Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (1) TMI 1658 - ITAT CHENNAIAddition being the notional interest and advance given to sister concern - assessee explained before the Assessing Officer that these are strategic investments made by it for the immediate working capital needs of the sister concern - HELD THAT:- As in case SA BUILDERS LTD. [2006 (12) TMI 82 - SUPREME COURT] held that when the borrowed funds were used for the business of sister concern, then the interest can be allowed as deduction even though the borrowed company has not used the loan amount for its business. The utilization of funds by the sister concern would tantamount to utilization of borrowed funds by the assessee. Therefore, the Apex Court found that there cannot be any disallowance. Moreover, in this case, the assessee claims that sufficient interest free funds were available with it. In those circumstances, this Tribunal is of the considered opinion that the disallowance is not justified. - Decided in favour of assessee. Addition being the contribution towards gratuity scheme - HELD THAT:- It is not clear from the orders of the authorities below whether the gratuity fund was created by the assessee itself or it was contributed to the LIC gratuity fund. In the absence of any details of the nature of fund to which the contribution is said to be made, this Tribunal is of the considered opinion that the claim of the assessee cannot be adjudicated. In case the assessee has contributed to the LIC gratuity fund or any other similar fund and the contribution paid by the assessee has gone out of the hands irrecoverably, then the claim of the assessee needs to be allowed. In case the fund, which is said to be paid by the assessee, still remains with the assessee, then it cannot be said that the fund was irrecoverably gone out of the hands of the assessee. For deciding this issue, the nature of fund to which the assessee made contribution towards gratuity scheme needs to be examined. In the absence of any details before this Tribunal, the issue of contribution to gratuity scheme is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter and bring on record the nature of the gratuity fund to which the contribution is said to be made and thereafter decide the issue in accordance with law, after giving a reasonable opportunity to the assessee. TP adjustment on Deduction u/s 80-IA - counsel submitted that the profit of the eligible business shall be computed as if the power generated by captive power plant was transferred to manufacturing industry at the market value - HELD THAT:- On identical situation, the issue of deduction under Section 80-IA of the Act was elaborately considered by the Mumbai Bench of this Tribunal in M/s Reliance Industries Limited [2017 (4) TMI 1489 - ITAT MUMBAI] after elaborately considering the provisions of Electricity Act for the purpose of deduction under Section 80-IA of the Act, found that the price at which the Electricity Board sells the electricity to its consumer has to be taken as market price for the purpose of computing deduction under Section 80-IA - This Tribunal is unable to uphold the orders of the authorities below. Accordingly, the orders of the authorities below are set aside and the Assessing Officer is directed to adopt the arm's length price of electricity at 6.03 per unit. Determination of purchase of power from subsidiary company located in Karnataka - HELD THAT:- The assessee purchased power from subsidiary company, namely, KPR Sugar Mills at Karnataka. The purchase of power is not in dispute. Had the assessee purchased power from State Electricity Board or Karnataka State Electricity Board, it would have paid the price fixed by the respective Electricity Board. Merely because the assessee purchased the power from subsidiary company that cannot be a reason to fix the cost of generation and also the purchase price. We have to determine the purchase price in an estimated market rate at which the assessee would have purchased the power from open market. When the Tamil Nadu Electricity Board sells power at ₹ 6.03 per unit, this Tribunal is of the considered opinion that the assessee could not have paid in the open market at ₹ 7 per unit. Therefore, even though the assessee claims ₹ 7/- per unit, this Tribunal is of the considered opinion that the assessee ought to have purchased the power at ₹ 6.03 per unit from TNEB. There is no justification in fixing the arm's length price at ₹ 3.59 per unit. In view of the above, and the reason stated in the earlier part of the order for deduction under Section 80-IA of the Act, the orders of the lower authorities are modified and the Assessing Officer is directed to fix the purchase price of power from subsidiary company, namely, KPR Sugar Mills Ltd. at ₹ 6.30 per unit.
|