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TMI Blog2020 (1) TMI 1032X X X X Extracts X X X X X X X X Extracts X X X X ..... Three "Chore only) is not allocable to the sub licensing income of Rs. 2.71 crore. 2. It is contended that the minimum royalty payment of Rs. 3,00,00,000/- (Rupess Three Crore only) is expended / incurred in connection with the earning of sub licensing income of Rs. 2.71 crore. 3. The Lower authorities have erred in holding that Advance received from customers amounting to Rs. 4,31,376/- as cash credit u/s 68 of IT Act. 4. The Ld. CIT(A) erred in holding that refund of excise duty being a capital receipt is includible in determination of Book Profit u/s 115JB of the act. 5. The assessee craves the right to add, alter, amend, reduce, delete or withdraw any grounds of appeal arising out of this order." Additional Ground filed by the assessee "That the Assessing Officer, while computing the deduction u/s 80-IB/80- IC of the Income-tax Act, 1961, ought to have excluded the income from licensing of technical know-how, i.e. royalty not on the gross basis but on net basis after adjusting the royalty paid for that also." ITA N o.4012/Del/2011 A.Y. 2007-08 (Revenue's appeal) 1. On the fact and in the circumstances of the case, the CIT(A) has erred in law and on facts in alloca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. The assessee craves the right to add, alter, amend, reduce, delete or withdraw any grounds of appeal arising out of this order." Additional Ground filed by the assessee "That the Assessing Officer, while computing the deduction u/s 80-IB/80- IC of the Income-tax Act, 1961, ought to have excluded the income from licensing of technical know-how, i.e. royalty not on the gross basis but on net basis after adjusting the royalty paid for that also." ITA N o.610/Del/2012 A.Y. 2008-09 (Revenue's appeal) 1. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in allocating expenses of Rs. 10,00,000/- against sublicensing income of Rs. 2,42,00,000/- which is excessive and unjustified. 2. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in deleting the disallowance of claim for deduction of Rs. 4,11,74,224/- u/s 80-IB on account of Self Cenvat Credit availment. 3. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in holding that Excise duty refund is a capital receipt in nature and not liable to tax. 4. The order of the Ld. CIT(A) is erroneous and is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The Order of the CIT(A) is erroneous and is not tenable on facts and in law. 4. The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal." ITA N o.4357/Del/2013 A.Y. 2010-11 (Assessee's appeal) 1. "The Lower authorities have erred in holding that the minimum royalty payment of Rs. 3,00,00,000/- (Rupees Three Crores only) is not allocable for the sub licensing rights. 2. The lower authorities have erred in holding that minimum royalty of Rs. 3,00,00,000/- (Rupees Three Crores only) being a part of total royalty paid of Rs. 7,87,93,921/- is to be allocated to Jammu and Baddi manufacturing units. 3. It is contended that the minimum royalty payment of Rs. 3,00,00,000/- (Rupees Three Crores only) is expended/ incurred in connection with the earning of sub licensing rights. 4. The Lower Authorities have erred in holding that refund of excise duty of Rs. 1,47,16,872/- is not a capital receipt (Shri Balaji Alloys, J & K High Court - 239 CTR 70). 5. The Lower authorities have erred in holding that refund of excise duty being a capital receipt is includible in determination of Book Profit U/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llocable for the sub- licensing rights acquired as a result of such payment. 2. It is contended that the minimum royalty payment of Rs. 3,00,00,000/- (Rupees Three Crore only) was incurred in connection with the earning of sub- licensing rights. 3. The lower authorities have erred in holding that minimum royalty of Rs. 3,00,00,000/- (Rupees Three Crore only) being a part of total corporate expenses of Rs. 8,48,64,135/- is to be allocated to Jammu and Baddi manufacturing units. 4. The Lower Authorities have erred in holding that refund of excise duty of Rs. 61,08,667/- is not a capital receipt (Shri Balaji Alloys, J & K High Court - 239 CTR 70). 