IC of the Act Hon ble supreme court judgment in the case of CIT.v. Sterling Foods Ltd (237 ITR 579) and Liberty India v CIT,137 ITR 218 are squarely applicable in the assessee s case. Therefore, we hold that the CIT(A) has rightly confirmed the addition made by the Assessing Officer and the same is confirmed. 32. In the res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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