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Asstt. Commissioner of Income Tax, Circle-4, Ahmedabad Versus GHCL Limited and Vica-Versa

2015 (12) TMI 842 - ITAT AHMEDABAD

Exclusion of excise duty and sales tax in the total turnover while computing deduction u/s 80HHC - Held that:- This issue is now covered, in favour of the assessee, by Hon’ble Supreme Court’s judgement in the case of CIT vs. Laxmi Machine Works (2007 (4) TMI 202 - SUPREME Court). - Decided against revenue.

Proportionate allocation of expenses - CIT(A) directing that apart from indirect expense already considered by the assessee for proportionate allocation, only auditor’s expenses nee .....

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ld that:- As learned CIT(A) has rightly held, the provisions of section 43A of the Act come into play only when the asset in question is acquired from outside India whereas, as is the undisputed position on the facts of this case, the related plant and machinery was “indigenous”. There is a categorical finding to that effect by the Assessing Officer himself. As such, the provisions of section 43A of the Act do not come into play at all. Learned Departmental Representative could not point out any .....

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HMEDABAD]- Decided against revenue. - ITA Nos.830 & 2508/Ahd/2008 - Dated:- 30-9-2015 - Pramod Kumar AM and Kul Bharat JM For The Revenue : R.I. Patel For The Assessee : S.N. Soparkar ORDER Per Pramod Kumar AM: 1. These three appeals pertain to the same assessee, involve some common issues and were heard together. As a matter of convenience, therefore, all the three appeals are being disposed of by this consolidated order 2. We will first take up ITA No.830/Ahd/2008. This appeal is directed agai .....

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of CIT vs. Laxmi Machine Works (290 ITR 667). Grievance of the Assessing Officer, therefore, lacks legally sustainable merits. 5. Ground no.1 is thus dismissed. 6. In the second ground of appeal, the Assessing Officer has raised the following grievance:- 2. The Ld. CIT(A) erred in law and on the facts of the case in directing that apart from indirect expense of ₹ 13.13 crores already considered by the assessee for proportionate allocation, only auditor s expenses of ₹ 15.46 lakhs nee .....

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onsidered the same, CIT(A) directed the Assessing Officer that apart from expenses of ₹ 1,10,79,552/- already considered by assessee for proportionate allocation, only auditor s expenses of ₹ 17,27,437/- need to be allocated proportionately and directed the Assessing Officer to rework the indirect expenses for export of trading goods. It was found that assessee had already taken into account administrative miscellaneous expenses of ₹ 1,10,79,522/- which have been allocated prop .....

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out and only one person was engaged and the clearing and forwarding was done through an agent. The connected salary expenses allocated by the appellant was of ₹ 2 lakhs and rent, rates and taxes of Delhi office of ₹ 1.20 lakhs attributable to trading of export goods have been considered. Assessee had considered clearing and forwarding expenses of ₹ 16 lakhs has been directly related to trading export. The major administrative expenses of Modem and V Sat expenses of ₹ 40.4 .....

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on to ₹ 1.10 crores. The staff recruitment expenses of ₹ 9.18 lakhs were entirely for soda ash manufacturing. In this background, CIT(A) observed that apart from expenses of ₹ 1,10,79,522/-, auditor s expenses of ₹ 17,27,437/- need to be allocated proportionately which makes total income of ₹ 1,28,06,959/- for allocation. Accordingly, Assessing Officer was directed to rework the indirect expenses for export of trading goods. In view of this, order of the CIT(A), on .....

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d the following grievance:- 3. The Ld. CIT(A) erred in law and on facts of the case in deleting the disallowance of excess claim of depreciation at ₹ 44,80,163/-, on account of reducing the foreign exchange fluctuation gain of ₹ 1,79,20,653/- from the WDV of plant and machinery in view of the provisions of section 43(1). 12. So far as this ground of appeal is concerned, some material facts will have to be taken note of. During the course of assessment proceedings, the Assessing Offic .....

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of this amount of ₹ 1,79,20,653/-. Aggrieved, assessee carried the matter in appeal before the ld. CIT(A) who deleted this disallowance by observing as follows :- I have carefully considered the submissions made and the decisions cited by the ld. A.R. and the observations of the A.O. in the assessment order. The appellant has availed foreign currency loan from IDBI and Export Import Bank of India for acquisition of indigenous plant and machinery. The appellant has received exchange fluctu .....

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cted the exchange fluctuation gain from the cost of fixed asset and reduced the depreciation claim applying provisions of Sec. 43A of the I.T. Act. As Plant and machinery was not purchased from a country outside India, the ld. A.R. has strongly contended that provisions of Sec. 43A are not applicable in the case of the appellant. The Act is silent as to how the adjustments will have to be done when asset is brought from India, as there is no provision similar to provision of Sec. 43A. Once the a .....

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d by the assessee for purchase of the asset. The assessee might have raised the funds to purchase the asset by borrowing but what the assessee had paid for it was the price of the asset. The manner or mode of repayment of the loan had nothing to do with the cost of an asset acquired by the assessee for the purchase of his business. Of course the decision of SC in TISCO 231 ITR 285 (SC) is subject to provisions of Sec. 43A. But when the asset is purchased from India and not from abroad, the provi .....

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Chemicals & Fertilizers Limited 227 ITR 172 (SC), DCIT V. Core Healthcare Ltd. (251 ITR 61) (Guj.). Though Sec. 43(1) has 12 Explanations, the section does not specify a case like that of the appellant i.e. case of gain on foreign currency loan acquired for purchase of indigenous assets. Provisions of Sec. 41(1) will not apply as contended by the A.R. as no deduction has been allowed to the appellant in earlier years. The foreign exchange fluctuation gain in the case of the appellant is defi .....

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the case in the light of the applicable legal position. 14. As learned CIT(A) has rightly held, the provisions of section 43A of the Act come into play only when the asset in question is acquired from outside India whereas, as is the undisputed position on the facts of this case, the related plant and machinery was indigenous . There is a categorical finding to that effect by the Assessing Officer himself. As such, the provisions of section 43A of the Act do not come into play at all. Learned D .....

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he matter of assessment under section 143(3) of the Act for the assessment year 2005-06. 18. In the first ground of appeal, the Assessing Officer has raised the following grievance. 1. The Ld. CIT(A) erred in law and on the facts of the case in directing the Assessing Officer not to reduce the cost of fixed assets by the amount of foreign exchange fluctuation gain of ₹ 25,86,714/- for computing depreciation, thereby deleting the disallowance of d43preciation to the tune of ₹ 6,46,678 .....

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ground no.2, the Assessing Officer has raised the following grievance :- 2. The Ld. CIT(A) erred in law and on the facts of the case in directing the Assessing Officer to allow consequential relief to the assessee on account of depreciation on computer software of ₹ 36,01,907/- and of ₹ 18,07,640/- arising out of disallowance made in A.Y. 2002-03 in the case of Icon Data Management Ltd., now merged with GHCL Ltd., when the issue is yet to reach finality, as the order of the CIT(A) i .....

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