9911796707
TMI Blog2019 (4) TMI 1867X X X X Extracts X X X X X X X X Extracts X X X X ..... ation by the Assessing Officer . Since, issue is covered in favour of the revenue, we do not find any infirmity in the action of the DRP, accordingly, we uphold the same. Provision of Warranty - assessee has claimed the provision in respect of warranty made in certain products, the estimated cost of which accrued at the time of sale - HELD THAT:- We find that ITAT in assessee s own case in earlier years remitted the issue to the file of the Assessing Officer and directed that the issue be decided in accordance with Hon ble Supreme Court decision in the case of Rotork Controls Ltd. [ 2009 (5) TMI 16 - SUPREME COURT] . In our considered opinion, we should follow the principles of precedents and the earlier direction of ITAT in assessee s own case. It is not at all the case that the decision of ITAT consistently in assessee s own case has been reversed by the Hon ble Supreme Court. That in earlier years, pursuant to the ITAT direction AO has passed perfunctory cannot be a ground for us to deviate from following precedents as above. Disallowance u/s.40A(9) - Main contribution to Mahendra Academy - HELD THAT:- After hearing both the parties and in view of the order of the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has confirmed the AO s order by observing that matter has not reached its finality. Respectfully following the order of ITAT in assessee s own case, we set aside the order of the authorities below and decide in favour of the assessee. Weighted deduction u/s 35(2AB) with reference to expenditure incurred on scientific expenditure - HELD THAT:- We note that in earlier year i.e., for A.Y.2008-09, Tribunal has noted the submission from assessee that once the R D facilities are approved and DSIR has not rejected the application submitted by the assessee, it could be presumed that the application has been accepted. Further that failure on the part of DSIR to confirm the authorities in time cannot be reason for taking back deduction to the assessee. Noting the above and following judicial precedents from earlier year, the Tribunal had directed that assessee is entitled to grant of better deduction u/s.35(2AB). Referring to these case laws from ITAT and also from Cummins India Ltd. [ 2019 (11) TMI 1182 - ITAT PUNE] and Sri Biotech Laboratories India Ltd. [ 2015 (7) TMI 1340 - ITAT HYDERABAD] assessee has requested that AO be directed to allow the claim for deduction u/s.35(2AB) as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the contention of assessee that no further income can be attributed to the assessee once the rental income has been assessed as business income and not from the income from house property. Deduction u/s.80IC in respect of Rudrapur Unit which was restricted to gross total income - HELD THA:- As regards the cost of inter unit transfers, the Dispute Resolution Panel is holding that proper detail has not been given to show that inter unit transfer has been properly done. The assessee s contention in this regard is that the details are given in audited accounts and audit report under section 80IC. In our considered opinion, this issue needs to be examined at the level of the Assessing Officer from detail as claimed by the ld. Counsel of the assessee to be available on record. DRP has found that assessee has incurred huge expenditure and claimed deduction also for Research and development expenditure. However, assessee has not allocated the same to this exempt unit. Assessee has not submitted the necessary details and has only submitted that these are mainly related to export models. We find that this general submission does not exonerate the assessee from submitting to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed by the ld. Counsel of the assessee that A.Y₹ 2006-07, 2007-08 and 2008-09 [ 2013 (12) TMI 139 - ITAT MUMBAI] the AO has given effect to the order of the ITAT and has concluded that no addition is warranted u/s.145A. Furthermore, assessee s Counsel placed reliance upon in the case of Diamond Dye Chem Ltd. [ 2017 (7) TMI 616 - BOMBAY HIGH COURT] - remit the issue to the file of the Assessing Officer with similar directions. Needless to add that the Assessing officer shall take into account the earlier orders passed in this regard Interest income - Correct head of income - whether business income or income from other sources - HELD THAT:-: We find that the impugned income has been shown as business income. The Assessing Officer has not tinkered the classification, however, the DRP has directed to treat the same as income from other sources by referring to the case laws in the context of deduction under chapter VI where issue related to income attributable to or derived from business income. The reliance of the assessee on Hon ble Bombay High Court decision in Lok Holding [ 2008 (1) TMI 365 - BOMBAY HIGH COURT] and Swiss Jewel [ 2005 (9) TMI 47 - BOMBAY HIGH COURT] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Professional Fess - FES Division - 1 China Project Expenses 4,81,24,372 4,81,24,372 B Expenses incurred on various other acquisitions - AD marketing 1 Professional fees-Paid to PWC-Proposed acquisition Jaguar Land Rover. 