9911796707
TMI Blog2024 (9) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... lar being clarificatory in nature, was in effect from the date of implementation of Regulation 6.8 of the 2002 Regulations, i.e., from 14-12-2009. Hence, it is settled position now that CBDT circular prohibiting allowance/ deduction of expenses incurred by the pharmaceuticals industries in nature of freebie to doctor is applicable retrospectively from 14-12-2009. Any expense incurred by the pharmaceutical company in the nature of freebie to doctor is required to be disallowed by virtue of the Hon ble SC in the case discussed above. As such there is no requirement that the incurred by the pharmaceutical company under particular head should be exclusively for doctors. Hence, we are not in agreement with finding of the CIT(A). AO in the absence of detailed bifurcation has estimated the amount pertaining to freebies to doctors at @ 10% of the gross expenses on ad-hoc basis. As such, in the absence of any detail working provided by the assessee, the AO left with no option but to estimate the amount pertaining to freebies to doctors. Indeed, the AO even for making estimates, should adopt some reasonable criteria but the AO in its finding failed to point out the basis of such estimation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the expense has shown such receipt separately. Thus, it is just a manner of representation - No infirmity in the order of the CIT(A). Thus, we hold that the assessee is eligible for deduction u/s 80-IC with respect to the income being service tax discussed above in the given facts and circumstances. Miscellaneous income - As relying on assessee own case [ 2019 (5) TMI 1932 - ITAT AHMEDABAD ] we hold that the assessee is eligible for deduction u/s 80-IC of the Act with respect to the income being Miscellaneous Income. Export benefit Insurance Income - As relying on assessee own case [ 2019 (5) TMI 1932 - ITAT AHMEDABAD ] assessee is eligible for deduction u/s 80-IC of the Act with respect to the income being Export Benefits Insurance claim Forex Gain, Cash discount - Tribunal in the own case of the assessee for AY 2012-13 [ 2022 (3) TMI 340 - ITAT AHMEDABAD ] where the issue has been decided in favour of the assessee to hold that the assessee is eligible for deduction under section 80-IC of the Act with respect to the income being Forex Gain. Interest Income - We direct the AO to exclude the net interest income i.e. excluding the expenses incurred in earning such interest income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be allowed on payment basis only - HELD THAT:- As decided in own case [ 2022 (3) TMI 340 - ITAT AHMEDABAD ] there are certain expenses which are allowed on payment basis in pursuance to the provisions of section 43B of the Act irrespective of the year of incurrence. One of such expenditure is leave encashment. Admittedly, the assessee has not made the payment of the leave encashment and therefore the same can t be allowed as deduction. However, the assessee is at liberty to claim the deduction of such expense in the year of payment. Thus the ground of appeal of the assessee is dismissed. Disallowance of weighted deduction u/s 35(2AB) - AO disallowed the claim of the weighted deduction on such expenditure whereas the learned CIT(A) deleted disallowances of deduction on certain items of the expenditure and at the same time, confirmed the disallowance on certain items - HELD THAT:- Issue squarely covered in favour of the assessee by the order of this Tribunal in the own case of the assessee [ 2012 (7) TMI 273 - ITAT AHMEDABAD ] we do not find any infirmity in the order of the learned CIT(A) with respect to the claim of deduction on salary to Dr. C Dutt, Building repairs and Municipal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y allowed. Capital Infusion - As respectfully following the order of the Tribunal in the own case of the assessee for AY 2012-13 [ 2022 (3) TMI 340 - ITAT AHMEDABAD ] we hereby set aside the finding of the learned CIT(A) and direct the AO to delete the addition made by him on account of capital infusion. Hence, the ground of appeal of the assessee with respect to capital infusion is hereby allowed whereas the ground of revenue s appeal in this regard hereby dismissed. Disallowance of deduction u/s 80-IE in Sikkim Unit on other incomes - similar disallowances have been made by the AO with regard to Baddi Unit of the assessee eligible under section 80-IC of the Act. The provision of section 80-IC and 80-IE of the Act are perimetria. Both the sections deal with the deduction against the profit and gains derived by the undertaking from eligible business i.e. manufacturing of articles or things - AO also disallowed the deduction u/s 80-IE on same reasoning used for disallowing the deduction claimed u/s 80-IC - In the case of disputes u/s 80-IC, CIT(A) in identical manner has allowed deduction on certain income and simultaneously sustained the disallowances of deduction on certain item o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation at 60%. Disallowance of depreciation made on capital investment subsidy by treating the costof capital assets - HELD THAT:- Once the year in which impugned capital subsidy was received it has been held that such receipt shall not be adjusted against the cost of the block assets then the disallowances of depreciation in subsequent year based on same cannot be sustained. Hence, the ground of appeal raised by the Revenue is hereby dismissed. Depreciation with respect to pallets, trolleys, and mobile racks allowed. Deduction claimed by the assessee u/s 80G and 80GGB allowed - As decided own case [ 2019 (5) TMI 1932 - ITAT AHMEDABAD ] donation paid by the assessee has no connection with the unit eligible for deduction u/s 80IC - The scheme of the Act provides to claim the deduction u/s 80G after claiming all the deduction provided under chapter VI-A of the Income Tax Act. Therefore the assessee can claim the deduction on account of such donation only against the Gross Total Income after claiming all other deduction. The donation paid by the assessee cannot be claimed as an expense in the profit and loss account as the same has not been incurred wholly and exclusively for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Respondent : Shri Ritesh Parmar, CIT-DR ORDER PER BENCH: The above captioned appeals have been filed by the assessee and the revenue against the separate orders of ld. Commissioner of Income-Tax (Appeals), Ahmedabad arising in the matter of assessment order passed under section 143(3) of the Income tax Act 1961 (in short, the Act ) involving respective Assessment Years. Since issues are inter-connected, we dispose of all these appeals by way of this common order. 2. First, we take up ITA No. 2365/AHD/2018, an appeal by the assessee for AY 2013-14. The assessee has raised following grounds of appeal: 1. On the facts and in the circumstances of the case, the learned CIT(Appeals) erred in confirming disallowance of Rs. 15,15,09,216 from out of total disallowance of Rs. 19,63,90,203 made by the Assessing Officer in respect of legitimate business expenditure incurred by the appellant-company for sponsorship expenses of medical practitioners/doctors. 2. On the facts and in the circumstances of the case, the learned CIT(Appeals) erred in confirming disallowance of Rs. 21,29,612 made by the Assessing Officer in respect of employees' contribution to PF/ESI, on the ground that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t becomes infructuous and related ground does not require adjudication, when he ought to have deleted such addition to book profit. 9. On the facts and in the circumstances of the case, the learned CIT(Appeals) erred in confirming Transfer Pricing upward adjustment u/s. 92CA(1) of the I.T Act as under: (a) Corporate Guarantee to Aes 8,32,291 (b) Capital Infusion to Aes 14,05,927 (c) Interest on Loan to Aes 4,39,625 Total: 26,77,843 10. On the facts and in the circumstances of the case, the learned CIT(Appeal) erred in confirming exclusion of the following items of income from the profits of the Sikkim Unit for the purposes of granting deduction u/s.80-IE of the I.T Act. Rs. (a) Insurance Income 49,259 (b) Government Grant 57,071 (c) Interest Income 68,809 Total: 1,75,139 11. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal. 3.1 The assessee vide letter dated 13-01-2023 also raised following additional grounds of appeal: The Appellant craves leave to raise these additional grounds of Cross Objections before the Hon'ble ITAT. This are legal grounds and therefore, as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, there is no reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of the item. There is no reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner of Income-tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross-objections before the Tribunal. The Tribunal should not be prevented from considering questions of law arising in assessment proceedings, although not raised earlier. 3.5 From the above, it is transpired that the view that the Tribunal is confined only to those issues arising out of the appeal before Commissioner (Appeals) is too narrow a view to describe the powers of the Tribunal. Undoubtedly, the Tribunal has the discretion to allow or not to allow a new ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d/ falling under the category of doctor benefits. Thus, the AO in absence of necessary details proceeded to estimate the expenditure for doctor s benefit included under the head Business Advancement and Sales Promotion @ 10% of such expenditures and accordingly disallowed an amount of Rs. 5,30,61,002/- and Rs. 37,78,978/- respectively. 6. On appeal by the assessee, the learned CIT(A) allowed part relief to the assessee. As such the learned CIT(A) regarding the expenses claimed under the Business Advancement and Sales Promotion held that expenses under the impugned head includes gift items distributed to various stakeholders which were less than Rs. 1000/- only. Further, it is also not the case that the gift items were exclusively given to doctors/medical practitioners only. Therefore, same cannot be said to be incurred in violation of regulation issued by the Indian Medical Council in exercise of power conferred under section 33 of Indian Medical Council Act 1956 and the consequent CBDT circular bearing No. 05/2012 dated 01-08-2012. The learned CIT(A) also found that identical disallowance was made in the own case of the assessee for AY 2011-12 and 2012-13 which was allowed by pred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 1 to 340 and contended that the assessee has incurred the expenses in violation of regulation issued by the Indian Medical Council and therefore, the same needs to be disallowed. 