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2012 (4) TMI 226 - ITAT AHMEDABADDis-allowing deduction U/s. 80IB(3) of the I.T. Act - AO denied availment of such exemption as it is available to only those SSI unit as per Section 80(3)(ii) having investment in plant and machinery of less than Rs. 1 crore whereas the assessee company exceeds such limit – assessee contented investment in plant and machinery would be less than Rs. 1 crore if items such as tools jigs, dies, moulds, spare parts for maintenance and cost of consumable stores considered as per Notification No.857 dated 10-12-1999 issued u/s 11B of IDR Act are excluded – Held that:- vehicles have to be excluded while determining the value of plant and machinery for the purpose of determining the status of industrial undertaking as an SSI - following the ITAT order in assessee's own case A.Y 2003-04 moulds, dies, jigs, fixtures, patterns, tools, consumables, factory equipments AO shall recomputed the value of the plant and machinery installed in the industrial undertaking - the AO is directed to exclude the cost of equipments while determining value of plant and machinery in order to ascertain the status of industrial undertaking of the assessee. As regards computers software, we restore the matter to the file of AO with the direction to ascertain as to whether or not all the computers are installed in office – in favour of assessee. Not allowing Royalty payment of Rs. 74,63,975/- being computation of arms length price in relation to international transactions though explained – the TPO observed that no royalty was charged by other group entites and accordingly the Arms Length Price for royalty charges was inferred as nil – assessee contented that the technical know-how was provided to the assessee and the same was not comparable with other entities of the group. The assessee had not made the one-time payment but making the continuous payment to the know-how provider - Held that:- for a transaction to come u/s 92 of the Act, it is necessary to establish that the course of business between resident and non-resident is so arranged that the business transacted between them provides to the resident either no profits or less than ordinary profits which might be expected to arise in the business - the payment of royalty is not hit by the provisions of Section 92 and there is no reason to hold that the expenses should not be allowed u/s.37(1) of the Act, since the expenditure has been incurred by the assessee during the course of business and is having the nexus with the business of the assessee - in favour of assesee not allowing Royalty payment of Rs. 1,15,32,819/- being claimed as expenses U/s 40(a) for the year under consideration relates to A.Y. 2003-04 – assessee replied before the AO saying that the TDS could not be deposited within the prescribed time-limit and assessee deposited the same during the year relevant to A.Y. 2004 - Held that:- There is no finding in the relevant assessment year to what amount royalty payment pertains to which assessment year and whether TDS thereon was paid by the assessee during the relevant period i.e. A.Y. 2004-05. Accordingly, the issue is restored to file of AO with direction to decide the issue afresh in the light of decision.
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