1,22,78,790 2 Legal Charges for Joint Ventures 9,86,615 132,65,405 C Expenses incurred on various other acquisitions -AD Kandivli Foreign Travel Expenditure on various projects 24,51,563 D Expenses incurred on various other acquisitions - Head Office 1 Professional fees-Paid to PWC-Proposed acquisition Jaguar Land Rover 1,22,78,190 2 F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision is in the nature of contingent liability and hence not an ascertained liability. The learned Addl C.I.T/DRP erred in coming to the conclusion that the Appellant had been unable to pass the tests prescribed by the Supreme Court in the case of Rotork India Ltd. The findings of the learned Addl C.I.T/DRP that in view of certain alleged infirmities and deficiencies the liability for warranty was not an ascertained liability, are perverse and, being contrary to facts are bad in law. The Claim of the Appellant be allowed 5. Disallowance U/s.40A(9) ₹ 2,59.650 representing the actual expenses incurred and ₹ 12,00,000/- being contribution to Mahindra Academy a) On the facts and in the circumstances of the case and in law the Appellant contends that the learned Addl C.I.T. erred in proposing and the DRP erred in confirming disallowance of deduction of ₹ 2,59,650/-, being the actual expenditure incurred during the year on employee welfare. b) On the facts and in the circumstances of the case and in law the learned Addl C.I.T. erred in proposing and the DRP erred in confirming disallowance u/s 40A(9) of ₹ 12,00,000 representing amount paid to Mahind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Price of international transaction adjustment of ₹ 4,62,38,658/- On the facts and in the circumstances of the case and in law. the learned Addl C.I.T./TPO erred in proposing and the DRP erred in confirming addition to the income of the Appellant a sum of ₹ 1,25,40,000 being adjustment in respect of corporate Guarantee and ₹ 3,36,98,658 by way of notional interest on the basis of Transfer Pricing Officer's order u/s 92CA on account of the determination of Arm's Length Price (ALP) on international transactions with an Associated Enterprise rejecting the contention of the Appellant that the same was not warranted on facts and in law. The order passed by the learned TPO u/s 92CA is contrary to the provisions of the Act dealing with determination of ALP. Addition be deleted. Without prejudice to the aforesaid ground, the learned Addl C.I.T. / DRP erred in confirming addition to total income on account of guarantee fees at 3%. If at all any adjustment was required the Addl. C.I.T should have restricted the addition of guarantee fees to the extent of 1% p.a. 9. Disallowance of capital loss on sale of R D assets of ₹ 2,29,79,716 On the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction and also that non-receipt of form 3CL from DSIR was not determinative of the issue. The learned Addl C.I.T/DRP ought to have appreciated that submission of report in form 3CL was neither the obligation of the Appellant nor within its control and therefore cannot be a ground for sustaining disallowance. The learned Addl. C1T be directed to allow the claim of the Appellant. 12. Disallowance u/s. 40a(ia) of Dealer Incentive ₹ 128,09.72,000/- and Service Coupon ₹ 38,92,51,000/- On the facts and in the circumstances of the case and in law the learned Addl C.I.T. erred in proposing and the DRP erred in confirming disallowance u/s 40a(ia) of Dealer Incentive ₹ 128,09,72,000 Service Coupon 38,92,51.000 aggregating to ₹ 167,02,23,000 rejecting Appellant's contention that tax was not deductible on dealer incentive service coupon under Section 19411 194C respectively. In any event the learned Addl. C.I.T./DRP ought not to have, made disallowance u/s 40a(ia) in those cases where the payees had filed their returns of income and paid tax due there under for the relevant, assessment year, there being thus no subsisting tax liability of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exchange of ₹ 251.63 crores as claimed by the Appellant in the computation of income. The Learned Addl CIT/DRP ought to have accepted the contention that there is no requirement in the Law to capitalize the difference in exchange to the capital assets acquired by the Appellant as also the loss arising due to difference in exchange was not contingent in nature and therefore was allowable as revenue deduction while computing the taxable income of the Appellant. Without prejudice to the aforesaid contention that the difference in exchange was allowable as revenue deduction, the Learned Addl CIT/DRP ought to have allowed depreciation on such difference in exchange as capitalized in the books of accounts. 17. Disallowance of deduction under section 80 1C - Rudrapur Unit On the facts and in the circumstances of the case and in law the Appellant objects to the arbitrary methodology of calculation of profits derived from the Appellant's Rudrapur Unit directed by the DRP and applied by Learned Addl CIT which has resulted in restricting deduction u/s. 801C to ₹ 99,76,03,710 as against ₹ 359,67,62,865 claimed by the Appellant relating to the said unit. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osing stock does not warrant any corresponding adjustment to opening stock of the same year' and further that 'adjustment in purchases is to be allowed only to the extent of unutilized CEXVAT credit available at the end of the year for raw material still in the closing stock of the assessee', both rulings being contrary to among others, the scheme of the Act itself. Without prejudice to the aforesaid contention the learned Addl. CIT erred in not allowing deduction for ₹ 53.60 crore being the amount of unutilized CKXVAT credit as on 31/3/2008 brought to tax in AY 2008-09 Addition of ₹ 22.95 crore made by the learned Addl. CIT be deleted and deduction of ₹ 17.10 crore claimed by the Appellant be allowed. 20. Adjustment to business income and income from other sources ₹ 84.10 crores The DRP erred in directing learned Adl. CIT to assess business income of ₹ 84.10 crores as income from other sources which direction is contrary to facts and the position in law. The learned Addl. CIT be directed to accept the head of income as shown in the Return of income in respect of the said income of ₹ 84.10 crores. Your appellant r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Legal charges - relating to acquisition 93,04,454 5. Professional fees - Foreign consultancy fees for acquisition 37,33,491 8,93,61,609 E. SSBU Meeting for JLR acquisition (Travelling Expenses) 1,83,279 1,83,279 TOTAL 15,33,86,228 6. The Dispute Resolution Panel following the ITAT order for earlier years i.e., 2006-07 and 2007-08 has held that this expenditure is capital in nature and no intervention is required. On the issue of depreciation on those assets, the DRP had followed the order of DRP in A.Y.2008-09 and has directed the assessee to suo-moto submit the details of capital assets that have come into existence on incurring the expenditure and the definite cost of acquisition of such capital asset, to the Assessing Officer within 7 days of the receipt of the directions so as to enable him to qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee has not shown to have made any reversal in the accounts on account of expired warranties either in this year or in preceding years on the basis of any records of warranties expired. Therefore it cannot be said that warranty provision account has been maintained faithfully and reliably to represent the liability on account of warranty in a true and fair manner and unutilized warranties have been offered to tax as and when the warranties expire. 4.11. Therefore, we agree with the AO's observation in para 5.3 of the draft order that there was a balance of ₹ 106.42 crores in the provision account as on 1.4.2008 and the utilization during the year was only 54.27 crore which clearly indicated that the provision made in the preceding years did not have any scientific basis. The AO has allowed the deduction on actuals basis and disallowed the excess of provisions. On facts of the case, the order of AO is reasonable and correct. Accordingly we uphold the aforesaid disallowance. 4.12. The assessee has also not been able to establish the stability and certainty of facts and the principles applied in its method of calculation of the provision over various years. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in all the years, the Assessing Officer has once again passed the orders repeating the disallowance for the reasons that details of reversal of provision made in earlier years has not been provided. Further submissions of the ld. Counsel of the assessee in this regard are as under:- The difference is negligible Average utilization of provision is in the range or 70%. As per AS 1 notified under section 145 a provision essentially involves making an estimate of a liability whose amount cannot be determined with substantial degree of accuracy. In the light of this DRP's mandate to provide vehicle-wise data of warranties expired and provision reversed is unrealistic since vehicles are sold on a daily basis and total number of vehicles/tractors sold during the year itself is 376701. The Supreme Court held that provision for warranty was an allowable expenditure when it arises from manufacture and sale of an army of sophisticated goods. So the entire army or mass of goods has to be collectively viewed as one and not on a vehicle by vehicle basis as intended by the DRP In view of facts noted by the DRP the issue should not be referred back to the AO unlike in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the file of the Assessing Officer for fresh consideration. Ground No.6: Disallowance of ₹ 5,86,81,405/- 15. This ground relates to disallowance of ₹ 5,86,81,405 claimed by assessee as (ESOP) employee cost being the difference between the fair market value / the shares offered to employee on the date of the grant of option and the price at which they are offered to employee. 16. Upon careful consideration and after hearing both the Counsel and perusing the records we find that issue has been considered and decided by ITAT Special Bench in the case of Biocon Ltd., vs. Dy. CIT (ITA No.248/BANG/2010). Accordingly, we remit the issue to the file of the Assessing Officer to consider the issue in light of the ITAT Special Bench in the case of Biocon Limited. 