2023 (3) TMI 714 - AT - Income Tax

TP Adjustment - Addition on account of purchase of MS Ingots - HELD THAT:- As we find no infirmity in the order of Ld. CIT(Appeals) in the instant set of facts. CIT(Appeals) has categorically observed that there is a qualitative difference between the MS ingots sold by the AE to the assessee as compared to those sold by the AE to third parties. Assessee has been able to produce substantial evidence to prove that the difference in prices is due to the quality of products sold.

TPO has accepted the contention of the assessee for the months of December 2013, February 2014 and March 2014 and the TPO has not made any addition, and TPO has made addition only for the month of January 2014 and that too only on the basis that during the month of January 2014 sales made by the AE to third parties were significantly higher as compared to other months, and therefore, there is in our view no rationale in making the adjustment only for the month of January 2014. Accordingly, we find no infirmity in the order of CIT(Appeals),who after detailed discussion in the order, has deleted the adjustment made by the TPO on this issue.

Depreciation on expenses incurred for increase in share capital - assessee admitted that such expenditure was treated as part of fixed assets and depreciation has been claimed of such expenditure, since expenditure is not allowed as revenue expenditure on increase in authorized capital, the assessee cannot claim such expenditure by capitalising the same and claiming depreciation thereon - HELD THAT:- The assessee is in appeal before us against the aforesaid addition confirmed by Ld. CIT(Appeals). In the case of International Computers Indian Manufacture Ltd. [2015 (3) TMI 502 - BOMBAY HIGH COURT] the Bombay High Court held that Depreciation is not allowable on capitalised expenditure on issue of shares; such expenditure would fall within provision of section 35D. Similar view was held in the cases of Autolite India Ltd Vs CIT [2003 (7) TMI 53 - RAJASTHAN HIGH COURT] and CIT Vs Mahindra Ugine and Steel Co Ltd [2000 (2) TMI 26 - BOMBAY HIGH COURT] where the Courts have denied depreciation on such expenses which were capitalised. Accordingly, we find no infirmity in the order of Ld. CIT(Appeals) on this issue so as to call for any interference. Ground number 1 of the assessee’s appeal is dismissed.

Addition on account of interest on the basis of Form 26AS offered to tax in subsequent year - HELD THAT:- We are in agreement with the view of the Ld. CIT(Appeals) that since the assessee follows mercantile system of accounting, this interest income should have been offered to tax in assessment year 2014-15 as well. However, in the interest of justice, once this interest income is subject to tax in assessment year 2014-15, then consequential relief may be allowed to the assessee by the Revenue if the said interest income has been offered to tax by the assessee in assessment year 2015-16, after carrying out the necessary verifications.