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2016 (5) TMI 265 - ITAT MUMBAI

2016 (5) TMI 265 - ITAT MUMBAI - TMI - Disallowance of interest - Held that:- The issue had been decided in favour of the assessee by his predecessor in the immediately preceding year, that the appeals filed by the Department against the order of his predecessor for the AY. s. 2000-01 and 2001- 02 had been dismissed by the Tribunal , that there was no change in facts during the year as compared to the facts in the earlier years. Therefore, he directed the AO to delete the disallowance of interes .....

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owed the provisions of section 145 A of the Act, that the AO filed an appeal before the Tribunal challenging the order of the FAA, that the Tribunal vide its order dismissed the appeal, filed by the AO. Considering the above, issue restored back to the file of the AO for fresh adjudication. He is directed to decide the issue as per the directions given in the order for the AY. 2003-04

Exclusion of 90% of the certain business receipts from the profit of the business for the purpose of .....

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set off has been decided in favour of the assessee by the Hon’ble Apex Court in the case of Alfa Lavel (India) Ltd. (2007 (11) TMI 281 - SUPREME Court ).

We find that the issue of registration charges written back was decided in favour of the assessee by the Tribunal while deciding the case of Extrusion Process Private Ltd. (2006 (6) TMI 261 - ITAT MUMBAI ).

As far as exclusion of sale of scrap is concerned it is found that in the case of Sony India Pvt. Ltd. (2008 (9) TMI .....

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rofit available to the assessee from exports, the benefit of deduction under section80 HHC was rightly not available. In our considered opinion the ld CIT(A)was justified in rejecting the ground of the assessee on the claim of deduction under section 80HHC in the absence of any eligible profit - Decided against assessee

Disallowance invoking the provisions of section 40A(2)(b) - Held that:- We find that the assessee had produced a reliable evidence in form of a certificate issued by T .....

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addition proposed/made by the TPO/AO - Held that:- The assessee wanted to sell Diacamba in USA, that from the local registration prospective it was essential to have a USA entity, that it set up GUSA which could carry out registration marketing and distributing functions, that it had applied the TNMM four determining the ALP of the transactions, that G-USA dealt only in the products of the assessee and had no other business activity, that any profit/loss occurring to the AE was on account of th .....

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same we decide ground against the AO.

Deduction u/s. 80 HHC - Held that:- 90% of the receipts of the assessee under the three heads i. e. consultancy services,sundry creditors balances written back and sundry income should not be excluded from the profit of the business for the purpose of computing deduction u/s. 80 HHC of the Act.

Reduction of profits eligible for deduction u/s. 80HHC for the purpose of calculating book profits u/s. 115JB - Held that:- Identical issue ha .....

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ew of the provisions of section 2(22)(e) - Decided in favour of assessee

Addition u/s. 92 CA (3) - Held that:- Australian-AE was set up to obtain and hold registration rights of certain products in Australia as was required to enable the assessee to make sale of its products in Australia, that the Australian-AE would pay usage rights received from the assessee to MA-AUS, after keeping some portion, that the TPO did not consider the basic fact that the assessee made direct sales to thi .....

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elling those products in the US markets, that it had also paid other fees as required by the US laws, that it had incurred total expenditure of USD 1, 58, 79, 306 under the head registration charges, that the AE got the assets revalued as on 01. 01. 2204, that registration rights were revalued from ₹ 44. 29 crores to ₹ 67. 99 crores by the independent valuer, that on 30. 09. 2004 the AE was dissolved, that the assessee took over the assets and liabilities of the AE at the revalued pr .....

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pporting the adjustment, that the FAA has given a categorical finding of fact that the TPO was factually incorrect in arriving at the conclusion of non transferability, that the AE had right to transfer the rights to others also. Considering the above facts, we are of the opinion, that the order of the FAA does not suffer from any legal or factual infirmity. Therefore, confirming his order, we decide ground against the AO. - Decided in favour of assessee

Non-adjudication of the ground .....

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the interest of Justice, we are restoring back the issue to the file of the FAA for fresh adjudication. He is directed to afford a reasonable opportunity of hearing to the assessee. First ground of appeal is decided in favour of the assessee, in part.

Disallowance of additional deduction u/s. 35(2AB)(1) in respect of the expenditure of ₹ 15. 57 crores incurred on in-house research and development activity carried out its Dombivili R&D facility - Held that:- As the AO/FAA did no .....