16. Following precedent as above, we remit the issue to the file of the Assessing Officer with directions as above. Ground No.7: Disallowance u/s.14A of ₹ 47,54,99,000/- 17. In this issue, assessee has claimed that no expenses have been incurred for earning exempt income has been rejected by the Assessing Officer. The Assessing Officer has applied rule 8D and accordingly computed the disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the rate of 3% and it is not the case that the said decision has been reversed by the Hon ble Jurisdictional High Court, we hold that adjustment @3% should be made. 21. Re: The addition towards notional interest is of ₹ 3,36,98,658/-. In this regard, we find that the ITAT in assessee s own case in ITA No.586/Mum/2013 for A.Y.2008-09 has restored back the issue following the Tribunal order in earlier years for the AO to decide on the basis of LIBOR rate prevailing at the relevant point of time. It was directed that in case LIBOR rate is less than 6% then charging of interest rate @ 6% by the assessee should be taken as arm s length price (ALP). Following the above said order in assessee s own case, we direct accordingly and restore the issue to the file of the Assessing Officer with similar direction. Ground No.9:Determination of Loss of ₹ 2,29,79,716/- on transfer of capital assed used for R D Activity 22. On this issue, ld. Counsel for the assessee fairly accepted that ITAT has decided the issue against assessee in A.Y.2006-07 and A.Y.2007-08. Accordingly, we uphold the order of the Assessing Officer on this issue following aforesaid precedent. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was dismissed by Hon'ble Bombay High Court vide its order dated 6th February, 2017 in ITA No 1148 of 2014. Hon'ble Supreme Court has dismissed the SLP filed by Department against the order of the Bombay High Court vide SLP No 37462/2017 dated 12.01.2018. Service Coupon: The issue is whether TDS u/s 194C was required to be deducted failing which disallowance u/s 40a(ia) was made. Regarding Service Coupons the issue has been restored back to the AO for fresh adjudication. (M.A.No.397/ Mum/2012 for A.Y. 2007-08. Page No. 2-4, para 6.1.1) Similar directions have been given in AY 2008-09 and the issue is yet to reach finality 27. Upon careful consideration, we note that ITAT in assessee s own case for A.Y.2008-09 has held as under:- 61. After considering the relevant findings of the Assessing Officer and the decision relied upon by the learned Counsel, we find that the issue of dealer incentive has been decided by the Tribunal wherein, the Tribunal has decided the issue in favour of the assessee by holding that the dealer incentive is not covered by the provisions of section 194H as the sale was made on principal-toprincipal basis. Regarding the issue of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as deleted the disallowance for the reason that property in question in stock in trade provisions of Section 28 will apply and not those of Section 23. 33. Upon careful consideration, we note that ITAT in ITA No.586/Mum/2013 for A.Y.2008-09 has decided the issue as under:- 94. We have carefully considered the submissions of the parties and also perused the relevant findings of the Assessing Officer. It is not in dispute that the income from letting out the property to Ridge Business Centre has been assessed as business income right from the earlier years and the same position has been accepted by the Department. Once the income which has been derived from stock-in-trade and has been accepted as business income, then the computation has to be made under section 28and not under section 23. The assessee has duly shown the income received / accrued from Ridge Business Centre as business income, then any further rent realized by Ridge Business Centre form the third party cannot be said to have been earned / received or accrued to the assessee company. Thus, we are inclined to agree with the contention of the learned Counsel for the assessee that no further income can be attribute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same in the 'Foreign Currency Monetary item Translation Difference Account' to be written-off to the profit loss account in later years. The assessee submitted that the foreign exchange expense fluctuation liability has been capitalized in the books but for income tax purposes it is considered as revenue expense. Accordingly the cost of assets for computation of depreciation allowable under section 32, such foreign expense has not been considered as cost of capital asset. The deduction has been claimed in the computation of total income filed. 37. The AO has disallowed this expenditure stating that the same is a contingent liability. Also, for the loans taken for fixed assets, the same was required to be capitalized and hence the AO has disallowed this expenditure. 38. The DRP upon assessee s appeal has dealt with the issue as under:- 21.4. We have considered the assessment order, the facts of the case as well as the submissions of the assessee. Admittedly foreign exchange loss of ₹ 214 crores is on capital account and the assessee vide submission dated 18th December 2013 has submitted that depreciation on this amount may be allowed considering that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this regard does not need any intervention. 