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2016 (3) TMI 82 - ITAT CHENNAI

2016 (3) TMI 82 - ITAT CHENNAI - TMI - Addition of excess depreciation claimed in the past - CIT(A) deleted the addition - Held that:- In this case, the assessee had obtained the benefit of depreciation to the tune of ₹ 23,92,470/- in earlier years. Hence, when the asset was written off by reducing the written down value of the assets, the assessee was not entitled for the depreciation benefit which was granted earlier. It is an undisputed fact that the assessee had claimed depreciation on .....

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d. In view of this, we hold that the depreciation claimed by the assessee on the above value of ₹ 43,88,000/- in earlier year, which the assessee is not entitled, need to be brought back to tax u/s.28(iv) of the Act as the value of benefit is arising from the business of the assessee. After reducing the said amount of depreciation granted earlier from the amount of ₹ 43,88,000/-, the balance amount is to be reduced from the closing written down value of block of assets. Accordingly, .....

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ation Ltd. V. Commissioner of Income Tax reported in [1997 (4) TMI 5 - SUPREME Court] and National Engineering Industries Ltd., VCIT [1998 (9) TMI 65 - CALCUTTA High Court] where under it is held that there is no distinction between discount and premium, the discount on debentures as well as the premium payable on actual redemption on debentures in future years and the expenditure incurred for issue of such debentures are all held to be the revenue expenditure, entitled to be spread over the per .....

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nt - Held that:- It is possible that with due diligence the Assessing Officer would have ascertained this fat at the time of original assessment also, but in view of the explanation (1) it does not mean that there was no default on the part of the assessee. Hence, reopening u/s.147 is held to be valid. The assessee has tried to take shelter under the exception provided by the above stated proviso where an assessment under sub-section (3) of section 143 has been completed, no action after the exp .....

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the assessee company claimed that the entire amount of ₹ 63.02 crores is capital receipt, the fact gathered show that at least a part of it should be on revenue account.Further, the assessee company has made a wrong claim u/s 80HHC treating the interest receipts as export incentive. In these circumstances, we have reason to believe that the Income chargeable to tax has escaped assessment in view of failure on the part of the assessee company to disclose truly and fully all material facts .....

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that where more than one price may be determined by the most appropriate method, the ALP shall be taken to be the arithmetical mean of such prices. In the instant case only one price has been determined under most appropriate method, the question of application of the proviso does not arise. - Decided against assessee - ITA Nos. 459/Mds/2010 & 904/Mds/2011 - Dated:- 22-1-2016 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER For The Department : Dr. B. Nischal .....

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mmon order for the sake of convenience. 2. First, we take up the Revenue s appeal in ITA No.459/Mds/2010. The first ground in this appeal is with regard to deleting the addition made by the Assessing Officer representing excess depreciation claimed in the past. 3. The facts of the issue are that the Assessing Officer stated that various assets were added to the fixed assets during the years 1999 to 2002 and depreciation was claimed in the concerned assessment years as per the IT Rules. Subsequen .....

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rs to the extent of ₹ 23,92,470/- was added back u/s.41(1) of the Act by the Assessing Officer to the total income. Aggrieved, the assessee went in appeal before the CIT(Appeals). 4. On appeal, the Commissioner of Incometax( Appeals) observed that the assessee has reversed ₹ 43,88,000/- being the asset capitalized earlier, which is reflected in Annexure-4A containing fixed assets - addition - 2004-05 - plant & machinery . In view of the reversal, the total amount has been reduced .....

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ading liability referred to in sec.41(1) . Accordingly, the Commissioner of Income-tax(Appeals) directed the AO to delete the same. Against this, the Revenue is in appeal before us. 5. The ld. AR submitted that the assessee has reduced the entire cost and not the WDV from the block of plant & machinery . As long as the theory of block asset is prevalent, any deletion or adjustment can be done to the block only. Unless and until the block is wiped out, the short-term capital gain/loss arising .....