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Per Rajendra, AM Challenging the order, dated 23. 07. 2009 and 14. 10. 2010, of the CIT(A)-14 and CIT(A)-15, Mumbai, the Assessing Officers (AO. s)and the assessee have filed the cross-appeals for the years under consideration, raising various grounds of appeal. Assessee-company, engaged in the business of manufacture and sale of pesticides and insecticides, weedicides, veterinary-drugs and polymers and sale of pesticides, insecticides etc. The details of filing of returns, retruned incomes etc. .....

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served that an amount of ₹ 11. 78 crores were shown as Capital Work in Progress (CWIP)as on 31/03/ 2004, that the assessee had claimed interest expenditure of ₹ 15. 80 crores. He directed the assessee to show cause as to why proportionate interest relatable to CWIP should not be disallowed. After considering the submission of the assessee, the AO disallowed the sum of ₹ 1, 76, 81, 096/-out of the interest expenditure, as interest relatable to CWIP. He computed the disallowance .....

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nge in facts during the year as compared to the facts in the earlier years. Therefore, he directed the AO to delete the disallowance of interest relatable to CWIP. 2. 2. During the course of hearing before us, Authorised Representative(AR)and Departmental Representative(DR)agreed that the issue stands decided in favour of the assessee by the orders of the Tribunal for the AY. s2000-01, 2001-02 and 2003-04. We would like to re-produce the relevant portion of the order of the Tribunal dealing with .....

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ve heard the learned representat ives of the part ies and perused the record. We find that the issue is squarely covered by the judgment of Hon'ble Supreme Court in the case of Core Health Ltd. ( supra ) , on which the assessee has placed reliance . We respectfully follow the law laid down by the Hon'be Supreme Court in the said case and in the light of that we confirm the orders of the CIT(A) in both the assessment years 2000-01 and 2001-02. Respectfully following the above, we decide g .....

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ded in the valuation of closing stock of raw material and work in progress as per section 145A of the Act. Accordingly he added the amount in question to the value of closing stock and consequently to the total income of the assessee. 3. 1. During the course of hearing before us, representatives of both the sides agreed that the issue stands decided in favour of the assessee by the order of the Tribunal for the earlier years. The AR further relied upon the cases of Indo Nippon Chemicals Ltd. (26 .....

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trictly followed the provisions of section 145 A of the Act, that the AO filed an appeal before the Tribunal challenging the order of the FAA, that the Tribunal vide its order dated to 2/05/2013 dismissed the appeal, filed by the AO. We find that while deciding the appeal for the AY. 2003-04(supra)has held as under: 2. 2. Before us, Authorised Representative(AR)stated that the Tribunal vide order dated 30. 11. 2009 (ITA2242/Mum/2006/-AY. 2002-03)had restored back the matter to the file of the AO .....

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s(P)Ltd. (381ITR116). He referred to page no. 1 to 4 of the paper book. Departmental Representative(DR)stated that he had no objection if the matter was sent back to the AO. 2. 3. We have heard the rival submissions and perused the material before us. We find that at page no. 4 of the paper book, the assessee has given the impact of the adjustment of Modvat Credit to the Profit & Loss Account for the year under consideration. In our opinion, in the interest of justice matter should be restor .....

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the AO, ground no. 2 would become infructuous. As we have already remitted the issue raised in ground no. 1 to the file of the assessee, so, we are dismissing ground no. 2 as infructuous. Considering the above, issue restored back to the file of the AO for fresh adjudication. He is directed to decide the issue as per the directions given in the order for the AY. 2003-04. Ground no. 3 is decided in favour of the AO, in part. 4. Ground No. 4 pertains to excise duty to closing stock related to Gro .....

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hearing the assessee. Ground no. 4 is decided in favour of the assessee, in part. 5. Fifth ground of appeal is about exclusion of 90% of the certain business receipts from the profit of the business for the purpose of computing deduction u/s. 80 HHC of the Act. While computing the deduction available 80HHC of the Act, the AO excluded Insurance Claim(Rs. 24. 11 lakhs), Sales of Chemicals and Scrap(Rs. 1. 33 Crores), Sales tax set off(Rs. 67. 04 lakhs), Registration charges written back(Rs. 5. 53 .....

