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M/s Ess Dee Aluminum Ltd And Others Versus Asstt. Commissioner of Income Tax And Others

2015 (6) TMI 249 - ITAT AHMEDABAD

Eligibility for deduction under section 80IB in respect of Daman unit as well as Goa unit - income derived from FDR Interest - Held that:- The assessee has filed certain papers to prove nexus of borrowed funds and FDR interest income. Since these documents were not filed before the AO and the CIT(A), we deem it proper to admit these documents since it goes to the root of the issue, and therefore, this issue is restored to the file of the AO to decide the same in accordance with law, after consid .....

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ng that the order of the Tribunal is set aside or reversed by Hon’ble High Court or Hon’ble Apex Court, we do not find any infirmity in the order of the CIT(A), the same is hereby confirmed and the ground nos.1 and 2 of the Revenue are rejected. - Decided against revenue.

Eligibility for exchange rate difference - Held that:- Difference on account of exchange rate fluctuation is liable to be allowed u/s.80IB. The exchange rate fluctuation arises out of and is directly related to the s .....

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question was treated as expenditure related to the manufacturing activity. Therefore, we do not find any good reason to interfere with the order of the CIT(A) on this issue, which is hereby confirmed - Decided against revenue.

Addition of under valuation of scrap sale - CIT(A) deleted addition - Held that:- Excise Department has not adjudicated the case. Therefore, following the order of the Co-ordinate Bench of Tribunal ACIT Vs. Santro Tiles Ltd. [2015 (6) TMI 272 - ITAT AHMEDABAD] .....

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the assessee and the Revenue, and are directed against the order of the Commissioner of Income-tax (Appeals), Valsad dated 30.6.2011 pertaining to the Asstt.Year 2008-09. Both these appeals were taken up together for hearing, and being disposed of by way of this consolidated order for the sake of convenience. 2. First take up the assessee s appeal in ITA No.2032/Ahd/2011. The assessee has raised the following grounds of appeal. "1. On the facts and in the circumstances of the case, the ld. .....

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150/- and book profit of ₹ 68,60,76,279/- under section 115JB, and the assessee revised its return declaring total income of ₹ 1,31,88,670/- and the book profit of ₹ 68,60,76,279/-. This return was also again revised on 26.10.2009 declaring total income of ₹ 3,56,10,220/- and book profit at ₹ 68,60,76,279/-. The case was, thereafter, picked up for scrutiny assessment, and the assessment under section 143(3) of the Act was framed by the order dated 8.10.2010. While f .....

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he claim of deduction under section 80IB following the appellate orders pertaining to the assessment years 2005-06, 2006-07 and 2007-08. However, the learned CIT(A) confirmed the action of the AO to exclude the FDR interest from the eligible profit for claiming deduction under section 80IB. The learned CIT(A) also confirmed the exclusion of interest on staff loan for claiming deduction under section 80IB of the Act. However, in respect of difference in foreign exchange, the ld.CIT(A) directed th .....

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his ground. Accordingly, this part of the ground is dismissed as not pressed. 6. Only effective ground raised in appeal by the assessee is against the confirmation of the action of the AO by the ld.CIT(A) for excluding the FDR interest amounting to ₹ 1,62,09,403/- in respect of Daman Unit and ₹ 51,49,279/- in respect of Goa Unit, as not eligible for deduction under section 80IB of the Act. 7. The learned counsel for the assessee submitted that the FDRs are kept for obtaining letter o .....

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rest ought to have been allowed. 8. The ld. CIT-DR submitted that similar issue in the Asstt.Years 2006-07 and 2007-08 has been decided in favour of the Revenue by the Tribunal in ITA No.1751 and 1752/Ahd/2010 and Anr., dated 8.11.2013, and therefore, the present appeal of the assessee, for the Asstt.Year 2008-09 is also liable to be dismissed. 9. We have heard submissions of both the parties and perused the material available on record. The assessee has filed certain papers to prove nexus of bo .....

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the fact that in the appeal of the assessee in the Asstt.Year 2006-07 and 2007-08, similar issue was raised, and the Tribunal vide order in ITA No.1751 and 1752/Ahd/2010 and Anr., dated 8.11.2013 decided the issue in favour of the Revenue, as in that case, the assessee had not placed evidences to prove its claim, as being done in the present case. Therefore, to decide the quantum of interest to be excluded, the evidences so filed, needs verification at the end of the Assessing Officer. 11. Now .....

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1. 2) On the facts and circumstances of the case and in law, the learned CIT(A) has erred in holding that the assessee company is the expansion of existing old business carried out in the name of firm viz. M/s. Ess Dee Aluminium, without considering the fact that assessee company is new undertaking established with the investment of crores of rupees and registered with the various government departments as new unit? 3) On the facts and circumstances of the case and in law, the learned CIT(A) has .....

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tune of ₹ 2,11,45,659/-. 6) It is, therefore, prayed that the order of the learned CIT(A) be set aside and that the order of the AO be restored. 7) The appellant craves leave to add, alter or amend any grounds of appeal." 13. The ground nos.1 and 2 of the Revenue are against the order of the CIT(A) in holding that the assessee is eligible for deduction under section 80IB amounting to ₹ 56,46,56,78/-. 14. The learned DR submitted that the ld.CIT(A) was not justified in deleting .....