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ed u/s.41(1) of the Act. For this purpose, he relied on the decision of the Supreme Court in the case of Nectar Beverages Pvt. Ltd. v. DCIT (314 ITR 314). 6. On the other hand, the ld. DR relied on the order of the CIT(Appeals). 7. We have heard both the parties and perused the material on record. In this case, the assessee had obtained the benefit of depreciation to the tune of ₹ 23,92,470/- in earlier years. Hence, when the asset was written off by reducing the written down value of the .....

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amount on earlier occasion has to be withdrawn and to be added back in this year, as otherwise, the assessee company will get double benefit, which is not justified. In view of this, we hold that the depreciation claimed by the assessee on the above value of ₹ 43,88,000/- in earlier year, which the assessee is not entitled, need to be brought back to tax u/s.28(iv) of the Act as the value of benefit is arising from the business of the assessee. After reducing the said amount of depreciati .....

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xt ground in this appeal is with regard to deleting the disallowance of expenses of ₹ 6,75,53,000/- incurred towards premium of premature redemption of debentures. 9. The facts of the case are that while disallowing the above sum the Assessing Officer has stated that the above sum is not allowable as business expenditure since the same has been paid for infraction of law as contemplated in Explanation to sec. 37 (1) of the Act. He also stated that the above sum is a capital expenditure and .....

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paid by the assessee as in the case of Madras Industrial Investment Corporation Ltd. v. CIT [225 ITR 802 (SC)] but can be considered as monetary penalty paid by the assessee to respective lenders. He disallowed the above expenditure in terms of Explanation to 37(1) of the Act (though Explanation is not explicitly mentioned in the order). He has also stated that expenditure would be of capital nature since it would provide enduring business advantage by way of reduced interest payments in future .....

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reiterate the view adopted by various courts that any expenditure incurred for infraction of law is not an allowable deduction. The CIT (Appeals) further observed that in Hazi Aziz and Abdul Shakoor Bros. V.s CIT [41 ITR 350], the Supreme Court held that no item of expenditure which is paid by way of penalty for the breach of law could be allowed as it cannot be said that the amount was incurred wholly and exclusively for the purpose of business. If it is established that the penalty is not for .....

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arises on a wrongful act and is not allowable. The premium paid for premature redemption of debenture is neither an offence nor is prohibited under the law so as to be considered for disallowance as per Explanation to sec. 37(1) of the Act. In the present case, it is only a mutation of contract and for such changes in contract,. the amount paid as compensation is a liability which has arisen in the course of business. In fact, the net saving in interest cost to assessee due to this swapping is & .....

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ported in 261 ITR 753. The above sum is an expenditure incurred and allowable as revenue expenditure. Since it is a premium paid for pre-closure of the entire loan, there is no question of allowing the expenditure on pro-rata basis annually as contemplated in Madras Industrial investments Corporation Ltd. Vs CIT (225 ITR 802)(SC). It is an allowable revenue expenditure as the above sum has been paid at the time of closure of loan. The Chennai Tribunal in the case of M/s.Overseas Sanmar Financial .....

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l Investment Corporation Ltd. [225 ITR 802 (SC)], CIT v. Sivakami Mills Ltd. [227 ITR 465 (SC)] and CIT v. Madras Auto Services (P) Ltd. [233 ITR 469 (SC)], the ITAT, Chennai held as under: "Reduction in the rate of interest for fresh loans to be advanced by the financial institutions led the assessee-company to payoff the entire loan that carried the burden of higher rate of interest. The assessee apparently calculated the amount of interest that it would be paying over the years at the ag .....

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above decision, the CIT(Appeals) held that the expenditure incurred towards premium on pre-closure of loan paid during the financial year relevant to the Assessment Year 2005-06 is revenue in nature and has to be fully allowed. Accordingly, he directed the Assessing Officer to delete the addition. Against this, the Revenue is in appeal before us. 11. The ld. DR relied on the order of the AO. He has also placed reliance on the judgment of the Supreme Court in the case of Madras Industrial Investm .....