21.8. Another foreign exchange loss of ₹ 14.55 crores is stated to be incurred in relation to working capital loan from Union Bank of India; the copy of loan document regarding such loan has been produced. This is an undated document signed by the assessee purporting to be a Packing Credit Agreement with Union bank of India, Industrial finance Branch, Nariman Point for packing credit loan of ₹ 100 crore. This loan is in Indian currency. Therefore this is not foreign currency loan and hence any foreign currency loss cannot be incurred in relation to this loan. 21.9. The Assessee has also credited Foreign exchange gain of ₹ 9.82 crore under the Revenue account being Foreign Exchange Loss accrued on Inter Corporate deposits given in Foreign currency. This gain has been treated by the Assessee on the Revenue account and accordingly gross foreign exchange loss on revenue account ₹ 47.46 Crores has been reduced by this amount and deduction of only the balance ₹ 37.64 crores has been claimed. The foreign exchange losses on various accounts have already been discussed and directions as appropriate have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould ordinarily be trading profit or loss if the foreign currency is held by the assessee on revenue account or as a trading asset or as part of circulating capital embarked in the business. But, if on the other hand, the foreign currency is held as a capital asset or as fixed capital, such profit or loss would be of capital nature. In this view of the matter, in our considered opinion the action of the authorities below in holding that foreign exchange gain or loss incurred on acquisition of capital asset has to be adjusted with the cost of capital asset is correct. 42. As regards the gain or loss of revenue account, the same has to be dealt with in the revenue field. The AO in this regard has erred in holding that these are contingent as the same is contrary to the Hon ble Apex Court decision in the case of CIT vs. Woodward Governor India P Ltd. However, we note that the ld. DRP has analyzed the nature of foreign exchange loss claimed by the assessee and decided the issue properly. The claim of the assessee that foreign exchange fluctuation loss irrespective of it being in the field of capital or revenue be allowed as revenue expenditure is not sustainable in the light of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0IC(4) and therefore it is not eligible for deduction u/s 80IC. Alternately, the AO has held that the provision of section 80IA(8) and 801A(10) r.w. provision of Section 80IC(7) are applicable in this case and the assessee has shown excessive than normal profits in Rudrapur unit. 46. The AO has examined the unit wise accounts and found that Rudrapur unit has net profit margin of 20.80% whereas the company has overall profit margin of 7.75%, if income from other sources is considered as part of net profits. On excluding the income from other sources shown as business income, the net margin of the company remains 2.40% only. Thus the AO has shown that net profit rate of the eligible unit is about 9 times higher than the overall profit rate of the company. The AO has also held that turnover of Rudrapur unit is only 12.96% of total turnover of the company and if the profit of the Rudrapur unit as claimed by the assessee is excluded, the business of the company is into loss. The AO has also found that annual return on investments in Rudrapur unit is 231.27% as against 11.12% ROI in case of the company. Further, assessee has claimed a deduction of 495.40 crores u/s 35(2AB) of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in financial year 2004-05. Plant and Machinery used for such expansion from transfer of machinery previously used is about 10% of total value of plant and machinery installed during such expansion. 22.14. As per explanation below section 80IC(4) read with explanation 1 and 2 below section 80-IA(3), for the purpose of eligibility to claim deduction under section 80-IC, plant and machinery upto 20% of total value of plant and machinery installed in expansion, is allowed to be transferred from other business. 22.15. Since the assessee has used only about 10% of the plant and machinery previously used in its other business, the conditions in section 80IC(4) is not violated. Therefore it is hereby held that the assessee is eligible for deduction under Section 80-IC of the Act. Also, the AO has allowed deduction in AY 2005-06 for this expansion. 22.16. Regarding computation of profit of Rudrapur Unit, the assessee was requested to furnish various details regarding tractors produced at Rudrapur, Nagpur and Kandivali. The details submitted are as under Model wise PBIT for F04, F05 F09 - for RDPR 80IC F2004 RDPR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 244,427 212,871 31,556 275 Dl 35,224 11,038 267,119 218,247 48,772 81 249,802 207,425 42,377 295 Dl 475 Dl 1,092 226,850 50,990 6,988 279,539 223,805 55,734 5984 280,516 237,458 43,058 575 Dl F2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation vide letter dated 18th December 2013 as under:- On the issue of computation of profits of the Rudrapur unit we have already made detailed submissions challenging the stand of the AO while questioning profitability of the Rudrapur Unit. We would like to rely on them. In response to specific questions raised by you we annex herewith evidence to support cost advantage regard power consumption and details of manpower cost working. We are attaching specimen bills for power consumed which shows lower tariff at Rudrapur as compared to Nagpur. As regards man power cost per tractor we are annexing a working to substantiate the cost advantage. As regards freight it may be clarified that the saving in freight has happened at Rudrapur after undertaking substantial expansion in as much as this substantial expansion included backward integration as explained in the earlier note. Because of this backward integration' some components which were earlier procured from outside Rudrapur came to be manufactured at Rudrapur this saving on inward freight cost. Head office expenses allocated to the Farm Equipment Sector have been shared by all the tractor manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tractor produced at Nagpur and Rudrapur to explain the low power cost per tractor at Rudrapur. 