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TMI Blog2022 (9) TMI 1035X X X X Extracts X X X X X X X X Extracts X X X X ..... against difference worked out by the Assessing Officer, which is on very high. The assessee has explained reasons for small difference in price of similar products purchased from third party supplier and manufactured at its own unit. In our considered view, explanation furnished by the assessee appears to be reasonable and bonafide. As we have already noted in earlier paragraph of this order, pricing of any products cannot be compared on the basis of location alone, because it depends upon various factors, including functions performed, asset employed and risk involved. Since, there is minor difference of Rs.0.02 per unit, which is negligible may happen in any case. Therefore, we are of the considered view that there is no reason for the Assessing Officer to work out under-invoicing of products only on the basis of comparison of price charged by third party to the price charged by the assessee. Under invoicing of products - In this case, central excise authorities have accepted valuation determined by the assessee for products manufactured at Puducherry unit and thus, in our considered view, said facts strengthen case of the assessee that there is no under-invoicing of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N.Arjunraj, C.A for Mr.S.Sridhar, Advocate For the Respondent : Mr.S.Chandrasekaran, JCIT ORDER PER G. MANJUNATHA, AM: This bunch of five appeals filed by the assessee are directed against separate, but identical orders of the learned Commissioner of Income Tax (Appeals), Puducherry, all dated 19.02.2018 for the relevant assessment years 2008-09 to 2012-13. Since, facts are identical and issues are common, for the sake of convenience, these appeals were heard together and are being disposed off, by this consolidated order. 2. The assessee has more or less filed common grounds of appeal for all assessment years, therefore, for the sake of brevity, grounds of appeal filed for the assessment year 2008- 09 are reproduced as under:- 1. The common order of The Commissioner of Income Tax (Appeals), Pondicherry dated 19.02.2018 in I. T.A.Nos.201 to 204/CIT(A)-PDY/2016- 17 for the above mentioned Assessment Year is contrary to law, facts, and in the circumstances of the case. 2. The CIT (Appeals) erred in sustaining the addition pertaining to the presumed cost difference of the goods transferred to the branch at Gauhati in the computation of taxable total i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... another at Guwahati. The assessee manufactures ordinary and special wicks for M/s.Godrej Saralee Ltd. The Puducherry unit had claimed deduction u/s.80IB of the Income Tax Act, 1961 and Guwahati unit had claimed deduction u/s.80IC of the Income Tax Act, 1961, During the course of assessment proceedings, it was noticed that Guwahati unit purchased wicks at lower cost price from Puducherry, whereas from very same products has been purchased from M/s. Aeroaroma Home Care Products, Puducherry at higher price. The Guwahati unit purchased absorbent wicks @ 0.43 per unit from its Puducherry unit, whereas it has purchased very same absorbent wicks at Rs.0.78% per unit from M/s.Aeroaroma Home Care Products, Puducherry. During the course of assessment proceedings, the Assessing Officer called upon the assessee to explain as to why under-invoicing of products to Guwahati unit cannot be reworked for the purpose of deduction u/s.80IB of the Income Tax Act, 1961. In response, the assessee submitted that although, it has purchased very same product from two different suppliers, one from its own unit at Puducherry at lesser rate, when compared to purchase from third party by paying higher price, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claiming extra benefit, which is not due and thus, opined that there is no logic or commercial expediency or valid reasons due to logistics, expertise, technical competency to restrict work at the level of Kamivisa Products, Puducherry unit. Therefore, the learned CIT(A) opined that arguments of the assessee that Central Excise department has accepted value declared for its product without any disturbance cannot be helped to the assessee, because there is clear difference between rate charged by the assessee and rate charged by third party supplier and thus, rejected arguments of the assessee and sustained additions made by the Assessing Officer towards under-invoicing of products to Guwahati unit. Aggrieved by the learned CIT(A) order, the assessee is in appeal before us. 6. The learned A.R for the assessee submitted that the learned CIT(A) erred in not appreciating fact that products sold by Puducherry unit are at semi-finished stage, when compared to products purchased from third party supplier M/s.Aeroaroma Home Care Products and thus, rate charged by third party supplier cannot be compared to rate charged by the assessee. The learned A.R further referring to flow chart proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee, additional cost incurred at Guwahati unit and cost of value addition per piece from advanced stage of finished products to cost incurred on product supplied by third party supplier submitted that even assuming for a moment, but not conceding, products supplied by Puducherry unit are semi-finished products, but still after considering all additional cost incurred by the assessee, there is difference when compared to cost incurred for products purchased from third party supplier. Therefore, the learned DR submitted that there is huge variation in price charged by the assessee unit at Puducherry and price charged by third party supplier and said variation is mainly due to higher tax benefit claiming 100% deduction u/s.80IC of the Income Tax Act, 1961, for Guwahati unit. The Assessing Officer as well as learned CIT(A), after considering relevant facts has rightly worked out underinvoicing from Puducherry unit and made additions to total income and their orders should be upheld. 8. We have heard both the parties, perused material available on record and gone through orders of the authorities below. The appeals for the assessment years 2008-09 to 2011-12 are coming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground to come to a conclusion that the assessee has under-invoiced its products to get higher tax benefit for Guwahati unit. There may be various reasons for pricing products by different manufacturers / suppliers and it depends upon functions performed, asset employed and cost incurred for manufacturing products. Some manufacturers may meticulously plan their affairs and reduce cost of manufacturing goods and it depends upon location of unit, type of machinery they employed and amount of capital employed. Therefore, based on location alone price charged by two suppliers cannot be compared to come to the conclusion that there is underinvoicing of products to get tax benefits. In this case, it was argument of the assessee that Puducherry unit has transferred semi-finished wicks to Guwahati unit at Rs.0.43 per unit, as against purchase price of Rs.0.78 per unit from M/s. Aeroaroma Home Care Products. The assessee has filed chart explaining price difference between its own products supplied by Puducherry unit and products supplied from third party supplier and according to the assessee, products manufactured at Puducherry unit are at semi-finished stage and undergone further processi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer is bound to apply value of goods declared for central excise purpose, because central excise authorities are competent to determine value of product for the purpose of levy of duty. In this case, central excise authorities have accepted valuation determined by the assessee for products manufactured at Puducherry unit and thus, in our considered view, said facts strengthen case of the assessee that there is no under-invoicing of products supplied by Puducherry unit to Guwahati unit. In this context, it is relevant to refer to the decision of the Hon'ble High Court of Madras in the case of Ananda Metal Corporation (supra), where the High Court in the context of valuation of closing stock for the purpose of Sales Tax Act held that once there is no dispute from sales tax authorities for valuation of stock declared for the purpose of levy of sales tax, then the Assessing Officer does not have any jurisdiction to go beyond value of closing stock declared by the assessee and accepted by commercial tax department. The Hon ble Madras High Court in another case of Mrs.Sakundala Devi Khetan (supra) has reiterated very similar position of law and held that unless and unt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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