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Premson And Rallison Electricals Ltd Versus ACIT, Range 15, New Delhi

2015 (6) TMI 444 - ITAT DELHI

Computation of relief u/s 80 IC - Held that:- When Baddi Unit had transferred the goods to other units on cost basis, and when separate accounts are maintained by Baddi Unit and profits arrived at, the question of coming to a conclusion that this profit so arrived at contains trading profit is against the facts of the case. The separate books maintained have not been rejected. Under these circumstances we agree with the contentions of the Ld. Counsel for the assessee and allow the grounds raised .....

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pertaining to the A.Y. 2008-09. 2. Facts in brief:- The assessee is a company and is engaged in manufacture and trading of electrical goods (geysers, fans etc.), cables, metals, cloth and appliances. The assessee has s a manufacturing unit at Manpura (Baddi) Himachal Pradesh and branches at Ghaziabad and Patna. The head office is in New Delhi. The assessee claimed deduction u/s 80 IC on the profits and gains earned from its business income of its Manpura Unit. The issue before us is the computa .....

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,15,009/- Manpura Ghaziabad Rs.18,67,305/- Manpura Rs.8,60,325/- Delhi Patna NIL Thus there is stock transfer from Manpura unit to Ghaziabad branch worth ₹ 18,67,305/- and to head office Delhi worth ₹ 43,73,839/-. From the Delhi head office stock has been transferred to Manpura worth ₹ 18,15,009/-. Similarly, the Delhi office has received stock from Manpura as well as Ghaziabad. The Ghaziabad unit has also received stock from Manpura and transferred stock to Delhi. Besides, per .....

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ther at page 9 the Ld.CIT(A) has concluded as follows. "In the case of the assessee the facts clearly reveals that there is close interlinking of the units located at Manpura, which is admissible for deduction u/s 80IC, the branch at Ghaziabad and the head office at Delhi. There is frequent and substantial transfer of goods manufactured at Manpura to the other units. Similarly, there is stock transfer to Manpura from the Delhi HO. Similar goods i.e. geysers and fans which are manufactured a .....

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ted. The decision of the AO of reducing loss in respect of Ghaziabad unit i.e. ₹ 1,46,591/- from the net profit of Manpura unit for computation of deduction u/s 80IC is thus confirmed." 5. Aggrieved the assessee is in appeal before us on the following grounds. "1. That on the facts and circumstances of the case and on the position of law, the ld.AO has erred in assessing the deduction claimed u/s 80IC of the Act by the assessee. The order passed is in an arbitrary manner, without .....

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y relates to Ghaziabad. (ii) The ld.AO is not justified in disallowing ₹ 632434/- on estimated basis by taking 1% profits on turnover of ₹ 63243409/- of Baddi unit, considering them as profits derived from head office and branches on account of getting services, which are taken on absurd and hypothetical assumptions. 3. That the appellant reserves the right to create, leave, add, modify and amend any ground of appeal before or at the time of hearing the case." 6. The Ld.Counsel .....

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osed therein cannot be interfered with by way of estimation etc. (v) The unit at Baddi had transferred the goods in question at cost. This fact that Baddi Unit had transferred the goods at cost was brought to the notice of the AO vide letter dt. 8.11.2010. Similar submissions were made vide submissions dt. 1.12.2011 before the Ld.CIT(A). The Ld.CIT(A) at para 5.7 page 7 reiterated the same. Under these circumstances there cannot be a hypothetical deduction of 1% of the profits for Baddi Units in .....

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es not consist of goods manufactured by Manpura Unit is factually wrong. He argued that good produced by Manpura Unit are transferred to head office and branches and they are in turn sold at a profit and hence the entire profits of Manpura Unit should not be attributable to manufacturing activity. He submitted that the profits are partly derived from trading account and under those circumstances the First Appellate Authority rightly confirmed the order of the AO. 8. After hearing rival contentio .....

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