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TMI Blog2018 (4) TMI 1985X X X X Extracts X X X X X X X X Extracts X X X X ..... e. It was pivoted around such manufacturing activity and the assessee was therefore, entitled to deduction under section 80 IB of the Act in relation to such benefits also. This part of the question is therefore, not considered. Deduction u/s 80 IB on research and development expenditure which the assessee attributes exclusively to its noneligible units - Tribunal however in further appeal by the assessee noted that three different units were manufacturing different items. The assessee has placed before DRP the materials to contend that it had not carried out any research and development activity for formulation being manufactured by Jammu and Kashmir unit. This aspect was not rebutted by the Revenue. No specific material was quoted to disturb the assessee's detailed accounts maintained separately for each unit. It would thus appear that the assessee had canvassed before the revenue authorities and the Tribunal a specific case that formulation being manufactured at its unit at Jammu and Kashmir did not entail any research and development expenditure. Such research and development expenditure was incurred exclusively for the purpose of formulation being manufactured elsewhere. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se which we propose not to admit. We would therefore, only refer to independent standalone questions which survive for discussion which are as under : (5) Whether the Appellate Tribunal has erred in law and on facts in deleting addition of Rs.1,68,88,558/ made u/s 36(1)(iii) of the Act? (6) Whether the Appellate Tribunal has erred in law and on facts in admitting the additional ground of appeal of assessee and allowing it to restrict the suo moto disallowance made in the return of income from Rs.2,82,07,492/ u/s. 14A to Rs.5,808/ without the return being revised within the due date? (7) Whether the Appellate Tribunal has erred in law and on facts in deleting the addition made on account of disallowance of deduction of Rs.8,21,86,990/ made u/s 80IB of the Act on account of allocation of R D expenditure among manufacturing units based on turnover? ( 8) Whether the Appellate Tribunal has erred in law and on facts in deleting the addition of Rs. 25,39,60,000/ made on account of disallowance of foreign currency loss? With respect to question no. (5), we notice that this Court in Tax Appeal no.39/2015 by judgment dated 23.1.2015 decided such an issue in favour of the assessee making the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany is in the nature of advance since appellant has not recovered the same. It this was business advance, the same could have been recovered or adjusted by now but the fact that it remain outstanding for many years clearly shows that this is interest free advances given out of overall business fund which included borrowed funds also. The contention of the assessee before the authorities below was two folds; firstly, advances were given for business purposes, therefore provisions of section 36(1)(iii) cannot be applied and secondly, the assessee was having sufficient interest free funds to make advances. The judgement relied upon by the ld.counsel for the assessee in the case of CIT vs. Raghuvir Synthetics Ltd.(supra), wherein the Hon'ble High Court of Gujarat relying on the judgement of the Hon'ble Apex Court in the case of S.A.Builders Ltd. vs. CIT reported in (2007) 288 ITR 01 (SC) answered the question in favour of assessee. In the present case, both the authorities have made addition on the basis that the advances given have been continuing for a long period of time. Both the authorities have not given any finding with regard to availability of funds with the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already covered by the above referred decision of this Court, we do not find that any substantial question would arise for consideration, as canvassed. With respect to question no.6, we may notice that the Revenue primarily objects to the Tribunal admitting additional ground of appeal by virtue of which the assessee was allowed to restrict the disallowance under section 14A of the Act to Rs.5,808/ . This Court has taken a view in series of decisions holding that it is always open for the Tribunal to admit additional grounds of appeal and entertain the same as long as facts on record are available. Reference in this regard can be made to decision in case of Commissioner of Income tax v. Mitesh Implex reported in (2014) 367 ITR 85(Guj). This question is therefore, not considered. With respect to question no.7, it pertains to disallowance of deduction of Rs.8.21 crores (rounded off) claimed by the assessee under section 80 IB of the Act. This issue has two elements. First concerns the excise duty reimbursement granted by the Government to the assessee. Revenue contends that such reimbursement of excise duty is not a profit derived from the assessee's manufacturing activity for wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it at Jammu and Kashmir. The Revenue authorities confronted the assessee with this aspect and ultimately held that common expenses would be allocated proportionately for the purpose of claiming deduction under section 80 IB of the Act. The Tribunal however in further appeal by the assessee noted that three different units were manufacturing different items. The assessee has placed before DRP the materials to contend that it had not carried out any research and development activity for formulation being manufactured by Jammu and Kashmir unit. This aspect was not rebutted by the Revenue. No specific material was quoted to disturb the assessee's detailed accounts maintained separately for each unit. It would thus appear that the assessee had canvassed before the revenue authorities and the Tribunal a specific case that formulation being manufactured at its unit at Jammu and Kashmir did not entail any research and development expenditure. Such research and development expenditure was incurred exclusively for the purpose of formulation being manufactured elsewhere. The assessee had also produced detailed accounts separately maintained for all three units giving minute details which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Rs.13.50 lakhs as a business loss. This matter is squarely covered by the jdugment of the Calcutta High Court, with which we agree, in thecase of CIT v.Soorajmull Nagurmull(1981) 129 ITR 169. 7. Before the Calcutta High Court, the assessee was a firm engaged in the business of import and export of jute. In course of business, the assessee would enter into forward contract in foreign exchange in order to cover the loss which may arise due to difference in foreign exchange valuation. In one such contract, the assessee had to pay to the Bank difference of Rs.80,491/ which was claimed by the assessee as revenue expenditure. The Assessing Officer disallowed the claim. The High Court held that the assessee was not a dealer in foreign exchange and the foreign exchanges were only incidental to the assessee's regular course of business and the loss was thus not a speculative loss but incidental to the assessee's business and allowable as such. Facts in the present case are very similar. Admittedly, the assessee is not a dealer in foreign exchange. For the purpose of hedging the loss due to fluctuation in foreign exchange while implementing the export contracts, the assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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