9911796707
Advanced Search 
TMI Blog2016 (5) TMI 1519X X X X Extracts X X X X X X X X Extracts X X X X ..... (-) Rs. 135,54,53,820 Add: (i) Preliminary expenses disallowed 8,02,000 (ii) Expenditure on glow sign/neon sign 11,83,07,422 (iii) On a/c of determination of Arm's Length Price for international Transaction 5,40,589 Rs. 11,96,50,011 Less: Depreciation claim allowed to the assessee Rs. 3,42,32,624 Total income under normal provision of the Act (-) Rs. 127,00,36,433 B. Income under section 115JB of the Act: Book profit as per return (-) Rs. 143,04,28,448 Add: (i) Provision for gratuity 3,49,10,315 (ii) Provision for leave encashment 1,79,69,702 (iii) Preliminary expenses 8,02,000 (iv) Expenditure on glow sign/neon sign 11,83,07,422 Rs. 17,19,89,439 Total income under section 115JB (-) Rs. 125,84,39,009 3. Ld. CIT(A) partly allowed the assessee's appeal. 4. Being aggrieved with the order of ld. CIT(A), the assessee is in appeal before us and has taken following grounds of appeal: 1. "That on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals)-XX, New Delhi (hereinafter referred to as "t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ashment of Rs. 17,969,702/-. These provisions were added back by assessee while computing income under normal provisions of the Act. However, the same were not added while computing the book profit u/s 115JB. The assessee submitted that the provision for gratuity and leave encashment were created scientifically on the basis of actuarial valuation and, therefore, in the nature of ascertained liability. The assessee had relied on the case laws noted by the AO in the assessment order. The AO, after considering the assessee's submissions and examining the report of actuarial valuer, concluded that the provision for gratuity and leave encashment were based on estimates and presumed figures and were uncertain as far as their quantum was concerned. He, accordingly, added back both the provisions for computing book profit u/s 115JB. 7. Ld. CIT(A), following the order of the Tribunal for A.Y. 2001-02 in assessee's own case, vide ITA No. 5722, 5663, 4989/Del/2004 dated December 31, 2009, upheld the AO's action 7.1 At the time of hearing, ld. Counsel referred to page 102 to 134 of the Paper Book, wherein the Tribunal's order dated December 22, 2015 in assessee's own case for AY 2002-03, vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to the Profit & Loss Account. Out of the said sum assessee itself has added back the gratuity of Rs. 68,23,350/- while computing the income under the normal provisions and thus, effectively the only amount remained to be debited to the P&L account was a sum of Rs. 29,60,828/-. If the amount was not debited to P&L account during the year under consideration, then the same is not subject to adjustment made while computing book profit u/s 115JA. To that extent there could be any dispute. Therefore, it has to be held that to the extent the amount which was not debited during the year under consideration to the profit and loss account relating to schedule 10 in the balance sheet of the assessee, the addition cannot be made for computing book profit u/s 115JA. It is the case of the assessee that provision of gratuity of Rs. 68,23,350/- was though debited to the P&L account but it was again added while computing the income under the normal provisions. Copy of computation of income has been filed by the assessee at page 107 to 110 of the paper book. It is observed there from that while computing the income under the normal provisions the amount of Rs. 68,23,350/- being provision made f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-01, defects in the report and the claim of assessee that in assessment year 2000-01, a miscellaneous application has already been filed. We deem it appropriate to set aside this issue to the file of the AO for re-adjudication. Assessee will submit the actuarial report afresh to the AO. AO shall consider the order of the ITAT in AY 2000-01 also. This ground of appeal is partly allowed." 9. Ld. Counsel further referred to page 171 and 172 of the Paper Book, wherein the Hon'ble High Court has admitted the following substantial questions of law for adjudication: 1. "Whether the Income Tax Appellate Tribunal was justified in law in holding that an amount of Rs. 68,23,350/- representing the liability towards gratuity and payable to employees and duly debited in the Profit & Loss account represented an unascertained liability so as to enhance the book profit in terms of provisions of Clause (c ) of Explanation to Section 115JA(1) of the Income Tax Act, 1961? 2. Whether the Income Tax Appellate Tribunal was justified in law in not directing, that the amount of Rs. 29,60,828/- being the liability towards leave encashment due to the employees could not be deducted from the income comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice, peanut butter and chilly paste etc. to overseas markets. During the year under consideration, the assessee exported gua gums and pet chips to its Associated Enterprise, PWT. The assessee undertook the export of guar gums and pet chips to its AE in order to meet its exports turnover obligations to help assessee in achieving Star Export House Status. AE-PWT further sold the same guar gum to unrelated enterprises outside India. The PWT was selected as tested party for the economic analysis of this transaction. TNMM was adopted for TP analysis with OP/Sales as relevant PLI. The assessee claimed that the results from the economic analysis conducted by the assessee provided evidence that both the pricing basis itself of the international transactions that impacted the profitability of the Company and the outcome of that pricing, i.e., the profitability were at arm's length and hence satisfied the arm's length standard prescribed under the Indian Regulations. However, the ld. TPO characterized assessee as a service provider and held that the assessee had provided service to its AEs and, therefore, assessee should have recovered not only cost incurred in procuring the goods but also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnational transactions i.e. amount received by the assessee in respect of international transactions. The said decision of the ITAT Delhi Bench has been affiremed by the Hon'ble Jurisdictional High Court vide order dated 14.03.2013 in ITA Nos. 1828 & 1829/2010 and 1254/2011 against the said order of the Hon'ble High Court. The Special Leave Petition (SLP) of the Revenue had been dismissed by the Hon'ble Surpeme Court vide order dated 02.01.2014 in CC No. 22166 of 2013. The ITAT Delhi Bench, 'I-2', New Delhi in the case of HCL Technologies BPO Services Ltd. vs. ACIT, CC-2, New Delhi (supra) by following the aforesaid decision of the ITAT in the case of DCIT vs. Global Vantedge Pvt. Ltd. has dismissed the appeal of the Revenue. In the present case also the assessee had not gained, the AE had not paid anything and the commodities were sold to the AE at the same price at which those were purchased from the local market, just to retain assessee was only on account of foreign exchange fluctuation. The structure of the transaction was such for the assessee that it could not make any profit or incur any loss as the transactions were not being undertaken for the sake of any profit. We, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