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(India)Ltd. (295ITR451). For registration charges written back the AR relied upon the cases of Bisazza India Ltd. (ITA No. 1027 of 2010)and Extrusion Process Private Ltd. (106ITD336). 5. 2. We have heard the rival submissions and perused the material before us. We find that the Hon ble Bombay High Court has discussed the issue of exclusion of insurance claim in the matter of Pfizer Limited(supra)as under: A contract of insurance was a contract of indemnity. The insurance claim in essence indemn .....

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ty per cent. under clause (1) of Explanation (baa). In determining the profits of the business for the purposes of Explanation (baa), the incomes which were susceptible to a reduction of ninety per cent. were those incomes referred to in clauses (iiia), (iiib) and (iiic) of section 28 and receipts by way of brokerage, commission, interest, rent, charges or receipts of a similar nature included in such profits. Therefore, before a receipt was liable to be excluded to the extent of ninety per cent .....

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n decided in favour of the assessee by the Hon ble Apex Court in the case of Alfa Lavel (India) Ltd. (supra) in following manner: …. interest from customers and sales tax set off received by the assessee, being profits of the business under the head Profits and gains of business or profession , could not be excluded while calculating the deduction under section 80HHC. Respectfully, following the above judgment we decide the issue of sales tax set off against the AO. As far as exclusion of .....

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; 2, 16, 97, 607 was excluded by the AO from the profits of the business relying on Expln. (baa) below s. 80HHC. Before the learned CIT(A), it was contended on behalf of the taxpayer company that the miscellaneous income received by it did not constitute any receipts of a nature similar to the items given in Expln. (baa). It was contended that the said income was comprised of receipts by way of sale of scrap, amounts written back, sale of spare parts, etc. and the same being derived directly fro .....

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ational income of the taxpayer having regard to its dominant business, the same would be entitled to be included in the profits of the business for the purpose of computing deduction under s. 80HHC. According to the learned CIT(A), all the receipts i. e. sale of scrap, amounts written back and sale proceeds of spare parts included in the miscellaneous income of the taxpayer company were directly related to its dominant business. He, therefore, held that the same forming part of its operational i .....

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g of sale of scrap, amounts written back and sale proceeds of spare parts was directly related to the dominant business of the taxpayer company and the same, therefore, represented its operational income which, as held by Hon'ble Bombay High Court in the case of Bangalore Clothing Co. (supra) was entitled for inclusion in the profits of the business for the purpose of computing deduction under s. 80HHC. The said decision of Hon'ble Bombay High Court thus clearly supports the taxpayer' .....

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gal infirmity in the order of the FAA. So, confirming the same, we decide ground no. 5 against the AO. 6. Ground No. 6 and 7 regarding profit after reducing unabsorbed depreciation. Before us, the AR fairly conceded that the issue stand decided against the order of the Tribunal for the AY. 2003-04, dated 16. 01. 2015 (supra). We find that the Tribunal had dealt the issue as under: 4. Ground no. 3 is about disallowance of deduction u/s. 80HHC of the Act. During the assessment proceedings the AO f .....

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gross total income before the claim of deduction under Chapter VIA in view of provisions of Section 32(2) r. w. s. 72(2)of the Act, wherein the same was to be considered first before allowing any deduction u/s. 80HHC. He referred to the judgment of the Hon ble Supreme Court in the case of Ipca Laboratories Limited(266 ITR 521)and held that while computing deduction u/s. 80HHC brought forward loss is to be reduced before claiming deduction, that the assessee's income became NIL after conside .....

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ditions, that DEPB benefit could not be considered for working out deduction u/s. 80HHC. As such in view of NIL profit as discussed above the assessee company is not entitled for deduction u/s. 80HHC. 4. 1. In the appellate proceedings, the FAA held that in light of the judgment of Ipca Laboratories Ltd. (supra), order of the AO had to be upheld. 4. 2. Before us, the AR fairly conceded that the issue is decided against the assessee by the order of the Tribunal dated 30. 11. 2009(supra). We find .....

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ction 80HHC in the absence of any ehgihle profit. This ground is therefore, not allowed. Respectfully, following the above, we dismiss the ground no. 3 against the assessee. Ground no. 6-7 are decided in favour of the AO. 7. Ground no. 8 is about disallowance of ₹ 6. 94 lakhs. During the assessment proceedings, the AO found that the assessee had made certain purchases from a sister concern, namely Gujarat Insecticides Ltd (GIL). He called for the relevant details of purchases and examined .....