7.3. Both the learned AR and DR before us supported the order of the authorities below to the extent favourable to them. 8. We have heard the rival contentions of both the parties and perused the materials available on record. The Indian Medical Council (MCI) by exercising power conferred under section 33 of Indian Medical Council Act 1956 issued Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 (the regulations) on 10-12-2009 wherein the MCI has imposed prohibition on the medical practitioner and their professional associations from taking any Gift, Travel facility, Hospitality, Cash, or monetary grant from the pharmaceutical and allied health sector Industries. Subsequently, the CBDT vide circular No. 05/2012 dated 01-08-2012 clarified that expenditure incurred by the pharmaceutical or allied health sector industries in the nature of freebie to doctors is in violation of above mentioned regulation of MCI and therefore, such expenditure will not be allowed as deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principle of interpretation of taxing statutes - that they need to be interpreted strictly - cannot sustain when it results in an absurdity contrary to the intentions of the Parliament. 8.3 From the above, it is clear that the prohibition imposed by the MCI regulation and further by the CBDT circular is applicable on the pharmaceutical and allied health industries and the expenses incurred in providing the freebies to the doctors cannot by allowed as deduction under section 37(1) of the Act. 8.4 Now coming to issue whether the CBDT Circular 05/2012 dated 01-08-2012 shall be applicable prospectively or retrospectively i.e. whether applicable from the date on which circular was published (01-08-2012) or from the date on which MCI regulation was published (14-12-2009). In this regard we note that the Hon ble Supreme court in case of M/s Apex Laboratories (P.) Ltd. (Supra) held that The CBDT circular being clarificatory in nature, was in effect from the date of implementation of Regulation 6.8 of the 2002 Regulations, i.e., from 14-12-2009. Hence, it is settled position now that CBDT circular prohibiting allowance/ deduction of expenses incurred by the pharmaceuticals industries in na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee and in the absence of any basis to be adopted for making such estimation by the AO, we in the interest of justice and fair play, restrict the disallowance at 5% of the gross amount claimed by the assessee under the head Business Advancement Sales Promotion . 8.7 Coming to the expenses claimed under the head Doctors Sponsorship , both the AO and the learned CIT(A) agree that expenses incurred under the impugned head are in nature of freebie to doctors. The learned AR for the assessee before us also failed to establish that the expenses under the head Doctors Sponsorship are not in the nature of freebies to doctor. However, the learned CIT(A) divided the amount incurred before and after the date of issue of CBDT circular bearing No. 05/2012 dated 1-8-2012. The learned CIT(A) accordingly held that the expenses incurred before 1st August 2012 shall not be subject to the disallowance. As such, the learned CIT(A) held the applicability of the impugned circular with prospective effect. On the other hand, we have already discussed in the preceding paragraph that the Hon ble Supreme Court has taken the view that the impugned circular is clarificatory in nature and applicabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - iv) Miscellaneous income and rounding off of Rs. 34,59,039/- v) Net Foreign Exchange Gains of Rs. 54,93,768/- as income derived from eligible business by an appropriate enterprise of the assessee. 15. The AO during the assessment proceedings found that there were several incomes shown by the assessee under different heads which were not directly arising from the activity of manufacturing of article or things. The details of the same stand as under: (i) Notice pay Rs. 8,48,476/- (ii) Sale of Scrap Rs. 93,83,606/- (iii) Service tax refund Rs. 2,92,338/- (iv) Miscellaneous and rounding off Rs. 34,59,093/- (v) Forex gain Rs. 54,93,768/- (vi) Cash discount Rs. 9,40,184/- (vii) Export benefit Rs. 3,72,14,846/- (viii) Insurance income Rs. 8,418/- (ix) Interest Income Rs. 23,106/- (x) Government grant Rs. 3,41,469/- 15.1 Nevertheless, the assessee has claimed deduction under section 80-IC of the Act by treating them as profit derived from the business of eligible undertaking. However, the AO disputed the deduction with respect to such items of income by holding that such incomes are not derived from business of manufacturing of article or things. In other words, the above incomes did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uctions - Profits and gains from infrastructure undertakings (Computation of deduction) - Assessment years 1994-95, 1996-97 and 1997-98 - Foreign exchange fluctuation and duty drawback is an income derived from industrial undertaking, eligible for deduction under sections 80-I and 80-IA [In favour of assessee] II Foreign exchange fluctuation and duty drawback is an income derived from industrial undertaking, eligible for deduction under sections 80-I and 80-IA. 73.2 In view of the above, we hold that the assessee is eligible for deduction in respect of the income as discussed above under section 80 IC of the Act. Accordingly we direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed and the Revenue is dismissed. 69.3. Respectfully following the same, we do not find any reason to interfere in the order of the ld. CIT-A and thus direct the AO grant the deduction under section 80-IA of the Act on the items of income as discussed above. Hence, we hereby dismiss the ground of appeal of the Revenue. 16.1 Before us, no material has been placed on record by the Revenue demonstrating that the decision of the Tribunal in own case of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the amount of service tax. Therefore, in our considered opinion when such services tax is refunded to the assessee, the same will reduce the expense of eligible unit. The assessee instead of reducing the expense has shown such receipt separately. Thus, it is just a manner of representation. Accordingly, we do not find any infirmity in the order of the learned CIT(A). Thus, we hold that the assessee is eligible for deduction under section 80-IC of the Act with respect to the income being service tax discussed above in the given facts and circumstances. (vi) Miscellaneous income (Revenue appeal) 18. At the outset, we note that identical issue came before this Tribunal in own case of the assessee for A.Y. 2007-08 and 2008-09 in ITA No. 907 and 1634/AHD/2012 where the issue has been decided in favour of the assessee and against the Revenue vide order dated 15-05-2019. The relevant finding of the Bench is extracted as under: 73. We have heard the rival contention and perused the material available on record. The issue in the instant case is whether the miscellaneous income such as Penalty Received from Supplier, Discount Received from Vendors and Export Benefits are eligible for the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-IC of the Act with respect to the income being Miscellaneous Income discussed above. (v) Forex Gain (Revenue appeal) 19. At the outset, we note that identical issue came before this Tribunal in the own case of the assessee for AY 2012-13 in ITA No. 1415/AHD/2018 where the issue has been decided in favour of the assessee and against the Revenue vide order dated 22-02-2022. The relevant finding of the Bench is extracted as under: 223. We have heard the rival contentions of both the parties and perused the material available on records. With respect to the foreign exchange income, we note that this issue has already been allowed in favour of the assessee in the series of judgments which have been reproduced in the order of the learned CIT-A. At the time of hearing, the learned DR has not brought anything on record contrary to the finding of the learned CIT-A. 19.1 Before us, no material has been placed on record by the Revenue demonstrating that the decision of the Tribunal in own case of the assessee discussed above has been set aside/stayed or overruled by the Higher Judicial Authorities. Before us, no material was placed on record pointing out any distinguishing feature in the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue demonstrating that the decision of Tribunal in own case of the assessee as discussed above has been set aside/stayed or overruled by the Higher Judicial Authorities. Before us, no material was placed on record pointing out any distinguishing feature in the facts of the case of earlier AY and the year under consideration. Thus, respectfully following the order of the tribunal in the own case of the assessee discussed above, we hereby set aside the finding of the learned CIT(A). Thus, we hold that the assessee is eligible for deduction under section 80-IC of the Act with respect to the income being Cash Discount discussed above. (vii) (viii) Export benefit Insurance Income (Assessee s appeal) 21. At the outset, we note that identical issue came before this Tribunal in the own case of the assessee for AY 2010-11 in ITA No. 1286/Ahd/2017 where the issue has been decided in favour of the assessee and against the Revenue vide order dated 22-02-2022. The relevant ground of appeal and the relevant finding of the Bench is extracted as under: Ground of appeal 89. Ground No.4 : By this ground, assessee challenges order of the ld. CIT(A), who has confirmed the action of the ld.AO in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der sections 80-I and 80-IA [In favour of assessee] II Foreign exchange fluctuation and duty drawback is an income derived from industrial undertaking, eligible for deduction under sections 80-I and 80-IA. 73.2 In view of the above, we hold that the assessee is eligible for deduction in respect of the income as discussed above under section 80 IC of the Act. Accordingly, we direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed, and the Revenue is dismissed. 94.1. In view of the above order of the Tribunal, we do not find any disparity of facts and circumstances in the present year as that of earlier years. Therefore, we are unable to deviate from the view taken by the Co-ordinate Bench on this issue. We set aside orders of the Revenue authorities on this issue, and allow impugned claim of the assessee. This ground of appeal of the assessee is allowed. 21.1 Before us, no material has been placed on record by the Revenue demonstrating that the decision of the Tribunal in own case of the assessee discussed above has been set aside/stayed or overruled by the Higher Judicial Authorities. Before us, no material was placed on record pointi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the product which should be stopped as soon as the effective source is discovered. 