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2016 (9) TMI 507 - PUNJAB AND HARYANA HIGH COURT

2016 (9) TMI 507 - PUNJAB AND HARYANA HIGH COURT - TMI - Disallowance of deduction u/s 80 IB - Tribunal upholding the decision of ld. CIT(A) reducing the disallowance of deduction u/s 80 IB on the issue of inter-unit investments - allocating interest expenditure of Ludhiana unit for the funds invested in Unit-I, Unit-II and Unit-III at Samba (J&K) based on ration between own capital and borrowed funds - Held that:- The CIT (Appeals) held that the assessee could only make a claim that such transf .....

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ent of the capital constituted the interest-free reserves amounting to about ₹ 48.6768 crores, whereas, the borrowed funds constituted 57 per cent of the available funds aggregating to about ₹ 65.35 crores. He, accordingly, apportioned the amounts in respect of the three units depending on the amounts advanced by the Ludhiana Unit to each of them. The ITAT upheld this decision. - The approach of the CIT (Appeals) and the ITAT cannot be said to be perverse, irrational or absurd. I .....

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he Appellant : Mr. Rajesh Katoch, Advocate For The Respondent : Ms. Radhika Suri, Sr. Advocate with Ms. Rinku Dahiya, Advocate S.J. VAZIFDAR, CHIEF JUSTICE (Oral): This is an appeal against the order of the ITAT dismissing the appeal of the Revenue in respect of the Assessment Year 2008-09. The cross appeals were filed before the Tribunal. The respondent-assessee, however, has not challenged the order of the Tribunal. 2. According to the appellant, the following substantial questions of law aris .....

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duction u/s 80-IB in these units? (ii) Whether on the facts and circumstances of the case, the Hon ble Income Tax Appellate Tribunal was right in law in upholding the decision of ld. CIT(A) deleting the addition of ₹ 14,34,018/- made by the AO on account of advances to sister concerns while the Assessee is paying more interest on borrowed funds and hence the judgment of Hon ble Punjab & Haryana High Court in the case of CIT vs. M/s Abhishek Industries Ltd. 286 ITR1 (P&H) is fully a .....

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e assessee had failed to file revised return for claiming enhanced deduction? (iv) Whether on the facts and circumstances of the case, the Hon ble Income Tax Appellate Tribunal was right in law in upholding the decision of ld. CIT(A) in allocating interest expenditure of Ludhiana unit for the funds invested in Unit-I, Unit-II and Unit-III at Samba (J&K) based on ration between own capital and borrowed funds when the assessee has himself failed to file any evidence of self generated funds bei .....

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le for deduction under Section 80-IB. The Assessing Officer did not deal with the assessee s further contention that the Ludhiana Unit from which the funds have been transferred to the Samba Unit had sufficient interest-free funds and reserve funds for the purpose of investing in the three Samba Units. The Assessing Officer applied a rate of 12% towards interest on the funds advanced by the Ludhiana Unit to the three Samba Units and computed the amount accordingly. 4. The CIT (Appeals), however, .....

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Unit, interest-free funds were available and that the funds had also been borrowed by the Ludhiana Unit from financial institutions on interest. The CIT (Appeals), accordingly, adopted the approach of finding out the ratio of the borrowed funds to the interest-free funds. It was found that as per the balance-sheet as on 31.03.2008, about 43 per cent of the capital constituted the interest-free reserves amounting to about ₹ 48.6768 crores, whereas, the borrowed funds constituted 57 per cent .....

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