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ate of 12% with face value of ₹ 10 lakh per debenture at par value for ₹ 50 crores with an option to retain oversubscription upto ₹ 50 crores for a tenure of 8 years with redemption condition of 23 quarterly instalments starting at the end of 30th month from the date of allotment. However, considering the high cost of debentures, the assessee prematurely redeemed the 12% non-convertible debentures of ₹ 100 crores during the year ended 31.3.2005. For this purpose, the asse .....

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taken by the Jurisdictional High Court in the case of CIT v. M/s. First Leasing Company of India Ltd. in TC(Appeal) No.209 of 2006 and TC(Appeals) No.1099 of 2004. Vide judgment dated 22.2.2006, their Lordships observed as follows: 2. It is apt to refer Section 37 of the Income Tax Act, which reads as follows: 37. (1) Any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid .....

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for consideration before the Apex Court in the case of Madras Industrial Investment Corporation Ltd. V. Commissioner of Income Tax reported in 225 ITR 802, wherein the Apex Court observed that when a company issue s debentures at a discount, it incurs a liability to pay a larger amount than what is borrowed. The liability to pay the discounted amount over and above the amount received for the debentures, is a liability which has been incurred by the company for the purposes of its business in or .....

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s of commercial trading, in the context of business necessity or expediency. If the outgoing or expenditure is so related to the carrying on, or conduct of the business, that it may be regarded as an integral part of the profit-making process and not for acquisition of an asset or a right of a permanent character, the possession of which is a condition of the carrying on of the business, the expenditure may be regarded as revenue expenditure. Any liability incurred for the business of obtaining .....

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entures is an instance where, although the assessee has incurred the liability to pay the discount in the year of issue of debentures, the payment is to secure a benefit over a number of years, there is a continuing benefit to the business of the company over the entire period, and the liability should, therefore, be spread over the period of the debentures. 7. In the instant case, the issue is with reference to the allowability of premium payable on actual redemption of debentures as deduction .....

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case of National Engineering Industries Ltd., V. C.I.T. reported in 236 ITR 577, wherein it has been held as follows: There is no distinction between a discount and a premium. The result in both is that something over and above the face value and the specified interest is paid, the accounting procedure in one case being by way of a preliminary deduction from the m oned amount, and the accounting procedure is the other case being an addition at the end over the prescribed and mentioned face valu .....

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iscount and premium, the discount on debentures as well as the premium payable on actual redemption on debentures in future years and the expenditure incurred for issue of such debentures are all held to be the revenue expenditure, entitled to be spread over the period of debentures and consequently, allowable as deduction in a particular assessment year. Accordingly, we are of the opinion that the above expenditure is a revenue expenditure and this ground of appeal of the Revenue is dismissed. .....

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92 C (2) which reads as follows: 11 Provided that where more than one price is determined by the most appropriate method, the arm's length price shall be taken to be the arithmetical mean of such prices. Provided further that if the variation between the arm's length price so determined and price at which the international transaction has actually been undertaken does not exceed five percent of the latter, the price at which the international transaction has actually been undertaken sha .....

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the prices reported by it. Against this, the assessee went in appeal before the CIT(Appeals). 16. On appeal, the CIT(Appeals) observed that the transfer policy legislation requires a tax payer to determine an arm's-length price of their international transactions. The expression "arm's- length price" is defined by sec. 92F of the Act to mean a price that is applied or proposed to be applied to transactions between persons other than associated enterprises in uncontrolled condit .....

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n option to the assessee to adopt as arm's-length price any price which fall within (+) / ( -) 5% of the arithmetic mean of the multiple prices discussed above. The CIT(Appeals) also observed that the Arms Length prices determined by her is not more than 5% of the rate paid by the appellant. This is evident because for the item no. 1, the difference in rate is US $ 23.39 and whereas the amount paid by the Appellant is US$ 796.17; and for item No.2 difference in the rate is $ 3.78 and whereas .....

