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2019 (4) TMI 566 - AT - Income TaxDeduction u/s 80IC - higher rate of profit declared by the assessee-company in its Dehradun Unit - THAT:- The reasons for the higher profit margin earned by the Dehradun Unit were also explained by the assessee by showing as to how the cost of production of the same Unit was lower due to various incentives and the availability of raw material at cheaper rates in the local market. Keeping in view all these relevant aspects highlighted for the assessee as well as the other reasons given by the CIT(Appeals) in his impugned order, we are of the view that there was no justifiable reasons for the Assessing Officer to doubt or dispute the higher rate of profit declared by the assessee-company in its Dehradun Unit and to estimate the same at a lower rate thereby restricting the claim of the assessee for deduction under section 80IC. In that view of the matter, we uphold the impugned order of the CIT(Appeals) deleting the disallowance made by the AO on account of assessee’s claim for deduction under section 80IC. Addition u/s 80IA(8) - sale price charged by the assessee to the other group concern was alleged by the Assessing Officer as understated by the assessee on the basis of M.R.P. of the relevant products - understatement of sales price by the assessee on the basis of MRP of the relevant products - HELD THAT:- It is difficult to comprehend as to how the sale price could be lower when profitability shown by the assessee was higher. Moreover, the sale price charged by the assessee to its associate concern M/s. Shree Baidyanath Ayurved Bhawan Pvt. Limited was the subject matter of Transfer Pricing Exercise in A.Y. 2013-14 and as already noted by us, the same was accepted by the Transfer Pricing Officer as at Arm’s Length after carrying out the Transfer Pricing Analysis based on comparable cases. It was also pertinent to note here that the sale price charged by the assessee to M/s. Shree Baidyanath Ayurved Bhawan Pvt. Limited on the same basis was accepted by the Assessing Officer in the assessments for all the earlier years and there was no cogent material brought on record by the Assessing Officer to dispute the price mechanism adopted by the assessee in the year under consideration. Having regard to all these facts and circumstances of the case, we are of the view that the addition made by the Assessing Officer by alleging the understatement of sales price by the assessee on the basis of MRP of the relevant products was not sustainable and the CIT(Appeals) was fully justified in deleting the same. Disallowance of advertisement expenditure - entire advertisement expenses incurred during the year under consideration were claimed by the assessee in Kolkata Unit - HELD THAT:- Entire advertisement expenses were incurred by the assessee in respect of its own products, which were manufactured in Kolkata Unit whereas no advertisement expenses were required to be incurred in respect of Dehradun Unit where the entire sales was made to the sister concern M/s. Shree Baidyanath Ayurved Bhawan Pvt. Limited of their own products. It clearly shows that the entire expenditure incurred by the assessee on advertisement was related to marketing of its own products sold under its own brand and since such products were manufactured solely in Kolkata Unit, we find ourselves in agreement with the ld. CIT(Appeals) that the disallowance made by the Assessing Officer out of advertisement expenses was not justified especially when the genuineness of the said expenses was never doubted or disputed by the Assessing Officer. We, therefore, uphold the impugned order of the ld. CIT(Appeals) deleting the disallowance - Revenue appeal dismissed.
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