Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (7) TMI 1582 - AT - Income TaxAddition of difference of profit between the value of bagasse transferred to and power transferred from subsidiary company - bagasse, a by-product arising in the manufacture of sugar, supplied by the assessee to its subsidiary company TEL in exchange for the power and steam received by the assessee from the subsidiary company - AO considered the market value of the bagassee supplied by the assessee to its subsidiary company and against the said value of bagassee, considered the value of power received by the assessee from the subsidiary company and arrived at the difference - HELD THAT:- As decided in assessee's own case [2013 (1) TMI 1007 - ITAT CHENNAI]we are inclined to decide the issue in favour of the assessee. This ground raised by the Revenue is dismissed. Addition of sale of Molasses - Addition in respect of the sale of molasses by the assessee by comparing the price at which another company, Trichy Distilleries and Chemicals Limited has purchased the molasses - CIT(A) deleted the addition on the reason that the price depends upon quality or grade as well as on the demand and supply position. The AO has taken average rate of ₹ 1,680/- per MT, in respect of one customer - HELD THAT:- addition made by the AO cannot be sustained and we find no reason to interfere with the order of Ld.CIT(A). The price of the molasses is depending on the quality of the same. The prices are to be compared with same quality of molasses.The AO’s comparison of price is not proper. The Ld.CIT(A) considered the quality of molasses and various components included in it to arrive at a proper comparison. The Departmental Representative was not able to controvert the findings of CIT(A). Hence, the same is confirmed and this ground of Revenue is rejected. Deemed dividend u/s.2(22)(e) - HELD THAT:- When there is a running account between the parties on account of business transactions and there is no obligation of repayment by the parties, which is in nature of trade advance, to give effect to commercial transaction does fall within the meaning of sec.2(22)(e) of the Act. Hence, in our opinion deletion of addition by the CIT(A) is justified and the order of Ld.CIT(A) is confirmed on this issue. This ground is rejected. Addition made on account of export sales to Agrocorp - CIT-A deleted the addition - HELD THAT:- The details of document produced by the assessee before the authorities show that the assessee has properly accounted the export sales at ₹ 40.94 crores, which was duly reflected in the sales reported in the P & L A/c for the year ended on 31.03.2009. Further, the assessee has produced before the Ld.CIT(A), the party-wise and group-wise export of sale of Sugar to M/s.Agrocorp, which is at ₹ 40.94 crores. Ld.D.R is not able to controvert the findings of the Ld.CIT(A)’s recording in para 11.3 of CIT(A)’s order. Hence, when the books of accounts are duly audited and there is no adverse findings regarding the recording of the export sales and documents relating to the export show the same export figure, there is no question of doubting the same. Hence, we do not find any infirmity in the order of Ld.CIT(A) and the same is confirmed. Addition u/s.14A r.w.Rules 8D - main plea of the ld.A.R is that investment is a sister concern and associated companies and interest pertained to borrowings used for earning exempt income from the investments to be considered - HELD THAT:- Interest on borrowing which are made for specific purpose of business cannot be considered for the purpose of Rule 8D of the Income Tax Rules. Further, investments in sister concerns or subsidiaries with which the assessee is having business transactions, that investments cannot be considered for the purpose of applicability of Rule-8D. See Sun TV Networks [2016 (2) TMI 928 - ITAT CHENNAI] AO has to consider the assessee’s own fund i.e. capital and reserves as available for investment which yields exempted income and thereafter he shall apply the Formula in Rule 8D and also exclude investments in subsidiaries as held by the above order of Co-ordinate Bench. With this observation, we remit the issue to the file of AO for fresh consideration. Hence, this ground is allowed for statistical purposes.
|