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2017 (9) TMI 1408 - AT - Income TaxDeduction available u/s 80IC - according to AO transfer from one unit to another unit should have been done at market value - Held that:- The component transfer to panel unit are customer specific product and of different strength and specification therefore, they cannot be compared with the similar components company sold in the open market. The AO had made the adjustment due to the market value of the inter unit transfer but could not discharge the onus which in our opinion lie on him to ascertain the market value in respect of the component which were transferred by the assessee from one unit to the other unit. The onus lies on the AO to bring the comparative instance if the AO was not able to bring any comparative instance, he should adopted the market value on the basis of the value as determined by the Government of India, Excise Department i.e cost plus 10%. Ignoring this value in our opinion, will tantamount to that provision of section 80IA(a) of the Act has not been correctly applied by the AO and, therefore on the basis itself ignoring the alternate contentions of the assessee that if any deduction has to be reduced u/s 80IC in respect of Panel Division that has to be reduced only by ₹ 28,405/-. We allow Ground No.1 taken by the assessee and set aside the order of the Ld.CIT(A) confirming the reduction of the deduction claimed u/s 80IC of the Act by ₹ 10,28,461/-. Thus, Ground No.1 and 1.2 taken by the assessee are allowed while Ground No.1 taken by the revenue stands dismissed. Claim of the deduction u/s 10B - Held that:- Direct the AO to allow the deduction u/s 10B in respect of the disallowance made u/s 40A Profit of the eligible unit for deduction u/s 10B computation - corporate expenses allocation - GP of eligible unit - Held that:- We noted that in the case of the assessee, the profits of the eligible unit were not higher in comparison with the other business. GP rate of eligible unit was 25.20% as compared to the GP rate of other units in aggregate at 29.97%. While the net profit ratio of the eligible unit was 5.87% as compared to the net profit of other units at 15.09%. We noted that in the case of Catvision Products Ltd. [2003 (1) TMI 265 - ITAT DELHI-C]. This Tribunal has held that only the direct expenditure has to be considered while working out the profit for the purpose of deduction u/s 80IC. Mumbai Bench of the ITAT also in the matter of DCW Ltd. [2010 (1) TMI 939 - ITAT, Mumbai] held for the purpose of section 80IA that indirect expenses cannot be reckoned in the computation of determining the profits of the eligible undertaking. Ld. DR even though vehemently referred to the order of the AO but could not brought to our knowledge any contrary decision. We, therefore, confirmed the order of Ld. CIT(A) in deleting the reduction made by the AO in the deduction u/s 10B of the Act Addition u/s 14A - AO without recording any satisfaction applied Rule 8D - Held that:- This is settled law that no disallowance u/s 14A r.w. Rule 8D can be made without recording the satisfaction by the AO u/s 14A(ii) that the claim made by the assessee is not correct having regard to the accounts of the assessee. Even we noted that in this case, the assessee had capital and reserve much more than the investment. The capital and reserve as on 31.03.2007 were ₹ 1,17,79,62,711/- while the investments were only ₹ 37,15,000/-. Therefore, in view of the decision of the Jurisdictional High Court in the case of TAIKISHA Engineering India Ltd. [2014 (12) TMI 482 - DELHI HIGH COURT ], no disallowance can be made Disallowance of the foreign travel expenses - expenses incurred for personal purposes - Held that:- It is not denied that the assessee has paid fringe benefit tax on these expenses. Since fringe benefit tax has been paid, therefore, no disallowance can be made on account of the personal expenses. Our aforesaid view is duly supported by the decision in the case of Aero Enterprises [2013 (11) TMI 479 - ITAT DELHI]. No contrary decision has been brought to our knowledge even though the provision of section 115W is clear in this regard. We, therefore, delete the disallowance Claim of depreciation on goodwill - Held that:- The issue involved is duly covered in favour of the assessee by the decision of this Tribunal in the case of Controls & Switchgear Contractors Ltd [2016 (6) TMI 1244 - ITAT DELHI] as held Type Test Certification Fees’ and ‘Customer Approval Fees’ are certainly intangible assets being business claims, business information, contracts and know-how etc., which were intangible and without which the assessee would have no business to start with. Thus, rights of the similar nature specified in section 32(1)(ii) of the Act Claim of depreciation - Held that:- The assessee in the original computation of income reduced a sum of ₹ 6,68,071/- out of the claim of depreciation in respect of building for which the assessee was declaring income under the had income from “house property” but we noted during the impugned assessment year, after the merger, the assessee was not earning any rent and the building being used by the assessee himself, therefore, the assessee filed the revised computation of income and claimed the depreciation on the building amounting to ₹ 6,68,071/-. The assessee has also explained the reasons for the short claim of the depreciation to the AO since the building was not more used for rental purpose. We, therefore, set aside the order of Ld. CIT(A) on this issue and allow the depreciation to the assessee
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