TMI Blog2015 (11) TMI 487X X X X Extracts X X X X X X X X Extracts X X X X ..... the year 2003-04 and ₹ 124/- per kg for the A.Y. 2004-05. The A.O. has applied price of ₹ 95 per kg in respect of non acidic gum base. There is no logic given by him by adopting these rates. Thus, rates adopted by the A.O. for all the four types of gum base, in our opinion, has rightly been held as incorrect by the First Appellate Authority. As there is no other material available on record, to challenge the transfer price declared by the assessee, which is on the basis of invoices from CAFOSA, we have no other alternative but to uphold this claim. In the result we dismiss this appeal by the Revenue. - Decided in favour of assessee. - I.T.A. No. 4794/Del/2012 - - - Dated:- 9-10-2015 - Shri G. C. Gupta, Vice President And ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ober 18, 2004, served on the company on October 19, 2004. The assessment was framed under section 143(3) of the Act vide order dated February 27, 2006 assessing the total income of the company at ₹ 9,98,42,060/- as against the returned income of ₹ 6,37,63,610/-. Out of the various disallowances made by assessing officer, specific disallowances made by the AO relevant for the issues under consideration are as under:- * Reducing the deduction under section 80IB of the Act from its claim of Rs.l1,08,78,645 to ₹ 7,59,29,232 on account of denying the deduction under section 80 IB of the Act in respect of profits of the Gum base unit. * Disallowance of payment of club entrance fee of ₹ 10 lakhs treating it as b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 3,00,000/- is not allowable as business expenditure and therefore, needs to be disallowed. The AO allowed the deduction under section 80-18 of the Act in respect of the profits derived. by the Gumbase unit considering the lower market value of the goods transferred to other units. As a result, overall deduction under section 80IB has been reduced to ₹ 8,10,18,150/- as against the original claim of Rs.l1,08,78,645/-. 3. Aggrieved, the assessee has come up in appeal before the First Appellate Authority. The First Appellate Authority granted pat relief. 4. On the issue of payment of Club entrance fees, the disallowance made by the A.O. to the extent of ₹ 3 lakhs was upheld. 5. On the issue of deduction u/s 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption u/s 80 IB of the Act, as other Unit-I is eligible only for exemption of 30% of the profit. He relied on the order of the A.O. and submitted that the Ld.CIT(A) has granted relief without proper appreciation of the facts. 10. The Ld.Counsel for the assessee on the other hand relied on the order of the First Appellate Authority. He further relied on the decision of the Kolkata Bench of the Tribunal in the case of Assam Carbon Products Ltd. vs. ACIT 100 TTJ 224 for the proposition that the market value can be determined, based on proforma invoice of imported goods. He further relied on the decisions in the case of JCIT vs.Cipla Ltd. (2 SOT 617) Mumbai Bench of the Tribunal and the judgement of the Hon ble Gujarat High Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used by the assessee in its products. It was submitted that even if certain manufacturers of gum base are found, the quality standards do not match with that of the assessee. On the ground that there are no comparative prices available in the market, the assessee adopted the transfer price of gum base at the imported cost. 13. The A.O. for verifying the market price of gum base, issued notices u/s 132(6) to M/s Perfetti Van Melle. In response, it was submitted that this company was dependent on imported gum base only. The AO carried out an internet search and found that a company by name M/s Sun Euro Base was having an international high quality gum base factory and that M/s Candico of Mohan Cooperative Industrial Estate, New Delhi was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 90 128855880 136014540 7158660 Acidic 106528 109 11611552 12144192 532640 Orion 77584 58 4499872 4499872 - Lotto 59533 121 7203493 7203493 - Total: 76,91,300 13.1. There are four types of gum base. In the case of orion and lotto the cost of production was adopted as the market price by the Assessing Officer. This is not tenable in view of decisions relied upon by the assessee in the case of JCIT vs.Cipla Ltd. ((supra) Mumbai Bench of the Tribunal and the judgement of the Hon ble Gujarat High Court in the case of Anil Starch Products Ltd. vs. CIT (s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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