5. The Lower authorities have erred in holding that refund of excise duty being a capital receipt is includible in determination of Book Profit U/s 115JB of the act. 6. The assessee craves the right to add, alter, amend, reduce, delete or withdraw any grounds of appeal arising out of this order." ITA No.3373/Del/2011(ASSESSEE'S APPEAL) AY-2007-08 3. The assessee company is engaged in the business of manufacturing of plastic film used in packaging industry, printing articles in pouch form and zipper diaphragm having two units at B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. AR submitted that in AYs 2004-05, 2005-06 and 2006-07, the assessee also raised such an additional ground and the same had been accepted by the Tribunal vide order dated 20.03.2019. In AY 2005-06, the Tribunal, while disposing the assessee's appeal for AY 2005- 06 in ITA No. 901/Del/2009, and for AY 2006-07 in ITA No. 2199/Del/2009 vide its order dated 20.3.2019 has accepted the additional ground raised by the assessee and then thereafter directed the Assessing Officer to compute the sublicensing fee on net basis after adjusting the royalty paid against income of sub-licensing fee for the purpose of exclusion. 6. The Ld. DR objected to the admission of additional grounds on the ground that no such issue had been raised by the assessee before the lower authorities and ample time has lapsed to raise such grounds before the Tribunal and for this purpose relied upon the judgment of Hon'ble Bombay High Court in case of Ultra Tech Cement Ltd. ITA No. 1060 of 2014 order dated 18.04.2017. But the Ld. DR could not controvert the order dated 20.03.2019 passed by this Tribunal. The Ld. DR also relied upon the following decisions in respect of Section 80IA and 80IB: a) Opera Clothings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d sustained the addition because no supplies could have been made against such advances: Lucknow Trading Co. - Rs. 4,08,376/- Shiva Impex - Rs. 23,000/- Rs. 4,31,376/- The Ld. AR submitted that against the aforesaid addition of Rs. 4,31,376/-, the assessee is in appeal. The Ld. AR further submitted that the said sum amounting to Rs. 4,31,376/- has already been offered by the assessee in A.Y. 2011-12 and the same has already been assessed to tax. Hence it would amount to double assessment not permissible under law. However, in case the addition is maintainable, then the Assessing Officer be directed to exclude an amount of Rs. 4,31,376/- from the income of A.Y. 2011-12. 9. The Ld. DR relied upon the Assessment Order and the order of the CIT(A). 10. We have heard both the parties and perused all the relevant material available on record. The CIT(A) has given a finding in para 6 that the parties mentioned therein have paid for the value of goods, bought by them from the assessee and the assessee as a part of the contractual obligation, has supplied the goods. However, with regard to sum of Rs. 4,08,376/- of Lucknow Trading Co. and Rs. 23,000/- for Shiva Impex, a peru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shment of new industrial undertaking in the State of Jammu & Kashmir as an incentive to promote industrial activity in the State of Jammu & Kashmir and is in the nature of capital subsidy not liable to tax. Thus, the said excise duty refund has to be excluded from the computation of Section 115JB of the Act as well as it is a capital receipt. Thus, Ground No. 4 is allowed. 14. In result, appeal of the assessee being ITA No. 3373/Del/2011 for A.Y. 2007 is partly allowed for statistical purpose. ITA No.4012/Del/2011(DEPARTMENT APPEAL) AY-2007-08 15. As regards to Ground No. 1 of Revenue's appeal relating to allocation of expenses of Rs. 10 lakhs against sub-licensing income of Rs. 2,71,00,000/-. The Ld. AR submitted that it is basically covered by Grounds No. 1 and 2 and additional ground of assessee's appeal and need no comments because if the additional ground is accepted, as was made in earlier years, while accepting the assessee's contention that the sub-licensing income needs to be excluded on net basis after adjusting the royalty paid, then this ground does not survive. The Ld. DR could not controvert this position. 