22.21. The assessee has also explained that certain components are manufactured at one unit and then transferred to other units for use in final product. However the assessee has not furnished any data regarding such components produced at other units and transferred to Rudrapur unit, cost of production of such components at other units, price at which it has been transferred to Rudrapur unit and whether a reasonable net profit on such components produced at other units have been accounted at other units and whether such transfers are at market price. The excessive profits at Rudrapur and loss in other business show that the transfer of components to Rudrapur unit from other units is not at market price rather this is the cause of loss in other business since the transfer to Rudrapur unit is not at arm's length price. The primary onus is on assessee to demonstrate that the transfer of components to Rudrapur unit is at arm's length. This onus has not been discharged. Therefore the provision of Section 80IA(8) and 80IA(10) are therefore attracted. 22.22. The assessee has given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e enjoyed by Rudrapur unit. That company has vide and varied business activity, profitability of each would be separate. That assessee s claim is duly supported by audited accounts and detailed working in the past. 51. As regards in per tractor sales price of various models from Rudrapur and Nagpur units, ld. Counsel submits that each model has various variants and price of each variant differs from that of others, that all India prices of the same variant are almost same for all plant locations. 52. He submitted that labour cost is direct cost at Rudrapur and not an allocated cost, that comparative rates for manpower cost at Rudrpur and Nagpur have been provided. The details of wages paid for workers for all the worker at Rudrapur and Nagpur is an unreasonable demand and the same information has otherwise been provided which is more than sufficient to support submission made by the assessee. 53. It has further been submitted that power cost is direct cost which is based on actuals. Hence, there is no question of comparing. Per unit power cost at Rudrapur is lower than Nagpur as demonstrated by submission of power bills. That detail of interunit transfers are available in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation as above. 57. As regards the cost of inter unit transfers, the Dispute Resolution Panel is holding that proper detail has not been given to show that inter unit transfer has been properly done. The assessee s contention in this regard is that the details are given in audited accounts and audit report under section 80IC. In our considered opinion, this issue needs to be examined at the level of the Assessing Officer from detail as claimed by the ld. Counsel of the assessee to be available on record. 58. We further note that the DRP has found that assessee has incurred huge expenditure and claimed deduction also for Research and development expenditure. However, assessee has not allocated the same to this exempt unit. Assessee has not submitted the necessary details and has only submitted that these are mainly related to export models. We find that this general submission does not exonerate the assessee from submitting to the authorities below proper and cogent details of expenses to show that research and development expense not related with this unit. Further, the assessee submitted that employee cost of employee welfare expenditure need not be allocated to this un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reated as allowed for statistical purposes. 63. We follow the aforesaid precedent and remit the issue to the file of the Assessing Officer with similar directions. Needless to add that the Assessing officer shall take into account the earlier orders passed in this regard and also the decision of Hon ble Bombay High Court referred above. Ground No.20: Interest income of ₹ 84.10 Crores whether business income or income from other sources: 64. On this issue there is no discussion in the Assessing Officer s order. The DRP has directed the AO to assess the income under the income from other sources. The relevant discussion of the DRP on this issue is as under:- 27. It is further seen that as per assessment order, the AO has assessed income from other sources only ₹ 4,75,72,689/-. No discussion has been made in the assessment order in this regard. Neither any submission has been made during hearing. However, from the accounts, it is seen that other income of assessee comprising of interest, dividend, capital gains etc. is ₹ 270.34 crores. The assessee has investment in subsidiaries including foreign subsidiaries-yielding dividend. TDS on interest inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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