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e material on record. Similar issue came for consideration before the Tribunal in ITA No.63/Mds/2008 in the case of M/s. Coastal Energy Pvt. Ltd. and the Tribunal vide its order dated 28.10.2015 for the asst. year 2004-05 held as under: 5. We have heard both the parties and perused the material on record. In this case, the main contention of the ld. AR is that arithmetical mean in respect of seven shipments should be arrived at determining the ALP and if it is variation is below 5%, there could .....

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ly linked transactions to facilitate determination of ALP envisaged a situation where it would be inappropriate to analysis the transactions individually. The proposition that a number of individual transactions can be aggregated and construed as a composite transaction in order to compute ALP also finds an echo in the OECD guidelines under Chapter III. Considering the legislative intent manifested by way of Rule 10A(d) r.w. Rule 10B of the Rules, it clearly emerges that in appropriate circumsta .....

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A(d) of the Rules. Though it is not feasible to define the parameters in a water tight compartment as to what transactions can be considered as closely linked , since the same would depend on facts and circumstances of each case. So, however, as per an example noted by the Institute of Chartered Accountants of India, in its Guidance Notes on transfer pricing, it is stated that two or more transactions can be said to be closely linked , if they emanate from a common source, being an order or cont .....

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P) Ltd. v. DCIT (23 SOT 455), wherein it was held that the ALP should be determined on a transaction-bytransaction basis and not on an aggregate basis as argued by the assessee s counsel. The same view was taken by the Tribunal in the case of ACIT v. UE Trade Corporation (India) (P.) Ltd., 44 SOT 457 (Delhi), wherein it was held that the Assessing Officer was within his jurisdiction for the purpose of determining of ALP by examining each transaction separately. 7. Further, in this case, price va .....

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DR in the case of ACIT v. M/s. Essar Steel Ltd. in ITA No.228 of 2008 dated 25.1.2011[Visakhapatnam). Accordingly, the assessee is not entitled for concession as prescribed in the proviso to sec.92C(2) of the Act. In view of the above, the ALP should be determined on a transaction by transaction basis and not on an aggregate basis as argued by the ld. AR. Hence, we reverse the order of the CIT(Appeals) and restore that of the AO. This ground of appeal by the Revenue is allowed. In the result, t .....

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l income of ₹ 57,36,72,000/·. The return was processed u/s.143(l) on 22·03·2003. Subsequently, the AO reopened the assessment by issuing notice u/s.148 on 03·09· 2004. The reason given for reopening was that the assessee had wrongly claimed a sum of ₹ 8,56,47,000/· as revenue expenditure instead of treating it as capital expenditure. The assessment was completed u/s 143(3) r.w.s 147 on 13·02·2006 wherein no addition was made on .....

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ad requested the AO to furnish the reasons for reopening which was duly communicated to it. The objection of the assessee to the reopening was rejected by the AO vide letter dated 19·11·2008. Thereafter, the assessee had filed two writ petitions before the Madras High Court challenging the notice u/s 148 issued on 03·08·2007 and the order rejecting the objections dated 19·11·2008. The writ petitions were admitted and stay was granted. Subsequently, they .....

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ditions I disallowances. Aggrieved by the above, the assessee carried the matter before the CIT(Appeals). 20. Regarding the reopening, the ld. AR submitted before the CIT(Appeals) that the re-assessment is based on change of opinion. It is also stated that assumption of jurisdiction u/s 147 on the basis of opinion of another AO (at Mumbai) is bad in law. It is further stated that the AO was not correct in holding that no assessment was existing at the time of reopening the assessment. In this ca .....

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to notice u/s 148. After communicating the reasons for reopening and after rejecting the objection of the assessee to reopen the assessment, the AO held the initiation of the re-assessment proceedings as valid for the following reasons: 1. Original assessment passed on 13-02-2006 was annulled by the CIT(A) vide his order dated 01-12-2006. Since there was no assessment exists at the time of reopening of the assessment the proviso to section 147 of the Act will not applicable in this case. 2. Not .....

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d an amount of ₹ 8,28,862,000I- were shown as expenditure under the head "operating expenditure". The Schedule-16 of the profit and loss account giving details of operating expenditure of ₹ 8,28,862,000I- includes compensation paid to M/s Tamilnadu Petro Products Limited for the purpose of termination of supply agreement of ₹ 63,02,47,5931-. Therefore. the same has been claimed as a revenue expenditure in the hands of M/s CIBA India Private Limited since it is being r .....