16. We have heard both the parties and perused all the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any additional evidence. The Department also could not point out what additional evidence had been filed by the assessee. 21. The Ld. DR relied upon the Assessment Order. 22. We have heard both the parties and perused all the relevant material available on record. It is seen from the records that the evidences produced before the CIT(A) by the assessee, was filed before the Assessing Officer. There are no new evidence filed by the assessee before the CIT(A). Besides this the Ld. DR also could not demonstrate from the order of the CIT(A) that there are no evidence filed before him. Hence Ground No. 3 of Revenue's appeal is dismissed. 23. As regards to Ground No. 4 relating to refund of excise duty/Cenvat credit amounting to Rs. 2,34,24,510/- forming part of the manufacturing profit eligible for deduction u/s 80-IB of the Act and Ground No. 5 relating to excise duty refund/Cenvat credit is a capital receipt, the Ld. AR submitted that the issue is covered by the Hon'ble Jurisdictional Delhi High Court judgment in the case of CIT vs. Dharam Pal Prem Chand in 317 ITR 353 (Del) in favour of the assessee against which the SLP filed was also dismissed. However, it is brought to your ki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. Being aggrieved by the Assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 29. The Ld. AR submitted that as regards to Grounds No.1 to 4 and additional ground filed on 12.3.2018, the same are identical to Assessment Year 2007-08 (ITA No. 3373/Del/2011). The Ld. DR relied upon the Assessment Order and order of the CIT(A), but could not controvert the identical issues to that of A.Y. 2007-08. 30. We have heard both the parties and perused all the relevant material available on record. The additional grounds taken by the Ld. AR is identical to that of A.Y. 2005-06 wherein the Tribunal admitted the said ground (order dated 20.03.2019). The issue herein is also identical to that of A.Y. 2007-08 which is decided hereinabove by us. In the present Assessment Year as well (A.Y. 2008-09) also the facts remains the same. Thus, we direct the Assessing Officer to compute the sub-licensing fee by way of excluding on net basis after adjusting the royalty paid against income of sub-licensing. The assessee must provide all the information and the clauses to bifurcate the said sub-license fee from the original royalty payment. Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment Order and could not controvert the facts of the present assessment year with that of earlier assessment year. 37. We have heard both the parties and perused all the relevant material available on record. The issue is identical to that of A.Y. 2007-08 which is decided by us hereinabove. There are no distinguishing facts mentioned by the Ld. DR in the present case (i.e. A.Y. 2008-09). Hence Ground No. 4 and 5 of Revenue's appeal are dismissed. 38. In result, appeal of the Revenue being ITA No. 610/Del/2012 for A.Y. 2008-09 is dismissed. ITA No.6292/Del/2012(ASSESSEE'S APPEAL) AY 2009-10 39. The assessee company is engaged in the business of manufacturing of plastic film used in packaging industry, printing articles in pouch form and zipper diaphragm having two units at Baddi and Jammu. The assessee filed its return of income u/s 139 for assessment year 2007-08 on 31.10.2009 declaring an income of Rs. 9,58,29,354/- after claiming deduction of 80IC & 80IB under normal provisions of Income Tax Act, 1961 and book profit u/s 115JB for Rs. 21,23,89,607/-. The assessment was completed on 16.12.2011 at total income of Rs. 12,02,12,976/- by making various additions. 40. Being aggri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vity in the State of Jammu & Kashmir and is in the nature of capital subsidy not liable to tax. Thus, the said excise duty refund has to be excluded from the computation of Section 115JB of the Act as well as it is capital receipt. The decisions relied by the Ld. AR in case of Shri Balaji Alloys (supra) is applicable in the present case. Besides in A.Y. 2006-07 as well as in A.Y. 2007-08 hereinabove, this issue is decided in favour of the assessee by the Tribunal and the facts are identical in the present Assessment Year as well. Therefore, Ground No. 5 and 6 of the assessee's appeal are allowed. 