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um Chloride. As the name of the product purchased by the assessee from GIL and the name mention in the invoice of TC did not match, the AO held that the assessee had failed to provide the necessary and comparable evidence relevant to purchase of PTC from its sister concern. He, accordingly, disallowed 20% of the purchase value i. e. ₹ 6. 94 lakhs invoking the provisions of section 40A(2)(b) of the Act. 7. 1. During the appellate proceedings, before the FAA, the assessee submitted that prod .....

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ter considering the submission of the assessee and the assessment order, the FAA held that the disallowance had been made by the AO on the premises that the assessee did not produce the necessary and comparable evidence, that from the copy of certificate issued by TC it was clear that the necessary and comparable evidence was furnished to the AO. 7. 2. The DR left the issue to the discretion of the bench. The AR supported the order of the FAA. We have heard the rival submissions. We find that th .....

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ear the assesee had exported 4. 62 lakhs Kgs. of Dicamba to its AE at a total consideration of ₹ 30. 38 Crores. It justified the transaction on the basis of TNMM. However, the TPO used Comparable Uncontrolled Price(CUP)method by comparing the Dicamba sold to non-AEs with average sale price charged to its AE, and proposed adjustment of ₹ 2, 60, 75, 487-/. Based on the order of the TPO, the AO made an addition of ₹ 2. 60 crores on account of sale of goods to AE. 8. 1. Aggreived b .....

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a corollary the prices charged by the assessee should be regarded at arm s length, that the customs authorities in the USA had accepted the assessee s export price as the ALP, that same constituted an appropriate benchmark for Indian TP regulations. The assessee also objected to use of CUP method and contended that there were various differences between the transaction entered into by the assessee with its AE and that entered with unrelated entity viz. difference in geographical markets differen .....

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price charged by the assessee to G-USA was USD 14. 11, that it would meet the arm s length principle by exercising the provision to section 92C(2), that the TPO had not made adjustment in the price for certain differences such as custom duty registration, cost selling and distribution expenses, that the assessee had incurred expenses like commission freight and warehousing, while making sales to non-USA market, that USA and non-USA market were completely different, that while determining the AL .....

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ave a USA entity, that accordingly G-USA was set up to carry out registration marketing and distribution functions, that the AE was based in USA where the marginal rates were higher than that of India, the AE at USA had suffered a loss, there would not be any saving or avoidance of tax by the assessee by shifting profits to USA, that from the risk metrics point of view it was a very low-risk or no risk case, that the TPO had made adjustment using CUP method without considering the various factor .....

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s charged to non-AE. s for selling and distribution expenses, that even in sale price to non-AE. s final result was the transaction proved to be done at fair market value, that the same was less than the average sale price charged by the assessee to G-USA(USD 14. 11 per Kg. ), that the transaction of export of goods to its AE would meet the arm s length principle. Finally, he deleted the addition proposed/made by the TPO/AO. 8. 3. Before us, the DR supported the order of the TPO and the AR relie .....

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that any profit/loss occurring to the AE was on account of the products purchased from the assessee, that the AE had incurred a net loss of 10. 98% on sales, that 74% of the sale was made to G-USA, that there was no evidence of shifting of profit by the assessee to its AE, that it had charged USD 14. 11 per Kg. from its AE for the goods supplied, that the average sale price to non-AEs of USD 14. 64 per Kg. resulted in adjusted APL of USD13. 99 per Kg. In our, opinion there is no legal or factua .....

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cts as directed in the earlier part of our order. 10. Ground No. 3 is with regard to confirming reduction of 90% of business receipts while computing business profit for the purpose of deduction u/s. 80HHC which includes consultancy expenses, sundry credit balance written back, penalty recovered, analysis charges, interest & Brokerage on FD, Sundry income and other miscellaneous income. The FAA had upheld the exclusion of various items while computing the deduction u/s. 80HHC of the Act. 10. .....

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ITR 344), Eastern International Hotel Ltd. (93 ITD 233) the issue of sundry credit balances written back has been decided in favour of the assessee, that in the cases of Alfa Lavel (India)Ltd. (295ITR451)& Abhishek Industries Ltd. (217Taxmann104), the issue of sundry income for the purpose of computing deduction u/s. 80HHC has been decided against the revenue. The DR left the issue to the discretion of the Bench. 10. 2. We have heard the rival submissions we find that the AO had excluded co .....