23.1 At this juncture it is important to refer the judgment of Hon ble SC in the case of Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 (SC) which have interpreted the term derived from . The relevant decision of the Supreme Court reads as under: The Legislature has deliberately used the expression attributable to , having a wider import than the expression derived from , thereby intending to cover receipts from sources other than the actual conduct of the business of the specified industry. (p.85) 23.2 From the ratio of the aforesaid decision of the Hon ble Apex Court, it emerges that the phrase derived from covers receipts from the actual conduct of business of the specified industry as provided under section 80-IC of the Act. 23.3 Likewise, as per the Hon ble Bombay High Court in the case of Hindustan Lever Ltd. v. CIT [1980] 121 ITR 951/3 Taxman 390, the word derived as far as income-tax law is concerned, has been given a narrow meaning - a strict meaning, by the courts and has been understood in the restricted sense of a direct derivation and not understood in the broad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable on the issue on hand as the provision of section 80IA and 80IC of the Act are perimetria. Therefore, following the above-mentioned judgment of Hon ble Jurisdictional High Court, we hereby direct the AO to exclude the net interest income i.e. excluding the expenses incurred in earning such interest income. Hence the ground of appeal of the assessee in this regard is partly allowed. (x) Government grant (Assessee) 24. The assessee during the year under consideration receives a government grant of Rs. 3,41,469/- in the Baddi unit from the Department of Biotechnology under the scheme of Biotechnology Industry Partnership Program. Such grant was received by the assessee for undertaking research in frontier futuristic technology to make Indian industry globally competitive. The assessee claims that the research activity is essential to its business, therefore such receipt of grant is eligible for deduction under section 80-IC of the Act. 24.1 However, AO disallowed the claim of the assessee by holding Government Grant for undertaking research activity is not the profit or gains derived from the activity of manufacturing. 24.2 On appeal by the assessee, the learned CIT(A) also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has allocated common administrative expenses based on the number of employees between Baddi Unit and Sikkim unit. However, the AO was of the view that the basis adopted by the assessee for the allocation of the administrative expenses is not proper. As per the AO, the administrative expenses are required to be allocated based on the turnover of the respective units. Accordingly, the AO allocated an additional sum of Rs. 2,36,92,391/- to Baddi Unit and Rs. 5,50,80,826/- to the Sikkim Unit which resulted in a reduction in the deduction under section 80IC and 80IE of the Act of the respective eligible unit. 27. On appeal by the assessee, the learned CIT(A) confirmed the finding of the AO by observing that the method adopted by the AO for allocation of administrative expenses based on turnover is an appropriate method. 28. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. 28.1 The learned AR before us submitted that in the earlier year, the administrative expenses were allocated based number of employees, and the same basis should be adopted by the Revenue in the year in dispute. 28.2 On the other hand, the learned DR vehemently supported the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any particular undertaking of the company in a case the assessee has more than one undertaking. Thus the dispute arises for the allocation of such expenses among the different unit/ undertaking of the assessee. Regarding the allocation, we are of the view that these expenses cannot be allocated based on the turnover. It is because the turnover of any undertaking is very much volatile and keep on changing depending upon the market forces, competition, Government policies, etc. There can be a situation that the turnover of one undertaking is very high in a particular year but in the subsequent year the turnover may go done or vice versa which will affect the pattern and consistency in the allocation of the administrative expenses and distort the presentation of the financial statements for different years. Therefore we are of the considered view that the basis of the allocation of administrative expenses based on the turnover is not advisable. 21.5 The next controversy arises what should be the basis of the allocation of the said expenses in the given facts and circumstances. Generally, the human resources working in any of the undertakings of the assessee does not frequently change ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uments made before the lower authorities. 33.2 On the other hand, the learned DR vehemently supported the order of the authorities below. 34. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that an identical issue came before this Tribunal in the own case of the assessee for AY 2011-12 in ITA No. 1396/AHD/2018 where the issue has been decided against the assessee vide order dated 22-02-2022. The relevant finding of the Bench is extracted as under: 146. We have heard the rival contentions of both the parties and perused the materials available on record. There are certain expenses which are allowed on payment basis in pursuance to the provisions of section 43B of the Act irrespective of the year of incurrence. One of such expenditure is leave encashment. Admittedly, the assessee has not made the payment of the leave encashment and therefore the same can t be allowed as deduction. However, the assessee is at liberty to claim the deduction of such expense in the year of payment. Thus the ground of appeal of the assessee is dismissed in terms of the above. 34.1 Before us, no material has been placed on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). The explanation in no way obliterates the primary condition that the expenditure must be approved by the prescribed authority (DSLR). When the prescribed authority has categorically certified that such expenditure is outside approved facility it cannot be allowed. In this regards reliance is also placed upon the decision of the Hon'ble Supreme Court in a bench of Five Judges in the case of Padmasundara Rao vs State of Tamil Nadu [2002] 255 ITR 147 and also in the case of Prakash Nath Khanna vs. CIT [2004] 266 ITR 1 (SC). Once it is shown that the case of the assessee comes within the letter of the law, he must be taxed, however great the hardship may appear to the judicial mind to be Further reliance is placed on the judgment of II'AT [2012] 54 SOT 615 (MUM) / [2012] 24 taxmann.com 218 (MUM) [04.07.2012] in the case of USV Ltd. vs. DCIT Circle-32, Mumbai wherein hon'ble tribunal held as under: Whether expenses not reported in Department of Scientific and Industrial Research (DSLR) certificate, would not be eligible for deduction under section 35(2AB) - Held, yes Similar issue is considered by the ITAT Mumbai F Bench in ITA No. 2179/Mum/2009 fir AY 2005-06 and relianc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26.71 515.05 Lakhs and studies expenses of Rs. 110.77 Lakhs. 37.2 Regarding the claim of weighted deduction on the remaining expenditures being interest on loan, labour, and job work charges and capital expenditure on furniture electrical equipment, the learned CIT(A) found that such expenditures are not approved by the DSIR. Further, the assessee failed to establish that such expenditures were incurred in connection with R D expenses. Thus, the ld. CIT-A confirmed the disallowance made by the AO. 38. Being aggrieved by the order of the learned CIT(A), both the assessee and the Revenue are in appeal before us. The assessee is in appeal against the confirmation of disallowance of weighted deduction claimed whereas the revenue is in appeal against the deletion of the disallowances of weighted deduction. The relevant ground of appeal of the Revenue in ITA No. 2369/Ahd/2018 reads as under: 8. That the Ld.CIT(A) has erred in law and on the facts in deleting the disallowance made by the assessing officer out of Rs. 23.42,01,943/- out of deduction claimed by the assessee u/s. 35(2AB) in respect of research and development expenditure consisting of. i. Salary to Dr. Dutt of Rs. 272.31 lakh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not find any infirmity into the order passed by Ld. CIT(A). Hence, this ground of Revenue's appeal is dismissed. 39.1 Thus, respectfully following the order of this Tribunal in the own case of the assessee discussed above, we do not find any infirmity in the order of the learned CIT(A) with respect to the claim of deduction on salary to Dr. C Dutt, Building repairs and Municipal tax. 39.2 Coming to the issue of claim of deduction on the expenditures incurred relating to clinical trial, product/patent registration, studies, and professional charges in relation to clinical trial patient registration etc., we note the same has been covered in favour of the assessee by the order of this Tribunal in own case of the assessee in ITA 1327/AHD/2017 vide order dated 22-02-2022 pertaining to the AY 2009-10. The relevant extract of the order is reproduced as under: 50. Coming to deduction with respect to expenses incurred on account of clinical trial and patient registration, we note this issue also covered in favour of the assessee by the order of special bench of the Tribunal in case of Cadila Healthcare Ltd. vs. ADIT reported in 29 taxmann.com 229 where the special bench held as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed by the AO and the learned CIT(A). The assessee carried mater before this tribunal in ITA No. 1397/Ahd/2018. The tribunal vide order dated 22-02-2022 decided the issue in favour of the assessee by observing as under: 192. We have heard the rival contentions of both the parties and perused the materials available on records. At the outset, we note that issue of allowance of weighted deduction on account of expenditure incurred in connection with research and development activity is covered in favour of the assessee by the order of the Hon ble Gujarat High Court in the own case of the assessee (supra) wherein the Hon ble court held as under: 13. As regards Question No.(A), we find that the Tribunal has followed its earlier decision passed in respect of this very assessee in ITA No.446/Ahd/2002. In our opinion, the Tribunal rightly held that the assessee is entitled to weighted deduction in respect of the entire expenditure incurred for the development of in- house R D facility in terms of Section 35(2AB) of the Act. Consequently, we answer Question No. (A) in favour of the assessee and against the Revenue. 191.1. Respectfully following the above order of the Hon ble High court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance made u/s 14A r.w.r. 8D cannot be the subject matter of disallowance while determining the net profit u/s 115JB of the Act. The relevant portion of the said order is reproduced below: In view of above discussion, the computation under clause (f) of Explanation 1 to section 115JB(2), is to be made without resorting to the computation as contemplated under section 14A, read with rule 8D of the Income-tax Rules, 1962. 44.1 The ratio laid down by the Hon ble Tribunal is squarely applicable to the facts of the case on hand. Thus, it can be concluded that the disallowance made under section 14A r.w.r. 8D cannot be resorted while determining the expense as mentioned under clause (f) to explanation 1 to section 115JB of the Act. 44.2 However, it is also transparent that disallowance needs to be made with respect to the exempted income in terms of the provisions of clause (f) to section 115JB of the Act while determining the book profit. The provision of clause (f) of explanation 1 to subsection 2 of section 115JB of the Act requires that while computing book profit, the expenses in relation to exempted income under section 10/11/12 of the Act (other than subsection 38 of section 10) sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /TPO by following the order of its predecessor CIT(A). 49. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. 