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1 - was related to the compensation paid for the first refusal of the shares. Therefore the contention of the assessee that the entire material facts were available in the return of income is completely wrong & misleading the department and the same cannot be accepted. " The AO has further stated that the Madras High Court has taken into cognizance all the facts and legal positions submitted by the assessee and has appreciated the procedure followed by the assessing authority. He also s .....

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td v. CIT, 281 ITR 394 (Del); (ii) ACIT v.Rajesh Jhaveri Stock Brokers P Ltd, 291 ITR 500 (SC); (iii)Diwakar Engineers Ltd v. ITO, 187 Taxman 327 (Del); and (iv) Coastal Corpn Ltd v. JCIT, 118 TT J 563 (Vizag). 21. The CIT(Appeals) observed that there was no failure on the part of the assessee to disclose fully and truly the material facts necessary for the reassessment on the first occasion and, therefore reopening of the assessment, which is after four years is based on change of opinion is ba .....

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the assessee with regard to taxability of compensation as revenue receipt, disallowance of provision for bad and doubtful debts, exclusion of interest for computing deduction u/s.80HHC, denial of deduction u/s.80IA and levy of interest u/s.234B of the Act. The Revenue is in appeal against the annulling of the reassessment order. 22. The ld. DR submitted that the assessee has not disclosed fully and truly the facts necessary for the assessment. Hence, reopening is valid in law. The most material .....

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the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year. One has to see as to what failure of the assessee to disclose fully and truly all material facts signify. It is true that every disclosure is not and cannot be treated to be a true and full disclosure. A disclosure can be even false or true. It may be a full disclosure or it may not be a full one. A part disclosure many a times may be misleading one. What is required under the law .....

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assessment will differ from case to case. The material should not only be full but also be true. If some material found in the evidence produced before the Assessing Officer which the Assessing Officer could have uncovered but did not, then it is the duty of the assessee to bring it to the notice of the assessing authority. This omission or failure may be either deliberate, or even inadvertent, that is immaterial, but in case there is omission to disclose the material facts then subject to the .....

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an Bachat Evam Sakh Sahkari Samiti Ltd vs. Union of India, 249 CTR 73 (Raj). Further, he relied on the order of the Tribunal in the case of M/s. MRF Ltd vs. DCIT in ITA Nos. 1374 to 1377/Mds/2010 for the assessment years 2002-03, 2004-05, 2006-07 & 2007-09, dated 11.03.2011. 23. On the other hand, the ld. AR submitted that the assessment was reopened to consider the compensation received by the assessee as a revenue receipt and disallow excess claim of deduction u/s.80HHC of the Act. Accordi .....

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as appeared below PROFIT AFTER TAXATION BUT BEFORE EXTRAORDINARY ITEM . He drew our attention to the profit and loss account and notes thereon. According to the ld. AR, the assessee has duly disclosed all material facts for the purpose of assessment and the reopening of assessment is bad in law. The ld. AR relied on the following judgments: i) Rajasthan Syntex Ltd. 313 ITR 231 (SC) - SLP dismissed-313 ITR 27(St.) ii) SFIL Stock Broking Ltd. 325 ITR 285(Del.) iii) Prashant Joshi 324 ITR 154(Bom) .....

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hem P. Ltd. 332 ITR 602(SC) xviii) Baer Shoes (India) Ltd. 331 ITR 435 (Mad.) xix) Sri Mookambigai Spinning TC(A) No.2611 of 2006 dt. 27.11.2006 24. We have heard both the parties and perused the material on record. In this case, the contention of the assessee counsel is that the notice for re-assessment has been issued beyond four years from the end of the relevant assessment year and because the assessee had provided all material facts in the returns filed, the revision done only on the basis .....