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animal health products. For the AY. 2000-01, the assessee claimed deduction under section 80HHC of the Income-tax Act, 1961. The Assessing Officer, while computing the deduction excluded 90 per cent. of the amount of an insurance claim which was related to the stock-in-trade of the assessee. The Commissioner (Appeals) confirmed the order of the Assessing Officer. The Tribunal noted that for the AY. 1998-99 it had come to the conclusion that there was no justification to exclude 90 per cent. of t .....

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ess as computed under the head of profits and gains of business or profession. The income emanating from the sale would not be liable to a reduction of ninety per cent. for the simple reason that it would not constitute a receipt of a nature similar to brokerage, commission, interest, rent or charges. A contract of insurance was a contract of indemnity. The insurance claim in essence indemnifies the assessee for the loss of the stock-in-trade. The indemnification that was made to the assessee mu .....

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oses of Explanation (baa), the incomes which were susceptible to a reduction of ninety per cent. were those incomes referred to in clauses (iiia), (iiib) and (iiic) of section 28 and receipts by way of brokerage, commission, interest, rent, charges or receipts of a similar nature included in such profits. Therefore, before a receipt was liable to be excluded to the extent of ninety per cent. , it must be a receipt of a nature similar to brokerage, commission, interest, rent or charges. Therefore .....

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had become richer by the amount which it transferred to its profit and loss account. The moneys had arisen out of ordinary trading transactions. Although the amounts received originally were not of income nature, the amounts remained with the assessee for a long period unclaimed by the trade parties. By lapse of time, the claim of the deposit became time-barred and the amount attained a totally different quality. It became a definite trade surplus. The assessee itself had treated the money as it .....

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wing the above referred judgments, we hold the 90% of the receipts of the assessee under the above three heads should not be excluded from the profit of the business for the purpose of computing deduction u/s. 80 HHC of the Act. We uphold the order of the FAA for the remaining four receipts. Ground number 3 is decided in favour of the assessee, in part. 11. Next ground deals with reduction of profits eligible for deduction u/s. 80HHC for the purpose of calculating book profits u/s. 115JB of the .....

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ed with the question under consideration. 12. 1. Before us, Representative of both the sides conceded that issue was decided by the Tribunal in favour of the assessee. We find that originally the question was decided agaisnt the assessee. But, later on an appliaction was filed by the assessee u/s. 254 (2) of the Act before the Tribunal, who recalled its order. By its order dated 25. 01. 2012, the Tribuanl relying upon the decision of the Hon ble Apex Court in the case of Bhari Information Techno .....

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, raised by the assessee, was not pressed by the AR during the course of hearing before us. Hence, the same stands dismissed, as not pressed. ITA/8758/Mum/2010-AY. 2005-06: 13. The first effective ground of appeal is about deletion of disallowance of interest amounting to ₹ 7. 12 crores. During the assessment proceedings, the AO observed that an amount of ₹ 47. 49 crores were shown as Capital Work in Progress(CWIP)as on 31/03/2005, that the assessee had claimed interest expenditure o .....

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First ground is dismissed. 14. Next ground of appeal is about deleting the addition of ₹ 5. 25 crores on account of unutilised modvat credit. Considering our orders for the earlier AY. , issue of unutilised modvat credit is restored back to the file of the AO for fresh adjudication. He is directed to decide the issue as per the directions given in the order for the AY. 2004-05. Ground no. 2 is decided in favour of the AO, in part. 15. Third ground deals with deleting the addition of ₹ .....

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merits there is no case for the Revenue. In fact the CIT(A) has analysed this issue elaborately and came to a conclusion that provisions of section 2(22)(e) are not attracted in the case of normal business transactions. The same principle was upheld by the Hon'ble Delhi High Court in the case of CIT vs. Raj Kumar 318 ITR 462 wherein this issue was elaborately discussed as under: - "Section 2(22)(e) of the Income-tax Act, 1961, shows that a payment would acquire the attributes of a divid .....

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ent" which the company may make on behalf of or for the individual benefit of any shareholder or also to any M/s. Gharda Chemicals Ltd. concern in which such shareholder is a member or a partner and in which he is substantially interested ; and (iv) the limiting factor being that these payments must be to the extent of accumulated profits, possessed by such a company. The immediate precursor to section 2(22)(e) is found in section 2(6A) of the Indian Income-tax Act, 1922. The purpose of ins .....

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of loans. The purpose being that persons who manage such closely held companies should not arrange their affairs in a manner that they assist the shareholders in avoiding the payment of taxes by having these companies pay or distribute, what would legitimately be dividend in the hands of the shareholders' money in the form of an advance or loan. The word "advance" has to be read in conjunction with the word "loan". Usually attributes of a loan are that it involves the po .....