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2005-06, 2006-07 and 2007- 2008 had decided the issue in favour of the assessee, and the grounds raised by the Revenue was dismissed. 15. We have considered rival submissions and perused the material available on record. We find that the ld.CIT(A) has decided the issue following earlier year s order by observing as under: "For Assessment years 2005-06, 2006-07 and 2007-08, this issue was decided in favour of the appellant vide appellate orders in Appeal No. (i) CIT(A)/VLS/118/09-10 dated 2 .....

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ribunal has decided the issue in favour of the assessee by observing as under: "9. We have heard rival submissions and perused the orders of the lower authorities and material available on record. In the instant case, the deduction claimed under section 80IB was denied by the AO on the ground that the assessee commenced production after 31.3.2004. The claim of the assessee is that it commenced production on 3.3.2004 was mainly not accepted by the AO on the ground that the premises which was .....

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iance on the decision of Hon ble Supreme Court in the case of Kishanchand Chellaram Vs. CIT, 125 ITR 713. Further, the learned CIT(A) found that Shri Khemchand Dhingra who was the owner of the premises and who gave the premises to the assessee, as per the claim of the assessee, was not examined by the AO. The claim of the assessee was supported by the MOU signed by the owner of the premises. The CIT(A) after detailed consideration of all the different aspects of the facts available on record fou .....

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ire facts in details, and therefore, we do not find any good reason to interfere with the order of the learned CIT(A), which is confirmed, and thus common grounds raised in the appeals of the Revenue for all the years under consideration are dismissed." 17. Since the deduction has been allowed in the first year of operation i.e. in the Asstt.Year 2005-06, therefore, respectfully following the decision of the Coordinate Bench of the Tribunal cited supra, more so, when no material is placed o .....

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is not justified in deleting the disallowance. He submitted that the ld.CIT(A) ought to have confirmed the order of the AO. The learned DR submitted that the ld.CIT(A) failed to take note of fact that in the case of Liberty India Vs. CIT, 317 ITR 218 (SC), the Hon ble Supreme Court held that duty draw-back is not profit derived from the eligible business under section 80IB, but they belong to the category of ancillary profits of such undertaking. 20. On the contrary, the learned counsel for the .....

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ue in para 6.3(c) as under: "(c) Difference on account of exchange rate fluctuation is liable to be allowed u/s.80IB. The exchange rate fluctuation arises out of and is directly related to the sale transaction involving the export of goods of the industrial undertaking. Respectfully following the decision of the Hon be Bombay High Court I the case of CIT Vs. Rachna Udyog (Bom) ITA No.2394 of 2009 dated 13.01.2010. I direct the Assessing Officer to include the difference in foreign exchange .....

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e deletion of addition made on account of disallowance of deduction on the sundry balance written back of ₹ 1,19,678/-. 24. The ld. DR submitted that ld.CIT(A) is not justified in deleting the disallowance. He supported the order of the AO. On the contrary, the learned counsel for the assessee supported the order of the CIT(A). 25. We have considered rival submissions and perused the material available on record. We find that the CIT(A) deleted the disallowance by observing in para 6.3(d) .....

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ated as expenditure related to the manufacturing activity. Therefore, we do not find any good reason to interfere with the order of the CIT(A) on this issue, which is hereby confirmed and the ground no.4 raised by the Revenue is rejected. 27. The ground no.5 of the appeal of the Revenue is against deletion of addition of under valuation of scrap sale to the tune of ₹ 2,11,45,659/-. 28. The learned CIT-DR submitted that the AO made addition on the basis of show cause notice issued by the Ex .....

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issued. The AO has not collected any evidence to make the impugned addition. 29. We have considered rival submissions and perused the material available on record. We find that the Co-ordinate Bench of the Tribunal in the case of ACIT Vs. Santro Tiles Ltd. (supra) while considering the similar issue, set aside the issue back to the file of the CIT(A) with direction to decide the same as per fact and law in the light of final outcome in the excise proceedings. The relevant portion of the above or .....

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e the issues raised by Directorate General of Central Excise Intelligence (herein after referred as DGCEI ) was not finally adjudicated. As such, figures adopted by Assessing Officer also be subjected to consequential modification. The DGCEI had observed that raw materials were purchased without bills or at reduced rates and freight and transport bills were obtained at a lower rate. In this background, learned Authorized Representative submitted that addition on account of suppression of sales h .....

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concealment to the tune of ₹ 43,88,57,612/- was worked out on the basis of Annexures D-1, D-1, D-3 and D-4 to the report by the DGCEI, Ahmedabad in four assessment years. Statement recorded by DGCEI, Ahmedabad, dated 06.09.2008 Shri Prakashbhai Dahyabhai Patel, Director of M/s. Santro Tiles Limited has stated that due to market compulsion and general trade practice, they had been suppressing MRP and paying less central Excise Duty. He further stated that they have revised their MRPs of al .....

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counted sale price which was collected by company in cash from various dealers/distributors admitted by the Director as well company has not shown full amount of sales in regular books of account. The sale price worth ₹ 7,94,25,558/- in A.Y. 2005-06, ₹ 11,04,17,079/- in A.Y. 2006-07, ₹ 10,21,40,223 in A.Y. 2007-08 have been under stated in trading account. This has resulted into escaping of income to the extent of ₹ 7,94,25,558/-, ₹ 11,04,17,079/-, ₹ 10,21,40, .....

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