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TMI Blog2016 (6) TMI 1332X X X X Extracts X X X X X X X X Extracts X X X X ..... as in earlier years, have not been rebutted through any evidence or material on record. - decided against assessee. - ITA No. 316/CHD/2013 - - - Dated:- 23-6-2016 - Shri Bhavnesh Saini, J. Appellant by: Shri Vishal Mohan Respondent by: Shri Manjit Singh, DR ORDER This appeal by assessee has been directed against the order of ld. CIT(Appeals) Shimla dated 22.01.2013 for assessment year 2008-09 challenging the order of ld. CIT(Appeals) in upholding and sustaining the application of provisions of Section 80IA(10) of the Income Tax Act confirming addition of ₹ 24,22,978/-. 2. Briefly the facts of the case are that the assessee had set his industry under the name and style of M/s. Shree Tools in Shoghi, Industrial area primarily for the manufacture of diamond tools, diamond wire etc. to be used in the cutting of granite, marble, concrete etc. Order u/s 143(3) was passed by the Assessing Officer, wherein invoking the provisions of Section 80iA (10) read with 80 1C (7) of the income Tax Act, 1961, a sum of ₹ 24,22,978/- was added to the taxable income of the assessee holding the same to be excess profit on the ground that the assessee had not booked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capacity. M/s. Stoneage had long been in the business of manufacturing and sale of diamond wire which is used in the granite mines. The appellant thereafter set up an industrial unit at Shoghi as his proprietorship concern in order to avail the tax. benefits u/S: 8'OIC of the Act. The said industrial unit was set up under the name and style of M/s Shree Tools. In the very first year of its assessment, i.e. A.Y. 2006-07, it was noted by the A.O. that the assessee had returned heavy net profit of 49.31%, whereas his sister concern M/s. Stoneage Industrial had returned a net profit of only 8.51% in the same line of business. The assessing officer examined the facts of the case at length and concluded that many essential expenses had not been booked by the assessee in order to return higher profits, as he was eligible for 100% deduction u/s 801C of the Act. The A. O. inter-alia noted that no expenditure on technical know-how, goodwill and customer base was booked by the assessee even though he had used the technical know-how developed by the firm M/s. Stoneage and even though he had exploited the goodwill and the customer base of the firm to his advantage. Thus the A.O. concluded t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hip firm, it was on these specific facts that the assesses had agreed to the addition to his taxable income to the tune of 10% of his turnover for use of technical know-how and goodwill etc. 4.2 As regards the appellant's submission that he had the requisite technical know-how to set up the plant, he has, intact, himself admitted in Para 3(c) of his written submissions that there was mo dearth of technical know-how to him as he had been a partner in a concern which was into a similar business. Thus the Appellant has categorically conceded that it was by virtue of his experience of working as a partner in M/s. Stoneage that he was in possession of the requisite technical know-how. As per the accepted principles governing Partnership Firms, no partner is allowed to set up a parallel and similar business in his individual capacity without any consideration. Hence there had to be attributed a certain cost to the technical know-how developed by the partnership firm which the assessee had admittedly used for his separate individual business. Therefore, the principle of arm's length price has been rightly invoked by the A. O. on the given facts. The appellant's argument tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stic reduction in its sales and has also returned meagre profits. The obvious reason behind the said arrangement is the availability of 100% deduction u/s 80IC to the assessee in respect of his profits, while the said deduction was not available to the firm located at Jaipur. Thus, under this arrangement, the firm has consciously allowed its market share to be diverted to its partner, and that too without charging any price. 4.5 It was vehemently argued by the appellant that the additions made in the last year cannot be made a basis for making the addition in the instant year as each year is an independent year. The said argument of the appellant is also found to be devoid of any force, as he -has not been able to show as to how the facts of his case are any way different from those of the earlier two assessment years. The A.O. has rightly referred to the decision of the Hon'ble Supreme Court in the case of Radha Swami Satsang 193 ITR 321 wherein the Hon'ble Court has held that where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and the parties have allowed that position to be sustained by not challen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admission of the assessee that facts are same in assessment year under appeal, making the above disallowance which were considered in preceding assessment year 2006-07 and 2007-08, there is no reason to take a contrary view in assessment year under appeal. The assessment orders under section 143(3) for assessment year 2006-07 and 2007-08 alongwith the audited accounts are filed on record which supports the findings of the authorities below that issue is identical as have been considered in preceding assessment year 2006-07 and 2007-08. The assessment orders for preceding assessment years show that Assessing Officer raised specific query with regard to disallowance under section 80IA(10) of the Income Tax Act and the assessee in reply to the Show Cause Notice issued by Assessing Officer agreed that the proposed Show Cause Notice and opinion of Assessing Officer for profits be revised as proposed. The Assessing Officer even after admission of the assessee for agreed addition, also discussed the issue in detail and has given specific finding of fact for the purpose of making the similar additions in earlier years . 6. The ld. counsel for the assessee now admitted before me that is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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