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2019 (1) TMI 797 - AT - Income TaxDisallowance of excessive licence fee paid to M/s Uflex Ltd. - Held that:- Issue of increase of the license fee from ₹ 50 Lac per month to ₹ 2 Crore per month was examined by the ITAT in the immediately preceding year. The ITAT after considering the facts and submissions of both the parties deem it appropriate to allow the increase of license fee from 1st February, 2006. The order of ITAT is approved by Hon’ble High Court and Supreme Court. Therefore, from 1.4.2006 some licence fee i.e. @ ₹ 2 crore p.a. is to be allowed. So far as the contention of the learned DR with regard to furnishing of lease agreement is concerned, it would be relevant to the preceding year and not to the year under consideration because the license fee was increased by the lease agreement in the preceding year. After considering the agreement and entire material, the issue of increasing the license fee is considered by all the authorities in the preceding years therefore, in the immediately preceding year, we hold that the CIT(A) was fully justified in allowing the license fee @ ₹ 2 Crore per month in the year under consideration. The ground no. 1 of the Revenue appeal is accordingly rejected. Addition u/s 68 - Held that:- CIT(A) had allowed the opportunity to the AO and has decided the issue only after taking into consideration the remand report submitted by the AO. However, in the year under consideration, the CIT(A) has allowed no opportunity to the AO to examine the copy of account of the customer in subsequent years and no remand report is called for. In view of the above, we deem it appropriate to set aside the order of the CIT(A) on this point and restore the matter back to the file of the AO. We direct the assessee to produce the copy of account of above three customers for subsequent years before the AO thereafter the AO will examine whether the above three parties are the regular customers and the assessee has supplied the goods to those parties in the normal course of business and whether these advances have been adjusted against such supply of goods. If it is so than the observation of ITAT would be squarely applicable and no addition would be made for trade advances received by the assessee. Addition u/s 68 - Held that:- The director of AEPP stated that the net worth of AEPP is more than ₹ 100 crores and there is no cash deposit in the bank account of AEPP before making the payment for share application money to MEPL i.e., the assessee. The assessee has furnished the copy of audited balance sheet of AEPP, from which, we find that the share capital of AEPP including reserves and surplus is ₹ 103.64 crores and the investment in shares of various companies by AEPP is ₹ 95.32 crores. In our opinion, these facts clearly establish the creditworthiness of AEPP. In view of the above hold that the assessee has been able to discharge the burden of proving the share application money received by it from AEPP and therefore, learned CIT(A) rightly deleted the addition made by the Assessing Officer. Deduction u/s 80-IB on account of Self Cenvat Credit availment - Held that:- This issue is squarely covered in favour of the assessee by case of CIT Vs. Dharam Pal Prem Chand Ltd. – [2008 (11) TMI 231 - DELHI HIGH COURT] held that the assessee had on the payment of excise duty debited the profit and loss account and upon receipt of refund credited the profit and loss account. The net effect on the profit and loss was nil on account of the methodology followed by the assessee. Therefore, there was no reason to exclude the amount of refund of excise duty in arriving at “profit derived” for the purpose of claiming deduction under section 80-IB. Excise duty refund - a capital receipt in nature and not liable to tax - Held that:- This claim of the assessee has been accepted by the learned CIT(A) and the order of learned CIT(A) has been upheld by us by rejecting ground No.6 of the Revenue’s appeal. Thus, the assessee’s claim that it is revenue receipt is approved by the learned CIT(A) as well as by us. Therefore, in our opinion, learned CIT(A) was not justified in holding this same income to be capital receipt in the year under consideration. We reverse the finding of the learned CIT(A) on this point and allow ground No.7 of the Revenue’s appeal.
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