49.1 The learned AR before us submitted that the AE did not utilize the guarantee furnished by the assessee. Therefore, there is charging any fees from the AE. 49.2 On the other hand, the learned DR before us vehemently supported the order of the authorities below. 50. We have heard the rival contentions of both the parties and perused the materials available on record. The facts of the issue in hand have been elaborated in the preceding paragraphs. Therefore, we are not inclined to repeat the same for the sake of brevity. The transaction of extending corporate guarantee to the AE has been covered under the net of international transaction by the explanation inserted to subsection 2 of section 92B of the Act vide Finance Act 2012. Recently the Hon ble Madras High Court in the case of PCIT vs. Redington (India) Ltd. reported in 122 taxmann.com 136 has held that corporate guarantee is covered under the limb of international and having bearing on profit and loss account. Therefore, the same needs to be determined at arm length in TP report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee company has extended corporate guarantee to its AE. However, such guarantee was not utilized by the AE. Therefore, in the given facts and circumstances, we are of the considered opinion that no inherent risk arises to the assessee company or financial services utilized by the AE from the assessee company. However, the assessee has suo- moto offered guarantee commission on the corporate guarantee to the one AE namely Zao Torrent Pharma Russia @ 1.5% of the guaranteed amount. 50.3 Be that as may be, we find that the assessee in A.Y. 2009-10 has also provided corporate guarantees to its 4 different AE and benchmarked the guaranteed commission at NIL. The TPO in its order benchmarked the commission at @ 3% of guaranteed value based on analysis of US Bond data and risk factor. The issue travelled before this Tribunal in assessee s appeal bearing ITA No. 1285/Ahd/2017. The Bench vide order dated 22-02-2022 after analyzing the various case laws held that commission @ 0.5% of value of corporate guarantee shall be taken as ALP. In the present case the assessee has already offered ALP commission @ 1.5% of the guaranteed value extended to the AE namely Zao Torrent Pharma Russia. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee and the AE. The view of the TPO has been confirmed by the learned CIT(A). In our considered view, the learned CIT(A) failed to appreciate the fact that in the given case a holding company extended loans and advances to its foreign subsidiary to grow the business. Such a transaction cannot be compared with loan extended by the banks whose main activity is extending loans to generate revenue. In holding so, we draw support and guidance from the judgment of judgment of Hon ble Bombay High Court in case of CIT vs. Everest Kento Cylinders Ltd reported in 58 taxmann.com 254 wherein it was held that as under: In the present case, it is assessee-company that is issuing corporate guarantee to the effect that if the subsidiary AE does not repay loan availed of it from ICICI, then in such event, the assessee would make good the amount and repay the loan. The considerations which apply for issuance of a corporate guarantee are distinct and separate from that of bank guarantee and, accordingly, commission charged cannot be called in question, in the manner TPO has done. The comparison is not as between like transactions but the comparisons are between guarantees issued by the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(Appeals) has failed to appreciate various judicial precedents which have held that LIBOR plus 2% is a reasonable margin to compute ALP of loan given to subsidiaries. In the instant case, the assessee has worked out the ALP at LIBOR plus 2.5%. Further, the Ld. CIT(Appeals) has also not appreciated the fact that the mark-up of 3.72% computed by the TPO works out to nearly 72% of LIBOR which in our view, is quite excessive. Accordingly, looking into the instant facts of the instant case, we are of the considered view that the assessee is justified in computing the ALP at 7.69% (i.e. at LIBOR plus 2.5%) and the appeal of the assessee is allowed with respect to this Ground of Appeal. 54.3 In view of the above discussion and finding by the tribunal that the reasonable rate of interest shall be LIBOR + 2%, we hereby hold that suo-moto notional interest offered by the assessee at LIBOR + 400 basis is at ALP and no further adjustment is required to be made. Hence, we hereby set aside the finding of the learned CIT(A) and direct the AO to delete the upward adjustment made on account of benchmarking of loan to AE. Thus, the ground of the appeal filed by the assessee is hereby allowed. Cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the learned CIT(A) both the assessee and the revenue are in appeal before us. The assessee is in appeal against the addition confirmed by the ld. CIT-A for Rs. 14,05,927/- whereas the Revenue is against the deletion of the addition made by the AO. The relevant ground of appeal of the revenue in ITA No. 2369/Ahd/2018 reads as under: 10) that the Ld. CIT (A) has erred in law and on the facts in deleting the upward adjustment amounting to Rs 9,30,45,293/- made by TPO consisting of: i) Liaison Support Services of Rs. 1,72,06,725/- ii) Dossier Licensing Fee of Rs 5,49,35,742/- iii) Capital Infusion Transaction of Rs 72,71,834/- out of total adjustment of Rs 86,77,761/- iv) Custodian Fee of Rs 1,09,53,149/- 57.1 Both the ld. AR and the DR before us vehemently supported the order of the authorities below to the extent favorable to them. 58. We have heard the rival contentions of both the parties and perused the material on record. At the outset, we note that the part of share application amount on which the TPO/AO benchmarked the interest were paid in immediate previous assessment year i.e. A.Y. 2012-13 wherein also interest adjustment was made by the TPO/AO and part relief was provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llotment of shares, and even if one was to assume that there was an unreasonable delay in allotment of shares, the capital contribution could have, at best, been treated as an interest free loan for such a period of ' inordinate delay' and not the entire period between the date of making the payment and date of allotment of shares. Even if ALP determination was to be done in respect of such deemed interest free loan on allotment of shares under the CUP method, as has been claimed to have been done in this case, it was to be done on the basis as to what would have been interest payable to an unrelated share applicant if, despite having made the payment of share application money, the applicant is not allotted the shares. That aspect of the matter is determined by the relevant statute. This situation is not in parimateria with an interest free loan on commercial basis between the share applicant and the company to which capital contribution is being made. On these facts, it was unreasonable and inappropriate to treat the transaction as partly in the nature of interest free loan to the AE. Since the TPO has not brought on record anything to show that an unrelated share applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 80-IE of the Act. 61.1 The item of income on which learned CIT(A) allowed the deduction under section 80-IE of the Act read as under: i. Notice Pay Rs. 3,40,963/- ii. Sale of Scrap Rs. 8,35,083/- iii. Excise duty on sale of scrap Rs. 1,248/- iv. Cash discount Rs. 2,56,886/- v. Miscellaneous Income Rs. 4,27,344/- vi. Forex gain Rs. 3,712/- 61.2 The item of income on which learned CIT(A) disallowed the deduction under section 80-IE of the Act read as under: i. Insurance income Rs. 49,259/- ii. Interest Income Rs. 68,809/- iii. Government Grant Rs. 57,071/- 62. Being aggrieved by the order of the learned CIT(A) both the assessee and the Revenue are in cross appeal before us. The assessee is in appeal against the amount of disallowance sustained by the learned CIT(A) whereas the revenue is appeal against the deduction allowed by the ld. CIT-A. The relevant ground of revenue s appeal in ITA No. 2369/Ahd/2018 reads as under: 11) ''that the Ld. CIT (A) has erred in law and on the facts in directing the AOto allow deduction u/s. 80IE after allowing the claim of the assessee consisting of: i) Notice Pay of Rs. Rs. 3,40,963/- ii) Sale of Scrap of Rs. 8,35,083/- iii) Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide first additional ground of appeal requested to give directions with respect to exclusion of excise refund of Rs. 22,09,96,112/- from the computation of book profit under section 115JB of the Act. 65. At the outset, we note that the issue raised by the assessee in the additional ground of appeal discussed above has been settled by the ITAT in the cases listed below: i. Greenply Industries Limited v. ACIT in ITA No. 232/Gua/2019 ii. Ambuja Cement Limited vs. Addl CIT in ITA No. 2968/Mum/2015 65.1 The relevant finding of the ITAT in the case of Greenply Industries Limited v. ACIT reads as under: 10. We have heard the rival contentions and perused the relevant material available on record. We note that the assessee runs two manufacturing units in the name of Rudrapur Plywood Unit and Rudrapur MDF Unit and both are covered by the Excise Notification No.50/2003 dated 10.06.2003. Both the units are located in backward areas and are eligible for 100% excise duty exemption in respect of goods manufactured and cleared from such units for a period of 10 years from the date of commencement of commercial production. The assessee has claimed the excise duty exemption from these two units at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22/Kol/2020 In ITA No.2149/Kol/2019) relied upon finding of its coordinate bench in the case of Sicpa India (P) Ltd. - vs.- DCIT T20171 186 TTJ 289 (Kol.) (Refer Page 123-150 of the Case Law Paper book) wherein it has been held that subsidies cannot be regarded as income even for the purpose of book profits u/s.115JB of the Act though credited in the profit and loss account and have to be excluded for arriving at the book profits u/s. 115JB of the Act. 13. Coordinate Bench Delhi in case of Uflex Limited -vs.- ACIT 2022 (1) TMI 731 - ITAT Delhi held that CENVAT credit, as received by the Assessee, in accordance with the incentive scheme for J K as formulated by the Central Government is a capital receipt not liable to tax, accordingly the same cannot be part of book profit under Section 115JB also. Relevant extract of the order of the Hon ble ITAT is reproduced below: ************************* 14. Coordinate Delhi ITAT in case of M/S BR Agrotech Ltd, -vs.- ACIT (2021 (9) TMI 233 - ITAT DELHI) decided in favour of the Assessee holding that only that receipt which forms part of the income are to be taxed. The capital receipts which are otherwise not subject to tax under the normal pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te to extend the scope of Total Income but provides an alternative basis for computing the income and hence income which is not chargeable to tax cannot be included in the computation of Book Profit u/s 115JB. 20. In the case of Sutlej Cotton Mills Ltd -vs.