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TMI Blog2018 (9) TMI 1940X X X X Extracts X X X X X X X X Extracts X X X X ..... reement?" 3. For these and other grounds that may be urged at the-time of hearing, the decision of the CIT(A) may be set aside and that of the AO restored. 3. The facts on the issue raised are that assessee was in the business of providing port service and had international transaction with the associated enterprise which was its principal named M/s. D.P. World Australia Limited, in Australia. The assessee had incurred expenditure of Rs. 3,46,50,000/- on account of technical services provided by the associated provided. The Assessing Officer (A.O. for short) referred the matter to the transfer pricing officer who determined the arm's length price of the technical service.The assessing officer therefore made an adjustment of Rs. 2,15,41,247/-. 4. Upon the assessee's appeal, the learned CIT(A) noted that identical issue was decided earlier by the ld. CIT(A) and the arm's-length price of the said transaction of technical service was directed to be taken at 50% of the amount claimed by the assessee. The ld. CIT(A) further noted that for assessment year 2003-04 and 2004-05 the order of the ld. CIT(A) was confirmed by the ITAT. It was further noted that the Revenue had no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chnical service fees at Rs. 2,47,90,566. Resultantly the A.O. made addition of Rs. 3.30 crore. The learned CIT(A), on the basis of TPO's order for the immediately preceding year i.e. 2003-2004, held that the arm's length price of the said transaction of technical service fees be determined at 50% of the amount claimed by the assessee (full value for clause (a) and (b) of the agreement and half consideration for (c), (d), (e) of the agreement). In this way the adjustment to the tune of Rs. 2,88,22,327 was held to be correct thereby determining the true ALP of the international transaction at Rs. 2,89,22,327. 4. We have heard the learned Departmental Representative and perused the relevant material on record. There is no appearance from the side of the assesse despite notice. At the very outset, the learned Departmental Representative conceded that the issue in question is covered against the Revenue by virtue of the order passed by the Bangalore Bench of the tribunal in the case of M/s.Gemplus India Pvt. Ltd. Vs. ACIT in ITA No.352/Bang/2009 for assessment year 20032004. In the light of this order dated 21.10.2010, the learned Departmental Representative was fair enough to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount in Rs. Rent recovery 495,000 Sundry revenue 4,411,000 Interest income 58,154,000 Total 60,536,836 The CIT(A) failed to appreciate that the other income earned by your Appellant is derived from the business of operating and maintaining the container terminal. The CIT(A) failed to appreciate the fact that the said income would not have been received by your Appellant, had your Appellant not been carrying on its business of operating and maintaining the container terminal. Without prejudice to the above, the CIT (A) erred in not observing the principles of judicial consistency of allowing deduction under Section 80-IA of the Act in respect of scrap sales and miscellaneous income allowed by the Commissioner of Income-Tax (Appeals) in AY 2004-05. Your Appellant prays that the AO be directed to allow deduction under Section 80-IA of the Act for other income earned by your Appellant. Apropos ground no.1: 11. Brief facts of the case are as under: In computation of income, the assessee has added disallowance u/s 40(a) of the Act amounting lo Rs. 7,73,05,970/-. The details of which were as under: Nature of Expenses Amount debited in P&L account Operating Expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... net profit shown in the profit and loss account to the extent mentioned in Explanation 1 to Section 1I5JB" In view of the above decision, it is submitted that the Company has computed book profits after making specific adjustments to the net profit appearing in the audited financial statements prepared in accordance with the provisions of Schedule VI of the Companies Act, 1956. Further, the specific adjustments do not require any disallowance under Section 40(a) of the Act, therefore the same has not be considered for the purpose of computing the book profits under Section 115JB of the Act. * The Company craves leave to rely on the decision of the Hon 'ble Bombay High Court in the case of CIT v Echjay Forgings (P.) Ltd (2001) 116 Taxman 322 wherein it has held that: " if a sum is debited to the profit and loss account under the provisions of the Companies Act, it will not be added to compute book profit, even if the same is disallowed under Section 37 or under arty other provision of the Income -tax Act" In view of the above, the Company humbly submits that the expenditure amounting to Rs. 77,305,970 disallowed under Section 40(a) of the Act is not required to be con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion should be allowed although the liability may have to be quantified and discharged at a future date. What should be certain is the incurring of the liability. It should also be capable of being estimated with reasonable certainty though the actual quantification may not be possible. If these requirements are satisfied, the liability is not a contingent one." 16. Furthermore, the Hon'ble Apex Court in the case of Apollo Tyres Ltd. vs. CIT [2002] 255 ITR 273 (SC) has held as under: "the Assessing Officer while computing the income under section 115J has only the power of examining whether the books of account are certified by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act. The Assessing Officer thereafter has the limited power of making increase and reductions as provided for in the Explanation to the said section. To put it differently, the Assessing Officer does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to section 115J. In view of the above decision, it is submitted that the Company has computed book pro/its after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant had to bear expenditure of deployment of CISF staff at the container terminal to the extent of forty percent of the actual relevant expenses incurred by JNPT. iii. That JNPT had invoiced certain amounts in respect of above mentioned security charges in the past years. Appellant had made a provision for security charges in the year under consideration on the basis of the invoices received in the past years. However, this ascertained liability was not discharged pending receipt of original invoices along with the copies of supporting documents from JNPT. It had accepted the liability and accordingly provided for the same in the books of account, however the same would be discharged on receipt of original invoices along with the copies of supporting documents from JNPT. In view of the above facts appellant submitted that the provision pertains to an ascertained liability which would be discharged in subsequent years on receipt of the original invoices along with the copies of supporting documents. 20. Thereafter, the assessee also placed reliance upon the several case laws. However, the ld. CIT(A) was not satisfied. He noted that the assessee has submitted that such c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Ltd. vs. The Asst. CIT (in ITA NO.415 of 2004 vide order dated 18.07.2018), wherein the question was as under: (a) On the facts and in the circumstances of the case, whether the Income-tax Appellate Tribunal was right in law in reversing the order of the CIT(A) and restoring that of the Respondent No.1 and thereby denying the appellant the benefit of Section 80IA of the I.T. Act in respect of interest income of Rs. 6,69,573/-? 26. The Hon'ble jurisdictional High Court has decided the issue in favour of the assessee by holding as under: 3. The deduction under both the aforesaid heads under Section 80IA of the Act was disallowed by the impugned order of the Tribunal.It followed the decision of the Apex Court in Commissioner of IncomeTax Vs. Pandian Chem icals Ltd. 318 ITR 420 which has held that thewords 'derived from' means somethi ng which has direct and immediate nexus with the industrial undertaking. Thus, the claim for deduction on the above heads was disallowed under Section 80IA of the Act. 4.Mr. Subramaniam, learned Counsel appearing in support of theappeal points out that Pandian Chemicals Ltd. (supra) was rendered inthe context of Section 80HH o f the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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