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g one would attribute to the term "advance". The rule of construction which answers this conundrum is noscitur a sociis. The rule has been explained both by the Privy Council in the case of Angus Robertson v. George Day [1879] 5 AC 63 by observing "it is legitimate rule of construction to construe words in an Act of Parliament with reference to words found in immediate connection with them" and the Supreme Court in the case of Rohit Pulp and Paper Mills Ltd. v. Collector of C .....

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m ; (iii) the purpose behind inserting of the term. In the instant case (i) the term "advance" has undoubtedly more than one meaning depending on the context in which it is used ; (ii) both the terms, that is, "advance" or "loan" are related to the accumulated profits of the company ; and (iii) the purpose behind the insertion of the term "advance" was to bring within the tax net payments made in the guise of loan to shareholders by companies in which they .....

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uring customized kitchen equipment. The assessee was also the managing director and held nearly 65 per cent. of the paid-up share capital of C. A substantial part of the business of the assessee, which was nearly 90 per cent. was obtained through C. For this purpose, C would pass on the advance received from its customers to the assessee to execute the job work entrusted to the assessee. The Assessing Officer was of the opinion that the money received by the assessee was in the nature of a loan .....

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n 2(22)(e). " 12. The Hon'ble Delhi High Court in fact followed the principles established by the jurisdictional High Court in the case of CIT vs. Nagindas M. Kapadia 177 ITR 393. The same principles were also reiterated by the Hon'ble Delhi Court in the case of CIT vs. Ambassador Travels P. Ltd. 318 ITR 376. In view of these principles, we are of the view that the commercial transactions between two companies could not be brought within the purview of the provisions of section 2(22 .....

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an international transactions with its associated enterprise (AE), Gharada Australia(G-Aus. ). The AO made a reference to the TPO to determine the arm s length price(ALP) of the said transaction. On 23/1/2008, the TPO passed his order proposing certain adjustments. In pursuance of the order of the TPO, an adjustment of ₹ 5. 18 lakhs was determined in respect of usage charges paid to G-Aus. 17. 2. Before the FAA, in the appellate proceedings, the assessee explained that sale of chemicals in .....

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e would pay usage charges products registration to its AE, that the usage charges was calculated in order to cover the general and administrative costs incurred by the AE for its operation, that for selling chloropyriphos(CPF)the AE procured registration data from Makhteshim Agan (Australia)Pty Ltd (MAA), that MAA was an unrelated third party, that as per the agreement for procuring registration data the AE had to pay US$ 0. 25 per Kg unit sold and debit note would be raised on it by MAA, that t .....

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en incurred, that the expenses were incurred only on a pass through basis and therefore had to be reimbursed at cost. The FAA, after considering the submissions of the assessee and the order of the TPO, deleted the addition following his order for the earlier year. 17. 3. Before us, the DR supported the order of the TPO/AO, and the AR relied upon the order of the FAA. We find that that the Australian-AE was set up to obtain and hold registration rights of certain products in Australia as was req .....

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at AE did not have any other business. 18. Ground No. 8 pertains to second TP adjustment and it is about depreciation of registration rights amounting to ₹ 5, 76, 55, 986/-and registration rights, valued at ₹ 67, 99, 06, 271/-. During the TP proceedings, the TPO found that the assessee had acquired the registration rights for total amount of ₹ 67. 99 crores based on assets revalued in the books of G-USA, as on 1. 10. 2004 which on 30/09/2004 before the valuation was equivalent .....

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d to be recomputed, that after disallowance of revaluation of registration rights there would be a loss of ₹ 23. 06 crores, that the loss should be allowed to be carried forward and set off in the subsequent assessment years. After considering submission of the assessee, the AO held that the assessee had computed long term capital loss on shares of G-USA on liquidation of investment, the AE was hundred percent subsidiary company of the assessee, that it had taken over the 100% subsidiary c .....

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reduced to ₹ 44. 92 crores, that there was a loss of capital to the assessee. He further held that the adjustment was not called for computation of income under the head capital gains in view of the provision of section 47 of the Act, that assessee was not entitled to carry forward of long-term capital loss and the claim made by it in that regard had to be rejected. He held that depreciation was to be allowed in respect of registration right taking the value before the revaluation of S .....