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llows:- Verification of the records of CIBA Limited for he impugned Assessment Year showed that they have paid compensation of ₹ 63.02 crores to the assessee only for the termination of supply agreement. The notes to the accounts states this amount has been paid as compensation to TPL for terminating the supply agreement entered by TPL with M/s. Petro Araldite Pvt. Ltd. (PAPL) dated 22.1.1998 for supply of Epichlorolydicin and And entering into supply agreement dated 22.3.2001. There is no .....

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) and for surrender of rights for the shares to be sold. Though the assessee company has claimed that the entire amount of ₹ 63.02 crores is capital receipt the facts gathered show that at least a part of it should be on revenue account. M/s. Petro Araldite is joint venture of M/s. CIBA India (Pvt.) Ltd. and the assessee, for manufacture of basic liquid resins with 76.24 share (24% for the assessee) CIBA India Ltd. have sold the entire shares held by them to M/s. Vatico Performance & P .....

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ntracts and it should be treated as a Revenue Receipt. Further, it has been judicially held in the case of Shri Rai Bahadur Jairam Valji v. CIT reported in 35 ITR 148(SC) that any amount of compensation received for cancellation of supply agreement is only a business income. Further, any waiver of right of shares is a short term capital gain as the cost of acquisition has to be taken as Nil in view of the Supreme Court decision in the case of Ms. Bhun Dadabai Kapadia v. CIT reported in 63 ITR 65 .....

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interest receipts as export incentives. It is a settled law that on the basis of material, prima facie, available before the Assessing Officer, opined that income chargeable to tax has escaped assessment can be formed. The word reason in the phrase reason to believe would mean cause or justification. In case the Assessing Officer has a cause or justification to know or suppose that income has escaped assessment , action u/s 148 can be taken. But obviously, there should be relevant material on w .....

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is completed u/s 143(3), as has been done in this case, no action could be taken after the expiry of four years from the end of the relevant assessment year unless the assessee has disclosed fully and truly all material facts necessary for the assessment for that assessment year, inter alia. 25. As seen from the reasons recorded, give a clear picture that the Assessing Officer has got material evidence to form his opinion for taking recourse to section 147 r.w.s 148 of the Act. There cannot be .....

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subject to sections 148,149,150,151,152 and 153. But in the present case, we are required to decide the limited issue regarding the validity of proceedings undertaken after four years of the assessment year in question. The Assessing Officer is required to see if the conditions laid in Explanation 2(c) because in this case the assessment was completed u/s 143(3) are satisfied or not. In case, (i) income chargeable to tax has been under assessed; or (ii) such income has been assessed at too low r .....

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d in the above portion of this order, we are satisfied that the Assessing Officer has reason to believe that income has escaped assessment. This fact confers jurisdiction on him to reopen the assessment. The power to re-assess post 1st April, 1989 are much wider than these used to be before. But still the schematic interpretation of the words reason to believe failing which section 147 would give arbitrarily powers to the Assessing Officer to reopen the assessment on the basis of mere change of .....

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sing Officer to reopen any and every assessment order which would simply amount to a review. The concept change of opinion is an in-built test to check the abuse of power by the Assessing Officer. So, now only when the Assessing Officer has a tangible material to base his conclusion that there is an escapement of income from assessment and the reasons recorded have a link with the formation of his belief, he has the power u/s 147 of the Act. 26. Now the most material part which was argued by the .....

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lly and truly all material facts necessary for his assessment for that assessment year. There are two other conditions which are not relevant for deciding the legal issue under appeal. We have to see as to what failure of the assessee to disclose fully and truly all material facts signify. The expression failure to disclose material facts has been explained in the Taxman s Direct Taxes Manual Volume 3. It is true that every disclosure is not and cannot be treated to be a true and full disclosure .....

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for assessment for that year postulates a failure of the assessee to disclose fully and truly all material facts necessary for his assessment. What facts are material and necessary for assessment will differ from case to case. The material should not only be full but also be true. If some material found in the evidence produced before the Assessing Officer which the Assessing Officer could have uncovered but did not, then it is the duty of the assessee to bring it to the notice of the assessing .....