- ACIT (1993) 45 ITD 22 (Cal) (SB) (Refer Page 157-201 of the Case Law Paperbook), it was held that according to standard accounting practice, capital receipt cannot be part of the profit. Therefore, capital receipts which do not have the character of income cannot be liable to income-tax by adding it to the book profit. When an amount which forms part of the book profit itself cannot be taxed under s. 115J, when it does not have the income character it has to be accepted that when what is routed through the P L account and carried to reserve is of a capital receipt and does not have an income character. It cannot be added back to the book profits merely because of the enabling provision in the Expln. to s. 115J for the purpose of imposing a tax thereon. 21. After going through the above referred judgments and decisions and on examining the facts of the instant case, we find that the excise duty exemption has been admittedly the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed as follows: 47. We further noted that Hon'ble Kolkata High Court, in the case of Pr. CIT v. Ankit Metal Power Ltd. [2019] 109 taxmann.com 93/266 Taxman 237 Ltd. had considered an identical issue and after considering the decision of Hon'ble Supreme Court in the case of Apollo Tyres Ltd. (supra) held that when a receipt is not in the character of income as defined under section 2(24) of the I.T. Act, 1961, then it cannot form part of the book profit u/s 115JB of the I.T. Act, 1961. The Hon'ble High court, further observed that sales tax subsidy received by the assessee is capital receipt and does not come within definition of income under section 2(24) of the I.T. Act, 1961 and when, a receipt is not a in the nature of income, it cannot form part of book profit u/s 115JB of the I.T. Act, 1961. The Court, further observed that the facts of case before the Hon'ble Supreme Court in the case of Apollo Tyres Ltd. (supra) were altogether difference, where the income in question was taxable, but was exempt under a specific provision of the Act, and as such it was to be included as a part of book profit, but where the receipt is not in the nature of income at all, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the sales tax incentive subsidy for computing book profit under section 115 JB of the Act. The assessee gets the relief accordingly. 66. The principles laid down by the ITAT in the cases cited above are squarely applicable in the given facts and circumstances. However, we find that the issue was first-time raised before the ITAT and therefore we are inclined to set aside the same to the file of the AO for fresh adjudication as per the provisions of law after considering the cases listed above. Hence the addition of appeal of the assessee is allowed for the structural purposes. 67. The last issue raised by the assessee in the additional ground of appeal is that no R D expenses either for discovery or product development or capital expenses shall be allocated to the eligible units. 68. The necessary facts are that the assessee has been incurring expenditures on in-house R D for pharmaceutical products produced by it. The R D expenditures incurred are classified by the assessee in two stages i.e. discovery stage and product development stage. The expenditure incurred on the product development stage has been suo-moto allocated by the assessee to the different manufacturing units inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for AY 2013-14. 71. The Revenue has raised following grounds of appeal: 1) that the Ld. CIT (A) has erred in law and on the facts in the disallowance of selling / distribution /publicity / Medical/Literature expenses u/s. 37(1) of the Act consisting of: i) Doctor Sponsorship Expenses of Rs. 4,48,80,987/- out of Rs. 19,63,90,203/- ii) selling and distribution expenses under the heads Business advancement expenses of Rs. 5,30,61,002/- iii) sales promotion expenses of Rs. 37,78,971/-. 2) that the Ld. CIT (A) has erred in law and on the facts in directing the AO toallow deduction u/s. 80IC after allowing the claim of the assessee of i) Notice Pay of Rs. 8,48,47 6/- ii) Sale of Scrap of Rs. 93,83,606/- iii) Service Tax Refund Income of Rs. 2,92,338/- iv) Miscelleneous income and rounding off of Rs. 34,59,039/- v) Net Foreign Exchange Gains of Rs. 54,93,768/- as income derived from eligible business by an appropriate enterprise of the assessee. 3) that the Ld, CIT (A) has erred in law and on the facts in allowing the appeal of the assessee on the issue of reallocation of R D Expenditure of Rs. 15,90,98,509/- u/s. 80IC and Rs. 4,19,35,952/- u/s. 80IE made by the Assessing Officer. 4) that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w and on the facts in deleting the addition of unutilized MODVAT/CENVAT credit of Rs. 7,14,75,444/- made u/s. 145A of the I.T. Act. 72. The first issue raised by the Revenue is that the learned CIT(A) erred in deleting the disallowance of expense incurred in contravention of MCI regulation. 73. At the outset, we note the issue raised by the revenue in the captioned ground of appeal has been adjudicated along with assessee s ground of appeal raised on the same issue in ITA No. 2365/Ahd/2018. The ground of appeal of the assessee has been adjudicated vide paragraph No. 8 of this order wherein we have decided the issue partly in favour of the Revenue and assessee. For the detailed discussion, please refer to the said paragraph of this order. Hence, the ground of appeal of the Revenue is hereby partly allowed. 74. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the disallowance of deduction claimed under section 80-IC of the Act on the other incomes. 75. At the outset, we note the issue raised by the revenue in the captioned ground of appeal has been adjudicated along with the assessee s ground of appeal raised on the same issue in ITA No. 2365/Ahd/2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are allocated to Baddi unit and Sikkim unit as under Nature Baddi unit Sikkim Unit Discovery Cost 70,183,556 1,84,99,320 Capital expenditure (Building) 7,22,249 1,90,374 Capital expenditure (Other than Building) 90,04,574 23,73,469 Total 7,99,10,379 2,10,63,163 77.2 The AO further found that the assessee has claimed weighted deduction under section 35(2AB) of the Act @ 200% on the above R D expenses except for expenditure on building repairs (i.e. 100% on building repair). Thus, the AO considering the same reduced the eligible profit of Baddi and Sikkim unit under section 80-IC 80-IE for Rs. 15,99, 98,509/- and 4,19,35,952/-. 78. On appeal by the assessee, the learned CIT(A) deleted the allocation made by the AO and thereby reducing the eligible profit under section 80-IC or 80IE of the Act as the case may be by following the order of his predecessor CIT(A) for the AY 2012-13 in the own case of the assessee. 79. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us. 79.1 Both the learned DR and the learned AR before us vehemently supported the order of the authorities below as favorable to them. 80. We have heard the rival contentions of both the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, in our considered view the principles laid down by the Tribunal are directly applicable to the facts of the case on hand. At this juncture we find important to refer the relevant extract of the order of this tribunal in the own case of the assessee (supra) which reads as under: 5. We have heard the rival submissions, perused the material available on record and the judgment cited by the parties. There is no dispute that the facts in the present case are identical with the facts of the case pertaining to A.Y. 2004-05. We have perused the order of the Hon'ble co-ordinate Bench in assessee's own case in ITA No.4356/Ahd/2007 (supra). The Hon'ble Tribunal following the decision of coordinate Bench in ITA No.1347/Ahd/2007 for A.Y. 2003-04 dismissed the ground of appeal raised by Revenue. In view of the fact that issue has already been decided by Hon'ble co-ordinate Bench in ITA No. 4356/Ahd/2007 for A.Y. 2004-05 and ITA 44 ITA Nos. 907, 938, 1634 1725/Ahd/No. 1347/Ahd/2007 for A.Y. 2003-04 in assessee's own case. Respectfully following the order of the coordinate bench, this ground of Revenue's appeal is dismissed. 40.3 It is also important to note th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s.80HH and 80I, profit from eligible undertaking is to be computed on the basis of gross income by reducing expenditure which has been incurred for the eligible undertaking out of the gross income derived from the industrial undertaking. In view of the aforesaid, question no.(A) is answered in favour of the assessee and against the Revenue. 25.3. In that view of the matter, we do not hesitate to hold that R D expenditure is need not to be allocated to Baddi Unit as the case made out by the assessee are to be viewed this particular fact of not extending any research work by the said unit, and no benefit thereof was being rendered by it. In view of the matter, we delete the impugned addition of Rs. 36,16,40,065/- disallowed by the ld.AO. Hence the ground of appeal of the assessee is allowed. 80.1 Before us, no material has been placed on record by the Revenue demonstrating that the decision of the Tribunal in own case of the assessee as discussed above has either been set aside/stayed or overruled by the Higher Judicial Authorities. Before us, no material was placed on record pointing out any distinguishing features in the facts of the case of earlier AY and the year under conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that Ld. CIT(A) has wrongly deleted the disallowance made by Assessing Officer. On the contrary, Ld. Authorized Representative for the assessee pointed out that this issue is squarely covered in favour of assessee in ITA No.4356/Ahd/2007 order dated 31-01-2011 by the co- ordinate Bench. Ld. AR submitted Hon'ble ITAT has followed the decision rendered in respect of A.Y. 2004-05. As the facts are identical to the facts of the case as discussed above, therefore respectfully following the same, we do not find a reason to interfere in the order of the ld. CIT-A. Hence, the ground of appeal raised by Revenue is dismissed. 85.1 Before us, no material has been placed on record by the Revenue demonstrating that the decision of the Tribunal in own case of the assessee discussed above has either been set aside/stayed or overruled by the Higher Judicial Authorities. Before us, no material was placed on record pointing out any distinguishing features in the facts of the case of earlier AY and the year under consideration. Thus, respectfully following the order of the Tribunal in the own case of the assessee discussed above, we do not find any infirmity in the finding of the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned AR before us submitted that the issue on hand is covered in favour of the assessee by the order of the Tribunal in its own case for AY 2009-10. 90. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that in own case of the assessee identical disallowance was made by the AO in the assessment year 2009-10. The issue came before this Tribunal in Revenue s appeal bearing ITA No. 1327/Ahd/2017. The Tribunal vide order dated 22-02-2022 decided the issue in favour of the assessee by observing as under: 56. We have heard the rival contentions of both the parties and perused the materials available on record. The issue on hand confined to the extent whether the software purchased by the assessee is part of computer for purpose of depreciation or the same can be treated as intangible assets. At this juncture it is pertinent to refer the depreciation schedule as provided under Act. On perusal of the same we find that Part-A, block III sub block (5) of the Depreciation Schedule contain the rate of depreciation for computer including computer software which reads as under: III. MACHINERY AND PLANT *** (5) Compute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ground of appeal raised by the revenue is hereby dismissed. 