9911796707
TMI Blog2012 (12) TMI 811X X X X Extracts X X X X X X X X Extracts X X X X ..... O had made an addition of Rs. 50,28,877/- representing difference in ALP and the assessee's price regarding the above export transactions. 4. Aggrieved by the order of the AO, the assessee had come in appeal before the CIT(A) and made the following submissions:- "i) The action of the TPO denied various adjustments made by the appellant to domestic prices to make the prices comparable which indicates incorrect application of facts and law. ii) The TPO has ignored DEPB incentives earned by the company and failed to add the same to the export price while comparing the export prices to domestic prices under CUP method adopted by him. The total fixed cost include regional fixed cost and advertisement expenditure for domestic sales which comprise to the tune of 52% of the total which pertained only for local business and the same are not relatable to the export. Thus, the TPO had made wrong comparison of the domestic sale price without all the relevant adjustments and worked out difference of Rs. 50,28,877 which is against the norms and rules of transfer pricing. iii) The company resorted to marginal production basis for pricing of exports in a highly competitive market and the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition of Rs. 50,28,877 made by the AO on this issue, and dismiss the ground taken by the appellant." 7. Aggrieved by the order of the CIT(A), the assessee is in appeal before us on this issue and the learned counsel for the assessee Shri Ratnakar submitted as follows: i) that it is not possible for the assessee company to make a profit of 1/3rd of sale price as its margin. ii) the assessee has shown that it was able to utilize only 36.42% of its capacity in the domestic market and had surplus unutilized capacity of about 63.58%. Since there was no possibility to increase domestic sales, the assessee exported lubricant oil to AEs at a competitive price in the international market. Certain adjustments have to be made to the sale price of domestic sales and certain deductions & additions have to be made for comparison with export sales. iii) The TPO has not added 17% DEPB available on exports and has not reduced fixed cost of Rs. 10.04 per Litre. It is found that in the subsequent year the TPO accepted the DEPB benefit as deduction while bench marking arm length price. Since the domestic sales are not possible due to saturation in the domestic market, the export sales were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions, only a proper debt of revenue nature which had been taken into account in computing the income of the assessee in that previous year or some earlier previous year can be allowed as bad debt. The AO also noted that the assessee was neither a money lender nor the amount written off was a trading liability. In view of this, he considered the amount claimed by the assessee as a capital loss. Aggrieved, the assessee carried the matter in appeal before the CIT(A). 11. On appeal, the CIT(A) confirmed the order of the Assessing Officer relying on the decision of Grindwel Norton Ltd. Vs. DCIT, 91 ITD 412 (Mum.)(TM) and Hashimara Industries Vs. CIT, 231 ITR 842. Aggrieved by the order of the CIT(A), the assessee is in appeal before us. 12. After hearing the arguments of both the parties and perusing the record, it is observed that from the order of the Assessing Officer and CIT(A) it is not clear as to the purpose of loan and the line of the business subsidiary and if the subsidiary is also in the same line of business or the advance has been made in the course of business, the amount written off will be allowable either as bad debts or business loss. Loan to subsidiary has been all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presumption that at least 1/3 of the moneys employed in the floriculture division should be treated as out of loans and estimated notional interest at 15% should be disallowed, is only imaginary and without any factual foundation; iv) all expenses incurred on the floriculture division have been allocated to it and its computation was separately filed before the AO; v) merely because there were borrowed funds in the balance sheet, it cannot be said that a part of the borrowed funds must necessarily be on the floriculture division. vi) no part of the borrowings are used for the floriculture division; The learned counsel for the assessee contended that the CIT(A) arbitrarily confirmed the proportionate disallowance of interest at Rs. 95.0 lakh on estimate. He further submitted that the various cases relied upon by the CIT(A) were where the borrowed funds as a fact were used and the question was estimate of such funds for the said purpose whereas in the case of the assessee, there were no borrowed funds and consequently the cases relied upon by the CIT(A) are inapplicable to the case of the assessee. 19. We have heard both the parties and perused the record as well as gone throug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO restricted the deduction to Rs. 13.07 lakhs and disallowed the balance amount. On appeal, the CIT(A) confirmed the order of the AO. Aggrieved the assessee is in appeal before us. 23. Before us, it was submitted that it is settled position that UTI is also treated as a company. It also pays dividend distribution tax and any dividend declared by it on its mutual funds is eligible for deduction u/s 80M of the Act. It is treated as inter corporate dividend. It was further submitted that the learned CIT(A) at para 11.2 has erroneously denied the assessee the benefit of dividend declared by the UTI while computing the deduction u/s 80M of the Act. 24. We have heard the arguments of both the parties and perused the record as well as gone through the orders of the authorities below. The Assessing Officer and CIT(A) restricted the deduction u/s 80M to the inter-corporate dividend received by the assessee. It is the contention of the assessee that the balance non-corporate dividend should also be considered as deemed dividend for the purpose of deduction u/s 80M. Since this aspect has not been adjudicated by either by the Assessing Officer or by CIT(A), we restore this issue to the fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates have already been filed with the department. He further submitted that the TDS certificates for the taxes deducted by UTI for Rs. 21,08,971/- were filed along with the return for assessment year 2004-05 because the TDS certificates were belatedly sent by UTI. It is submitted that the original certificate of TDS for the sum of Rs. 21,08,971 was filed vide letter dt. 17/03/2005 for assessment year 2004-05 and the assessee requested that this amount may be given credit for assessment year 2003-04 as the interest income of Rs. 1,00,42,718/- received from UTI was taxed in the assessment year 2003-04. This was not done. The learned counsel for the assessee as regards TDS for Rs. 4,12,795/- the original certificates from various banks have been filed on 10th December, 2003 as these were also received belatedly. 31. After hearing both the parties, we have admitted the additional ground of appeal of the assessee and considered the submissions of the learned counsel for the assessee. The TDS certificates have been filed in original and full particulars have been furnished, credit for TDS has not been given. Hence, we direct the Assessing Officer to give TDS for sum of Rs. 21,08,971/- ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