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t and M/s. Ciba India Private Limited was shown as an expenditure of ₹ 8,28,862/- under the head operating expenses . It includes compensation paid to the present assessee for the purpose of termination of supply agreement of ₹ 63,02,48,000/-. It was claimed by M/s. Ciba India Private Limited as revenue expenditure and the same was allowed in the hands of M/s. Ciba India Private Limited. In view of the above facts, it is to be considered that the assessee has not disclosed all the ma .....

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going proviso . It is possible that with due diligence the Assessing Officer would have ascertained this fat at the time of original assessment also, but in view of the explanation (1) it does not mean that there was no default on the part of the assessee. Hence, reopening u/s.147 is held to be valid. The assessee has tried to take shelter under the exception provided by the above stated proviso where an assessment under sub-section (3) of section 143 has been completed, no action after the expi .....

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ompany claimed that the receipt of ₹ 6302.48 lakhs during the previous year relevant to the assessment year 2001-02 as compensation for premature termination of the contract relating to M/s. Petro Araldite Pvt. Ltd. by releasing M/s. Ciba India Pvt. Ltd. (CIPL) and for surrender of rights for the shares to be sold and treated the same as capital receipt. 28.1. Though the assessee company claimed that the entire amount of ₹ 63.02 crores is capital receipt, the fact gathered show that .....

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f ₹ 63.02 crores could not have been paid to the assessee for surrendering its first right of purchase of CIBA's shares. The assessee company continued to have its shares in Petro Araldite. The substantial part of ₹ 63.02 crores should be in relation to compensation for alleged termination of contracts and it should be treated as a Revenue Receipt. Further, it has been held in the case of Shri Rai Bahadur Jai ram Valji vs CIT reported in 35 ITR 148 (SC) that any amount of compens .....

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ble to tax has escaped assessment in view of failure on the part of the assessee company to disclose truly and fully all material facts as required by the proviso to section 147 in not offering the compensation received as revenue receipts and also has made a wrong claim of deduction u/s 80HHC by treating the interest receipts as export incentives . Accordingly, we reverse the order of the CIT(Appeals) on this issue and direct the CIT(Appeals), to decide the other issue raised by the assessee on .....

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ransfer price and arms length price. 3. The Deputy Commissioner of Income tax erred in making adjustment only in respect of the invoice dated 08-05-2005 wherein appellant had adopted the transfer price of US$919.23/-. 4. The Deputy Commissioner of Income tax failed to appreciate that if the average of all the transactions concluded by the assessee during the year is taken as a whole then there is no significant difference inviting adjustment. 5. The Deputy Commissioner of Income tax ought to hav .....

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bles invoices for the month of May as ALP and hence requires no disturbance. 7. In any event, the Deputy Commissioner of Income tax ought to have granted adjustment of 5% before computing the adjustments to the Transfer Pricing. 31. The facts of the case are that the JCIT, TPO-III, Chennai made adjustments to the assessee s returned income u/s.92CA(3) of the Act, vide order dated 14.9.2009. The order was made in pursuance of a reference u/s.92CA of the Act by the AO. The AO i.e. DCIT, LTU, Chenn .....

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f only one item, i.e. Linear Alkyl Benzene (LAB) to its associate viz., Certus Investment and Trading (S) Pvt. Ltd. which is wholly owned subsidiary of the assessee company. The information provided vide From No.35A shows that the assessee had made exports throughout the accounting year under consideration. 31.2 The TPO has pointed out that in the transaction, there is variation between the Transfer Price and ALP which falls beyond tolerance limit of +/- 5%. The TPO for reasons discussed in deta .....

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accept the assessee s argument. 32. The ld. AR submitted that the objections emanated because of difference between the assessee and the TPO due to different approach on comparables. 33. The ld. DR submitted that the TPO has applied the provisions of sec.92CA only in respect of transaction mentioned against Sl.No.2 of para 4 of DRP order. The TPO has also relied upon the correctness of figures mentioned by the assessee in this account which has been audited and duly certified by the auditor. It .....

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