46. In result, appeal of the assessee being ITA No. 6292/Del/2012 for A.Y. 2009-10 is partly allowed for statistical purpose. ITA No.471/Del/2012( DEPARTMENT APPEAL) (AY 2009-10) 47. As regards to Ground No.1 of Revenue's appeal, the Ld. AR submitted that as explained in ground No. 1 of Revenue's appeal in Assessment Year 2007-08 (ITA No. 4012/Del/2011), the issue is identical in the present assessment year as well. The Ld. DR relied upon the Assessment Order and could not controvert the facts of the present assessment year with that of earlier assessment year. 48. We have heard both t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal admitted the said ground (order dated 20.03.2019). The issue herein is also identical to that of A.Y. 2007-08 which is decided hereinabove by us. In the present Assessment Year as well (A.Y. 2009-10) also the facts remains the same. Thus, we direct the Assessing Officer to compute the sub-licensing fee by way of excluding on net basis after adjusting the royalty paid against income of sub-licensing. The assessee must provide all the information and the clauses to bifurcate the said sub-license fee from the original royalty payment. Thus, we remand back this issue to the file of the Assessing Officer. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Therefore, additional ground is partly allowed for statistical purpose. 56. As regards to Grounds No. 4 and 5 of the assessee's appeal relating to refund of excise duty/cenvat credit, the Ld. AR submitted that in the year under appeal, the CIT (A) did not follow his predecessor's order for AY 2005- 06 to AY 2008-09 and held that such excise duty refund/cenvat credit is not a capital receipt, but a revenue receipt and liable to tax and consequently also did not exclude such r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elied upon the Assessment Order and could not controvert the facts of the present assessment year with that of earlier assessment year. 63. We have heard both the parties and perused all the relevant material available on record. The issue is identical to that of A.Y. 2007-08 which is decided by us hereinabove. There are no distinguishing facts mentioned by the Ld. DR in the present case (i.e. A.Y. 2010-11). Hence Ground No. 2 of Revenue's appeal is dismissed. 64. In result, appeal of the Revenue being ITA No. 4905/Del/2013 for A.Y. 2010-11 is dismissed. ITA No.1856/Del/2015(ASSESSEE'S APPEAL) AY 2011-12 65. The assessee filed its return of income on 28.09.2011 declaring total income of Rs. 17,03,01,701/- after claiming deduction u/s 80IC & 80IB under normal provisions of the Income Tax Act, 1961 and Book Profit u/s 115JB for Rs. 28,77,87,696/-. The assessment of the assessee was completed at total income of Rs. 18,00,32,963/- vide Assessment Order dated 10.12.2013 by making various additions. 66. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 67. The Ld. AR submitted that Ground No.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. 70. The Ld. DR relied upon the Assessment Order and the order of the CIT(A). 71. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the eligibility of excise duty refund was on account of establishment of new industrial undertaking in the State of Jammu & Kashmir as an incentive to promote industrial activity in the State of Jammu & Kashmir and is in the nature of capital subsidy not liable to tax. Thus, the said excise duty refund has to be excluded from the computation of Section 115JB of the Act as well as it is capital receipt. The decisions relied by the Ld. AR in case of Shri Balaji Alloys (supra) is applicable in the present case. Besides in A.Y. 2006-07 as well as in A.Y. 2007-08 hereinabove, this issue is decided in favour of the assessee by the Tribunal and the facts are identical in the present Assessment Year as well. Therefore, Ground No. 4 and 5 of the assessee's appeal are allowed. 72. In result, appeal of the assessee being ITA No. 1856/Del/2015 for A.Y. 2011-12 is partly allowed for statistical purpose. ITA No.1327/Del/2015(DEPARTMENT APPEAL) AY 2011-12 73. As regards to Ground No.1 of Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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