91. The next issue raised by the revenue is that Ld. CIT-(A), erred in deleting the disallowance of depreciation of Rs. 2,34,902/- made on capital investment subsidy of Rs. 30 lakhs by treating the costof capital assets. 92. At the outset, we note that the issue on hand arising from AY 2009-10. As such, the assessee during AY 2009-10 received subsidy of Rs. 30 Lakh from central government under Capital Investment Scheme 2003 for its unit situated at Baddi Himachal Pradesh. The assessee treated such receipt as capital receipt. However, the AO was of the view that the subsidy was received on account of capital investment which is directly linked with capital assets deployed by the assessee in Baddi Unit. Therefore, the cost of capital assets should be reduced by the amount of the subsidy which has been provided to meet the cost of capital assets. Accordingly, the AO in A.Y. 2009-10 reduced the amount of Block Assets and disallowed the proportionate depreciation @ 15%. Following the same, the AO in subsequent years and in the year under consideration, has disallowed the proportionate depreciation for Rs. 2,34,902/- only. 92 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly by any other person or authority: 67.1. On perusal of the above provision, we find that the WDV is to be actual cost of the assets at which the assessee acquired the same. There is no provision for reducing the value of WDV by any amount of incentive or subsidy. In this regard we also find support and guidance from the judgment of Hon ble supreme court in case of CIT vs. PJ Chemicals reported in 210 ITR 830, where in the similar facts and circumstances it was held as under: In the instant case, the reasoning underlying, and implicit in, the conclusion reached by the majority of the High Courts cannot be said to be an unreasonable view and on a preponderance of preferability that view commends itself particularly in the context of a taxing statute. The expression 'actual cost' needs to be interpreted liberally. The subsidy of the nature in the instant case did not partake of the incidents which attract the conditions for their deductibility from 'actual cost'. The Government subsidy, is an incentive not for the specific purpose of meeting a portion of the cost of the assets, though quantified as or geared to a percentage of such cost. If that be so, it does not pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le on record. At the outset, we note that in the own case of the assessee identical disallowance was made by the AO in the assessment year 2012- 13. The issue came before this Tribunal in Revenue s appeal bearing ITA No. 1415/Ahd/2018. The Tribunal vide order dated 22-02-2022 decided the issue in favour of the assessee by observing as under: 230. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, the assessee during the year under consideration purchased certain Trolleys, Mobile Rackets and Pallets and treated the same as part and parcel of the plant and machinery and claimed depreciation accordingly whereas the AO treated the same as furniture and fixture and disallowed the excess deprecation which has been reversed by the learned CIT (A). 230.1. Now the question arises before us whether the assets being Trolleys, Mobile Rackets and pallets used in manufacturing plant for movement and safe storage of goods can be described as plant and machinery or furniture. At this juncture, we note that the coordinate of bench Pune Tribunal in case of Serum Institute of India (supra) in similar facts and circumstances observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... G and Rs. Rs. 5,30,00,000/- under section 80GGB of the Act. 101.1 However, the AO found that the assessee has not allocated the donation to the Baddi and Sikkim Units eligible for deduction under section 80-IC and 80-IE of the Act. The AO was of the view that the donation paid by the assessee is also to be allocated to the eligible unit as the HO paid such the donation. The AO accordingly allocated an amount of Rs. 96,50,814 (80G) Rs. 58,78,048/- (80GGB) to the Baddi unit and an amount of Rs. 25,16,721/- (80G) 15,32,866 (80GGB) to the Sikkim unit as per their turnover ratio. 101.2 The AO further found that both the unit are claiming 100% deduction under section 80-IC and 80-IE of the Act, therefore deduction u/s 80G and 80GGB of the Act cannot be allowed in respect of the eligible unit. Thus, the AO disallowed the deduction under section 80G and 80GGB of the Act in respect of these two units for Rs. 60,83,768/- and 74,10,914/- only. 102. On appeal by the assessee, the learned CIT(A) deleted the disallowance made by the AO by following the order of its predecessor CIT(A) in own case of the assessee for earlier years. 103. Being aggrieved by the order of the learned CIT(A), the Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n case of the assessee as discussed above has either been set aside/stayed or overruled by the Higher Judicial Authorities. Before us, no material was placed on record pointing out any distinguishing feature in the facts of the case of earlier AY and the year under consideration. Thus, respectfully following the order of the Tribunal in the own case of the assessee discussed above, we do not find any infirmity in the finding of the learned CIT(A). Thus, the ground of appeal raised by the revenue is hereby dismissed. 105. The next issue raised by the revenue is that the learned CIT(A) erred in deleting the upward adjustment under TP provisions on account of liaison support, dossier licensing, custodian fee, and capital infusion. 106. In the captioned ground of appeal, the assessee has challenged the addition made by adjustment the ALP of different international transactions carried out with the AE. We, for the sake of better representation, proceed to adjudicate the same one by one. Liaison Support Services: 107. The assessee during the year has reimbursed cost of liaising support services to its different AEs along with markup on cost varying @ 0%, 5%, 10% and 13% which are detaile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant also provided the report of the independent review of the expert after considering the factuality and nature of services rendered where mark up of 10% to 16% over costs has been considered as appropriate so as to compensate for these services. The AR also argued that in earlier years also the appellant company had compensated AL's at 10% mark up which has already been accepted in the assessment proceedings, The facts and circumstances have not changed in this year, still the TPO has taken a different view. Looking at the submission of the appellant and details therein it seems that the compensation paid to AEs @ 10% is justifiable. The view is also supported by Calcutta High Court in the 'case of CIT V. ITC. Infotech India Limited (2016) 66 taxmann.com 106/237 Taxman 476/384 ITR 380 (Cal.) A.Y.2006-07, where in respect of marketing and administrative services rendered by AEs assessee adopted a revenue sharing model whereby assessee kept 75 per cent of revenue and paid 25 per cent of revenue to AEs, since said model was duly supported by relevant documents, impugned addition made to assessee's ALP by adopting revenue sharing model of 1 5 per cent was to be set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn by the assessee. On the other hand, the AE only provided support services and marketing of the product. Thus, the TPO attributed the profit in the Ratio 75% to the assessee and 25% to the AE and accordingly made an upward adjustment of Rs. 5,49,35,742/-. 108.1 On appeal by the assessee, the learned CIT(A) deleted the adjustment made by the AO by following the order of its predecessor for A.Y. 2012-13. 108.2 Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us. 108.3 The learned DR before us vehemently supported the order of the Assessing Officer. 108.4 On the other hand, the learned AR before us vehemently supported the order of the ld. CIT-A. 108.5 We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that in own case of the assessee, an identical adjustment was made by the TPO in the assessment 2012-13. The issue came before this Tribunal in revenue s appeal bearing ITA No. 1415/Ahd/2018. The Tribunal vide order dated 22-02-2022 decided the issue in favour of the assessee by observing as under: 241. We have heard the rival contentions of both the parties and perused the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manner: No. of Marking authorization Fee per authorisation 0 to 250 500 Euro 251 to 500 250 Euro 109.1 The assessee further submitted that identical custodian fee to independent party namely Emifarma SA de C.V. for holding its Marketing Authorization in Maxico @ $ 2000 to $ 3500 whereas it paid custodian fee to TPG @ $ 320 (250 euro) to $ 640 (500 Euro). Thus, the same is at ALP. 109.2 The assessee with regard to reimbursement of administrative expenses to TPG submitted the transaction of custodian fee are different from reimbursing of administrative expenses. As such reimbursement of administrative expenses are in relation to traveling and freight expenses. Therefore, the allegation that there no need to pay custodian fee when administrative expenses already reimbursed does not hold ground. 109.3 However, the TPO, on the other hand, disagreed with the contention of the assessee. The TPO found that the assessee for benchmarking the transaction relied on the custodian fees paid to Emifarma S.A de C.V., but as per the form 3CEB report, such party is a related party of assessee to whom it sold finished goods of Rs. 2,21,94,712/-. Hence, the comparable submitted by the assessee were r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and same is deleted. 109.6 Being aggrieved by the order of the learned CIT(A), the revenue is in appeal before us. 109.7 The learned DR before us vehemently supported the order of the Assessing Officer. 109.8 On the other hand, the learned AR before us vehemently supported the order of the ld. CIT-A. 109.9 We have heard the rival contentions of both the parties and perused the materials available on record. In the present case, the TPO has determined the ALP of the custodian fees paid by the assessee to its AE at Rs. NIL. However, the learned CIT-A has held that the custodian fees paid by the assessee are at ALP. The basis of the ld. CIT-A was this that the assessee has paid custodian fee to another company which was much more than the amount in dispute and the same was also accepted by the Revenue. Likewise, the ld. CIT-A also observed that all the economic benefits were transferred to the assessee and there was no of sharing the income for the marketing of assessee s product. In our considered view, the ld. CIT-A has given the reason and detailed finding which has not been controverted by the learned DR appearing on behalf of the revenue. Accordingly, we do not find any reason to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 450/Ahd/2012. 116. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us. 116.1 The learned DR before us vehemently supported the order of the Assessing Officer. 116.2 On the other hand, the learned AR before us vehemently supported the order of the ld. CIT-A. 117. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that in the own case of the assessee, an identical addition on account of unutilized value of MODVAT/CENVAT was made by the AO in the assessment year 2009-10. The issue came before this tribunal in revenue s appeal bearing ITA No. 1327/AHD/2017. The Tribunal vide order dated 22-02-2022 decided the issue in favour of the assessee by observing as under: 61. Having heard both the parties, we have gone through orders of the authorities below and materials available on record. It is submitted by the ld. counsel for the assessee, that assessee is regularly following 'exclusive method', i.e. 'net method' of accounting, whereby cost of purchases are accounted for without taking into effect i.e. net of MODVAT including inventory i.e. opening stock and closin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses of medical practitioners/doctors. 2. On the facts and in the circumstances of the case, the learned CIT(Appeals) erred in confirming disallowance of Rs. 1,87,614 made by the Assessing Officer in respect of employees' contribution to PF/ESI, on the ground that the same was not paid within the prescribed time limit under the PF/ESI Acts, even though the payment was made within the time limit for filing the return of income 139(1) of the LT. Act. 3. On the facts and in the circumstances of the case, the learned CIT(Appeals) erred in confirming the Assessing Officer's action in reducing the quantum of deduction / 80-IC in respect of the Baddi Unit by excluding the following items of income from the profits of the Baddi Unit eligible for such deduction: (a) Cash discount 1,62,156 (b) Export benefits 5,91,95,648 (c) Insurance income 3,959 (d) Interest Income 2,50,787 Total : 5,99,12,550 4 On the facts and in the circumstances of the case, the learned (IT(Appeal) erred in upholding the Assessing Officer's action in reducing the quantum of deduction u/s 80-IC in respect of the Salim Unit by allocating additional administrative expenses of Rs 27,74,99,662 to the Satin Unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al receipts as per the settled legal precedents. 2 Without prejudice to all the grounds raised, in law and in the facts and circumstances of the appellant's case, following the decision of the Honable Gujarat High Court in Assesse's own case, the Appellant craves that no R D expenditure including development cost should be allocated to industrial unit eligible for deduction u/s 80-IC of Rs. 15,86,14,030 and section 80-IE of Rs. 10,59.25,615, though allocated while filing the return of income In view of the above, the additional grounds raised may kindly be admitted in view of natural justice to the appellant. 119.2 At the outset, we note that the additional grounds raised by the assessee in its appeal for the AY 2014-15 are identical to the additional grounds raised by the assessee in ITA No. 2365/AHD/2018 for the assessment year 2013-14. The additional grounds of appeal of the assessee for the A.Y. 2013-14 have been admitted by us vide paragraph No. 3.4 to 3.5 of this order in the light of the principles laid down by the Hon ble Supreme Court in the case of National Thermal Power Co. Limited vs. CIT. Hence, following the same the additional grounds of appeal filed by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal of the assessee for the AY 2013-14 with respect to receipt of cash discount, export benefit and insurance income has been decided by us vide paragraph No. 20 and 21 of this order in favour of the assessee whereas ground with respect to interest income has been decided by us vide paragraph No. 23 of this order partly in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2013-14 shall also be applied for the assessment year 2014-15. Hence, the ground of appeal filed by the assessee is hereby partly allowed. 126. The next issue raised by the assessee is that the learned CIT(A) erred in confirming the allocation of additional administrative expenses to Baddi and Sikkim unit and thereby reducing the deduction under section 80-IC and 80-IE of the Act. 127. At the outset, we note that the issue raised by the assessee in its ground of appeal for the AY 2014-15 is identical to the issue raised by the assessee in ITA No. 2365/AHD/2018 for the assessment year 2013-14. Therefore, the findings given in ITA No. 2365/AHD/2018 shall also be applicable for the assessment year 2014-15. The relevant ground of appeal of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee is that the learned CIT(A) erred in confirming the disallowance of deduction under section 80-IE of the Act on the receipt of Interest, insurance, and export benefit. 133. At the outset, we note that the issue raised by the assessee in its ground of appeal for the AY 2014-15 is identical to the issue raised by the assessee in ITA No. 2365/AHD/2018 for the assessment year 2013-14. Therefore, the findings given in ITA No. 2365/AHD/2018 shall also be applicable for the assessment year 2014-15. The relevant ground of appeal of the assessee for the A.Y. 2013-14 has been decided by us vide paragraph No. 63 of this order partly in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2013-14 shall also be applied for the assessment year 2014-15. Hence, the ground of appeal filed by the assessee is hereby partly allowed. 134. The assessee vide first Additional ground of appeal request to give direction with respect to exclusion of excise refund of Rs. 26,75,10,140/- from the computation of book profit under section 115JB of the Act. 135. At the outset, we note that the issue raised by the assessee in its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Income of Rs. 33,575/- iii) Miscelleneous income and rounding off of Rs. 1,48,948/- as income derived from eligible business by an appropriate enterprise of the assessee 3) that the Ld CIT (A) hat erred in law and on the facts in allowing the appeal of the assessee on the issue of reallocation of R D Expenditure of Rs. 18,85,27,570/- to Baddi Unit and u/s. 8010 and Rs. 40,81,86,014/- to Sikkim Unit w/s. 801E made by the Assessing Officer. 4) that the Ld CIT(A) haserred in law and on the facts in directing to increase eligible profit for Baddi Unit by Rs. 6.28.27,394/- 5) that the Ld CIT (A) hat erred in law and on the facts in deleting the diallowance of garden expenses of Rs. 49,40,748/-. 6) that the Ld CIT (A) has erred in law and on the facts in deleting disallowance of Rs. 1,99,667/- made on account of treating capital investment subsidy of Rs. 30,00,000/- received from Government of India under the Central Capital Investment Subsidy Scheme, 2003 as received towards cost of capital asset and therefore not allowing depreciation on it. 7) that the Ld CIT (A) hat erred in law and on the facts in deleting the disallowance of additional depreciation on Pallets, Trolley and Mobile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue is that the learned CIT(A) erred in deleting the disallowance of deduction claimed by the assessee under section 80- IC of the Act on the receipts representing sale of scrap, service tax refund and miscellaneous receipt. 143. At the outset, we note that the issue raised by the revenue in its ground of appeal for the AY 2014-15 is identical to the issue raised by the revenue in ITA No. 2369/AHD/2018 for the assessment year 2013-14. Therefore, the findings given in ITA No. 2369/AHD/2018 shall also be applicable for the assessment year 2014-15. The relevant ground of appeal of the revenue for the AY 2013-14 has been decided by us vide paragraph No. 16 to 19 and 75 of this order against the revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2013-14 shall also be applied for the assessment year 2014-15. Hence, the ground of appeal filed by the revenue is hereby dismissed. 144. The next issue raised by the revenue is that the learned CIT(A) erred in deleting the allocation of R D expenses to the Baddi and Sikkim unit eligible for deduction under section 80-IC and 80-IE of the Act. 145. At the outset, we note that the issue raise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n excess amount already allocated to Baddi Unit based on number of employees shall be reduced. Accordingly, the learned CIT(A) directed the AO to reduce the amount of administrative expenses allocated to Baddi Unit by Rs. 6,28,27,394/- (Rs. 19,75,94,583/- already allocated by the assessee less Rs. 13,47,67,189/- calculated based on turnover ratio. 149. Being aggrieved by the order of ld. CIT(A), the Revenue is in appeal before us. 149.1 The learned DR before us vehemently supported the order of the Assessing Officer. 149.2 On the other hand, the learned AR before us contended that the ITAT in the earlier years in the own case of the assessee has adopted the basis of allocating the administrative expenses between the eligible and non-eligible units based on number of employees in the respective units. Thus, the same basis should be continued in the year under consideration. 149.3 Both the ld. DR and the AR before us vehemently supported the order of the authorities below as favourable to them. 150. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly the assessee allocated the common administrative expenses to different un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e next issue raised by the revenue is that Ld. CIT-(A), erred in deleting the disallowance of depreciation of Rs. 1,99,667/- made on capital investment subsidy of Rs. 30 lakhs by treating the same as related to cost of capital assets. 154. At the outset, we note that the issue raised by the revenue in its ground of appeal for the AY 2014-15 is identical to the issue raised by the revenue in ITA No. 2369/AHD/2018 for the assessment year 2013-14. Therefore, the findings given in ITA No. 2369/AHD/2018 shall also be applicable for the assessment year 2014-15. The relevant ground of appeal of the revenue for the A.Y. 2013-14 has been decided by us vide paragraph No. 92 of this order against the revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2013-14 shall also be applied for the assessment year 2014-15. Hence, the ground of appeal filed by the revenue is hereby dismissed. 155. The next issue raised by the revenue is that Ld. CIT-A erred in allowing the additional depreciation of Rs. 70,65,179/- with respect to pallets, trolleys, and mobile racks. 156. At the outset, we note that the issue raised by the revenue in its ground of ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e next issue raised by the revenue is that the learned CIT(A) erred in deleting the disallowance/ addition made to book profit u/s 115JB of the Act by the amount of disallowance made u/s 14A of the Act. 162. The AO found that the assessee under normal computation of income has made suo moto disallowance under section 14A r.w. rule 8D(2) of the IT rule for Rs. 18,14,792/- only. However no disallowance was made while computing the book profit as per the provisions of clause (f) of explanation to section 115JB(2) of the Act. Accordingly, the AO made addition of Rs. 18,14,792/- to the book profit. 