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2020 (4) TMI 813 - AT - Income TaxDeduction u/s 80HHC - amount received from sale of scrap in the total turnover - HELD THAT:- While deciding identical issue in assessee’s own case for Assessment Years 1998-99 to 2000-01, the Tribunal has held that the income received from sale of scrap has to be included in the total turnover for computing the deduction under section 80HHC of the Act, however, subsequently the Hon'ble Supreme Court in case of CIT vs. Punjab Stainless Steel Industry [2014 (5) TMI 238 - SUPREME COURT] has held that the income from sale of scrap cannot be included in total turnover. Keeping in view the ratio laid down by the Hon’ble Supreme Court in the aforesaid decision, the Tribunal while deciding identical issue in assessee’s own case for Assessment Year 2001-02 has restored the issue to the Assessing Officer for considering afresh keeping in view the ratio laid down by the Hon’ble Supreme Court in the decision referred to above. Facts being identical, respectfully following the decision of the Tribunal in assessment year 2001-02, as referred to above, we restore the issue to the Assessing Officer for fresh adjudication with similar direction. Disallowance under section 14A - HELD THAT:- Investments on which the assessee has received dividend income were made long time back and not in the current year. Further, in the year under consideration, the assessee had sufficient interest free funds available with it. Therefore, no disallowance of interest expenditure can be made. It is further noticed, while deciding identical issue in assessee’s own case in Assessment Year 2001-02 (supra), the Tribunal after examining the availability of fund and all other aspects has deleted disallowance of interest expenditure and further, has restricted the disallowance of administrative expenditure to 1% of the exempt income earned. Keeping in view the facts of the present case as well as the decision of the Tribunal in Assessment Year 2001-02, we hold that learned Commissioner (Appeals) was justified in restricting the disallowance to ₹ 2 lacs. Disallowance of depreciation on share issue expenses incurred and capitalized in earlier assessment years - HELD THAT:- Tribunal has allowed assessee’s claim of depreciation. It is also relevantly observe, while deciding the appeals filed by the Revenue against the decision of the Tribunal in Assessment Years 1984-85 to 2000-01, the Hon’ble jurisdictional High Court has also upheld the decision of the Tribunal allowing assessee’s claim of depreciation. In view of the aforesaid factual and legal position, we do not find any reason to interfere with the decision of learned Commissioner (Appeals) on the issue. The ground raised is dismissed. Disallowance of bad debt - HELD THAT:- Only because the bad debts were not actually written off during the current year but were written off after March 2002, the Assessing Officer disallowed the same. Notably, while deciding identical issue in assessee’s own case in Assessment Years 2000-01 and 2001-02 the Tribunal following the decision of the Hon’ble Calcutta High Court in the case of Turner Morrison And Co. Ltd. vs. CIT [2000 (3) TMI 34 - CALCUTTA HIGH COURT] has allowed assessee’s claim of bad debt. Depreciation after reducing estimated Written Down Value (WDV) of block of assets transferred - HELD THAT:- On a perusal of the latest order of the Tribunal for Assessment Year 2001-02 it is noticed that the Tribunal after following its earlier decision has directed the Assessing Officer to allow deprecation after reducing the WDV of FPU assets from the block of assets. Facts being identical, respectfully following the decisions of the Tribunal in the preceding assessment years, we uphold the order of learned Commissioner (Appeals) on this issue. Ground raised dismissed. Disallowance made on account of closing stock of diesel, oil and coal - following the decision of Tribunal in Assessment Year 1995-96 has allowed assessee’s claim with regard to consumable items. It is further relevant to observe, the Hon'ble Jurisdictional High Court has also upheld the decision of the Tribunal in the preceding assessment years while deciding Revenue’s appeal. Deduction u/s 80IB - HELD THAT:- In assessee’s own case for Assessment Year 2001-02, the Tribunal has held that till the date of approval of amalgamation in October, 2001, the NIP at Bangalore was functioning independently without intervention of the assessee. Therefore, head office expenses of the assessee cannot be allocated to the Bangalore unit. The Tribunal has also observed that appropriate head office expenses of SBPI had already been allocated to the Bangalore Unit. Accordingly, the Tribunal upheld the order of learned Commissioner (Appeals) on this issue. Facts being identical, the aforesaid decision of co-ordinate bench squarely applies to the case. Therefore, we do not find any infirmity in the order of learned Commissioner (Appeals). Ground raised is dismissed. Interest liability on account of Drug Price Equalization Account (DPEA) has to be allowed on year to year basis - HELD THAT:- Issue relating to DPEA has already attained finality as the Hon'ble Supreme Court vide order dated 30.03.2011 has confirmed the DPEA demand raised by the Central Government while dismissing the petitions filed by the assessee. Thus, in effect, the DPEA demand has also crystallised. That being the case, the decision of learned Commissioner (Appeals) on the issue deserves to be upheld. Ground raised is dismissed. Claim of deduction under section 80HHC of the Act has to be allowed only on actual amount of advance licence benefit utilized and offered to tax. Accordingly, we restore the issue to the Assessing Officer for deciding afresh after due opportunity of being heard to the assessee. TP Adjustment - mark-up of 15% has been challenged - HELD THAT:- from the material available on record it is noticed that the employees of the Procurement Department were exclusively engaged in managing procurement activities of the assessee till 31st December, 2001. Provision of global procurement services to AEs started only with effect from 1st January, 2002. The aforesaid factual position has not been controverted by the Revenue through any supporting evidence brought on record. Further, the observation of learned Commissioner (Appeals) that the average time spent for global Sourcing support services by the eight employees was about 60% appears to be on the basis of evidences furnished by the assessee and has not been controverted through any cogent evidence brought on record by the department. It is also a fact on record that the mark-up of 15% applied by the Transfer Pricing Officer is purely on estimate and has no basis at all. On the contrary, the finding of learned Commissioner (Appeals) that the assessee has already earned mark-up of about 66% is on sound basis. In view of the aforesaid, we do not find any reason to interfere with the decision of learned Commissioner (Appeals) on this issue. Ground raised is dismissed.
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