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ee had wholly owned subsidiary in USA, that it had registration right in CFS and Diacamba , that the registration rights were restated in its books of accounts by the AE as on 30/09/2004 on the basis of valuation analysis carried out by an independent expert, that the AE was dissolved on the last day of September, 2004, that upon dissolution all the assets and liability of the AE were distributed to the assessee at book value, that post liquidation the assessee continued the business in USA thro .....

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agencies, that for a registration the applicant would be required to submit a Dossier, that the AE had obtained registration, that the product registration was reviewed on a periodic basis for safety to human beings, animals and the environment, that fees were payable annually to maintain the registrations, that the AE had incurred significant registration cost for the production registration amounting to USD 1, 28, 6, 995. 33, that the above value was duly reflected as gross block in the books .....

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of the registration rights of the products as required by the law of that country, that the AO/TPO had made an adjustment of ₹ 23. 06 crores by rejecting the valuation of registration rights by an independent expert value, that the TPO had not read the valuation report in proper perspective, that the assessee had requested the valuer to further clarify the valuation report, that the valuer had reported that accurate determination of actually study costs paid by the that order was key in pr .....

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come tax rules, 1962. After admitting the additional evidences, the FAA forwarded a copy of the documents to the TPO for his comments. The TPO filed his comments in that regard. After considering the available material, the FAA held that the assessee had a wholly owned subsidy in USA, that the AE held registration rights in two products, that the rights were revalued in the books of the AE as on 1. 1. 2004 based on valuer s report, that the registration rights were revalued from ₹ 44. 29 c .....

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as spent on membership fees and incidental expenses, that those expenses were incurred much prior to the year 2004, that there was inflation and risk premium factor attached to it, that same had to be factored in, that the TPO in his remand report had not disputed the actual expenditure incurred by the AE, that he had also not disputed the contents of the various clarifications provided by the valuer, that the AE was in a position to transfer or assign the registration to its successor or to any .....

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ation made by the valuer at USD15. 6 million, that the book value was also lower compared to the actual expenditure incurred of USD1, 58, 79, 306 on the registration of those products, that the TPO had merely rejected the valuation done by the valuer on the surmise without considering the evidences on record, that the adjustment made by the TPO by rejecting the revaluation of the registration right was not proper. Finally, he held that the consideration for registration rights, as adopted by the .....

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that it had also paid other fees as required by the US laws, that it had incurred total expenditure of USD 1, 58, 79, 306 under the head registration charges, that the AE got the assets revalued as on 01. 01. 2204, that registration rights were revalued from ₹ 44. 29 crores to ₹ 67. 99 crores by the independent valuer, that on 30. 09. 2004 the AE was dissolved, that the assessee took over the assets and liabilities of the AE at the revalued price, that the payment for registration ri .....

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given a categorical finding of fact that the TPO was factually incorrect in arriving at the conclusion of non transferability, that the AE had right to transfer the rights to others also. Considering the above facts, we are of the opinion, that the order of the FAA does not suffer from any legal or factual infirmity. Therefore, confirming his order, we decide ground no. 8 against the AO. 19. Last Ground is about computation of interest u/s. 234B of the Act and is consequential in nature. ITA/83 .....

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ed and TP adjustment were to be made, then the capital loss had to be recomputed at ₹ 23. 06 crores. However, the AO held that as per the provisions of section 47 (iv)/(v) of the Act, transaction from holding company to subsidiary company or vice versa were not regarded as transfer , that the provisions of section 45 of the Act were not applicable. Accordingly, the AO did not carry out computation of capital gain/loss at all. Before the FAA, the assessee, vide its letter dated 6/4/2010, st .....

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capital loss were two different things, that they were not linked with each other, that separate adjudication was required with regard to allowability or otherwise of the long-term capital loss. The DR left the issue to the discretion of the bench. 20. 2. After hearing the rival submissions, we are of the opinion that the FAA should have decided the issue raised by the assessee. The TP adjustments do not deal with computation/ re-computation of capital loss. Such computation will have its own c .....

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additional deduction of 50% (i. e 150% -100%) u/s. 35(2AB)(1) of the Act in respect of the expenditure of ₹ 15. 57 crores incurred on in-house research and development activity carried out its Dombivili R&D facility. 21. 1. During the course of hearing before us, the AR stated that the CBDT had issued the certificate on 30. 3. 2009, that assessee was entitled for deduction. He referred to the pages 216 and 217 of the paper book. He relied upon the cases of Claris Life Sciences Ltd. (32 .....

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