163. On appeal by the assessee, the learned CIT(A) deleted the addition made by the AO in book profit after placing reliance on order of this tribunal in case of Adani Agro Pvt Ltd in ITA No. 2539/Ahd/2013 where the bench vide order dated 2nd February 2018 held that the disallowances made under section14A of the Act while computing normal profit cannot be imported for the purpose making disallowance/addition to book profit as per the provisions of clause (f) of explanation to section 115JB(2) of the Act. 164. Being aggrieved by the order of the learned CIT(A), the revenue is in appeal before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the provision of section 115JB in the matter of computation is a complete code in itself and resort need not and cannot be made to section 14A of the Act. 165.3 Now the question arises to determine the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. In this regard, we note that there is no mechanism/ manner given under clause (f) to Explanation-1 of Sec. 115JB of the Act to workout/ determine the expenses with respect to the exempted income. Therefore, in the given facts circumstances, we feel that ad- hocdisallowance will serve the justice to the Revenue and assessee to avoid the multiplicity of the proceedings and unnecessary litigation. Thus we direct the AO to make the addition of Rs. 5 Lacs as discussed above under clause (f) to Explanation-1 of Sec. 115JB of the Act. Thus, the ground of appeal of the Revenue in relation to additon to book profits is partly allowed. 166. In the result appeal of the Revenue is hereby partly allowed. Coming to ITA No. 1172/Ahd/2019, an appeal by the assessee for A.Y. 2015-16 167. The assessee has raised following grounds of appeal: 1. On the facts and in the circumstances of the case, the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal. 168. The assessee vide letter dated 13-01-2023has raised following additional grounds of appeal: The Appellant craves leave to raise these additional grounds of Cross Objections before the Hon'ble ITAT This are legal grounds and therefore, as per the decision of Han ble Supreme court in the case of National Thermal Power (229 ITR 383) can be raised before the Hon'ble ITAT. In view of the above, the appellant hereby raises following ground as additional ground of Appeal which is without prejudice to the grounds raised by the appellant while filing appeal in Form 36A. 1. Without prejudice to all the grounds raised, in law and in the facts and circumstances of the appellant's case, the appellant requests Hon'ble ITAT for admission of its additional claim and for not including the Excise Refund of Rs 26.50.23,405/- received by the appellant, while computing the Book Profit u/s. 115JB of the Act on the ground that it is income in the nature of capital receipts as per the settled legal precedents. 2 Without prejudice to al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 65/AHD/2018 for the assessment year 2013-14. Therefore, the findings given in ITA No. 2365/AHD/2018 shall also be applicable for the assessment year 2015-16. The relevant ground of appeal of the assessee for the A.Y. 2013-14 has been decided by us vide paragraph No. 13 of this order against the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2013-14 shall also be applied for the assessment year 2015-16. Hence, the ground of appeal filed by the assessee is hereby dismissed. 173. The next issue raised by the assessee is that the learned CIT(A) erred in confirming the disallowance of deduction under section 80-IC of the Act on receipts of cash discount, export benefit, insurance income and interest income. 174. At the outset, we note that the issue raised by the assessee in its ground of appeal for the AY 2015-16 is identical to the issue raised by the assessee in ITA No. 2365/AHD/2018 for the assessment year 2013-14. Therefore, the findings given in ITA No. 2365/AHD/2018 shall also be applicable for the assessment year 2015-16. The relevant ground of appeal of the assessee for the A.Y. 2013-14 with respect receipt of cash dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be the findings for the assessment year 2013-14 shall also be applied for the assessment year 2015-16. Hence, the grounds of appeal filed by the assessee is hereby allowed. 179. The next issue raised by the assessee is that the learned CIT(A) erred in confirming the disallowance of deduction under section 80-IE of the Act on the receipts of Interest, insurance, and export benefit. 180. At the outset, we note that the issue raised by the assessee in its ground of appeal for the AY 2015-16 is identical to the issue raised by the assessee in ITA No. 2365/AHD/2018 for the assessment year 2013-14. Therefore, the findings given in ITA No. 2365/AHD/2018 shall also be applicable for the assessment year 2015-16. The relevant ground of appeal of the assessee for the A.Y. 2013-14 has been decided by us vide paragraph No. 63 of this order partly in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2013-14 shall also be applied for the assessment year 2015-16. Hence, the ground of appeal filed by the assessee is hereby partly allowed. 181. The assessee vide first Additional ground of appeal requested to give direction with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts in directing the AO to allow deduction u/s. 80IC after allowing the claim of the assessee of i) Sale of Scrap of Rs. 1,48,67,792/- ii) Forex Gains of Rs. 48,40,17,969/- iii) Miscelleneous income and rounding off of Rs. 15,20,346/- as income derived from eligible business by an appropriate enterprise of the assessee 3) that the Ld CIT (A) has erred in law and on the facts in allowing the appeal of the assessee on the addition made by the AO on account of reallocation of R D Expenditure of Rs. 15,12,09,260/- to Baddi Unit u/s. 80IC and Rs. 52,26,33,895/- to Sikkim Unit u/s. 80IE of the I. T. Act, 1961. 4) that the Ld CIT(A) has erred in law and on the facts in directing the AO to increase eligible profit for Baddi Unit by Rs. 13,82,53,211/- 5) that the Ld CIT (A) has erred in law and on the facts in deleting the disallowance of garden expenses of Rs. 64,20,381/-. 6) that the Ld CIT (A) has erred in law and on the facts in deleting disallowance of Rs. 1,69,717/- made on account of capital investment subsidy of Rs. 30,00,000/- received front Government of India under the Central Capital Investment Subsidy Scheme, 2003 received towards cost of capital asset is not eligible for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the receipts representing sale of scrap, service tax refund and miscellaneous receipts. 190. At the outset, we note that the issue raised by the revenue in its ground of appeal for the AY 2015-16 is identical to the issue raised by the revenue in ITA No. 2369/AHD/2018 for the assessment year 2013-14. Therefore, the findings given in ITA No. 2369/AHD/2018 shall also be applicable for the assessment year 2015-16. The relevant ground of appeal of the revenue for the A.Y. 2013-14 has been decided by us vide paragraph No. 75 read with para 16 to 19 of this order against the revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2013-14 shall also be applied for the assessment year 2015-16. Hence, the ground of appeal filed by the revenue is hereby dismissed. 191. The next issue raised by the revenue is that the learned CIT(A) erred in deleting the allocation of R D expenses to the Baddi and Sikkim unit eligible for deduction under section 80-IC and 80-IE of the Act. 192. At the outset, we note that the issue raised by the revenue in its ground of appeal for the AY 2015-16 is identical to the issue raised by the revenue in ITA No. 2369 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of Rs. 1,69,717/- made on capital investment subsidy of Rs. 30 lakhs by treating the same relating to cost of capital assets. 198. At the outset, we note that the issue raised by the revenue in its ground of appeal for the AY 2015-16 is identical to the issue raised by the revenue in ITA No. 2369/AHD/2018 for the assessment year 2013-14. Therefore, the findings given in ITA No. 2369/AHD/2018 shall also be applicable for the assessment year 2015-16. The relevant ground of appeal of the revenue for the A.Y. 2013-14 has been decided by us vide paragraph No. 92 of this order against the revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2013-14 shall also be applied for the assessment year 2015-16. Hence, the ground of appeal filed by the revenue is hereby dismissed. 199. The next issue raised by the revenue is that Ld. CIT-A erred in allowing the additional depreciation of Rs. 69,05,331/- with respect to pallets, trolleys, and mobile racks. 200. At the outset, we note that the issue raised by the revenue in its ground of appeal for the AY 2015-16 is identical to the issue raised by the revenue in ITA No. 2369/AHD/2018 for the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d assets for Rs. 4,72,79,446/- during the year under consideration. It is also undisputed fact that disallowance of additional depreciation on such assets has been deleted while passing order of preceding year being A.Y. 2014-15, the facts of the case and the assets under consideration continue to be same, hence disallowance made for that year being Rs. 3,34,63,818/- is also deleted. Disallowance made by Assessing Officer for Rs. 84,11,534/- is deleted. Ground No. 14 is allowed. 204. Being aggrieved by the order of the learned CIT(A), the revenue is in appeal before us. 204.1 Both the learned DR and the learned AR before us vehemently supported the order of the authorities below as favourable to them. 205. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that the assets in dispute being pallets, trolleys and mobile racks have been treated by the assessee as part of the plant and machinery and therefore the depreciation at the rate of 15% and additional depreciation was claimed which was disallowed by the AO and subsequently allowed by the learned CIT(A).Against the finding of the learned CIT(A), regarding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue is that the learned CIT(A) erred in deleting the disallowances/ addition made by the AO to the book profit u/s 115JB of the Act by the amount of disallowance u/s 14A of the Act. 211. At the outset, we note that the issue raised by the revenue in its ground of appeal for the AY 2015-16 is identical to the issue raised by the revenue in ITA No. 2368/AHD/2018 for the assessment year 2014-15. Therefore, the findings given in ITA No. 2368/AHD/2018 shall also be applicable for the assessment year 2015-16. The relevant ground of appeal of the revenue for the A.Y. 2014-15 has been decided by us vide paragraph No. 165 of this order partly in favour of the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2014-15 shall also be applied for the assessment year 2015-16. Hence, the ground of appeal filed by the revenue is hereby partly allowed. 212. The next issue raised by the Revenue is that the learned CIT(A) erred in allowing the deduction under section 80-IE of the Act on the income not arising from eligible business. 213. At the outset, we note that the issue raised by the revenue in its ground of appeal for the AY 2015-16 is i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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