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2017 (4) TMI 821 - ITAT DELHI

2017 (4) TMI 821 - ITAT DELHI - TMI - Deduction u/s. 80IC - adjustment made on account of freight charges - Held that:- AO stated that the Baddi Unit was purchasing goods from Faridabad unit and not debiting freight charges. The AO has only made presumptions. The assessee has stated that Baddi Unit has incurred ₹ 44,63,799/- on freight and labour in respect of all purchases. Thus, the Ld. CIT(A) has rightly observed that this amount of ₹ 24,53,532/- is not to be reduced from the tota .....

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entions of the assessee. The AO has worked out the interest expenses on a presumptive basis which is not correct. Thus, the Ld. CIT(A) has rightly observed that the amount of ₹ 16,64,268/- is not to be reduced from the profits and not to be added to the total income, which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) on the issue in dispute and accordingly, dismiss the ground no. 2 raised by the Revenue. - Presumptive interest expense on acc .....

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dismiss the ground no. 3 raised by the Revenue. - Un-proportioned expenses - AO stated that rent, training charges and other administrative charges were not considered while computing the figure of common expenses - Held that:- The assessee has agreed for ₹ 5,00,970/- but stated that the balance expenses were for the Faridabad Unit only. Hence, the Ld. CIT(A) has rightly accepted the contentions of the assessee and rightly directed to modify the same accordingly and partly allowed, whi .....

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Ld. CIT(A) has rightly observed that the interest income may be treated as part of business profits and the amount of ₹ 17,46,414/- was rightly directed to be added to the total income of the assessee, which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) on the issue - I.T.A. No. 2293/DEL/2014, C.O. NO. 12/DEL/2015 - Dated:- 17-4-2017 - SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Department by : Sh. F.R. .....

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the Act, on account of freight charges. 2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in directing not to make adjustment of ₹ 16,64,268/- on account of interest expense for working out deduction u/s. 80IC of the Act. 3. On the facts and circumstances of the case, the Ld. CIT(A) has erred in directing not to make adjustment in respect of interest on loan @12% for working out deduction u/s. 80IC of the Act. 4. On the facts and circumstances of the case, the Ld. CI .....

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appeal. 3. The ground raised in the Assessee s Cross Objection read as under:- 1. That the Ld. CIT(A) erred in confirming the additions made by AO in respect to ₹ 17,46,414/- on account of interest on hundi discounting claimed without giving prejudice to the facts of the case. The above ground is independent and without prejudices to another grounds. The appellant prays for leave to add, alter, modify and withdraw any of the grounds either before or at the time of hearing. 4 The brief fac .....

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nufacturing has been carried out from four units, three at Faridabad and one at Baddi in Himachal Pradesh. In respect of profit of Baddi unit, the assessee company has claimed deduction u/s. 80IC at ₹ 1,15,71,789/-. Various details and documents with regard to income shown and expenses and deduction claimed, were called for and filed. Thereafter, the AO vide Order dated 28.12.2011 passed u/s. 143(3) of the I.T. Act,1961 and assessed the income at ₹ 1,76,62,052/-. 5. Against the said .....

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relied upon the order of the Ld. CIT(A) in respect of the grounds raised in the Revenue s Appeal and reiterated the ground raised in the Assessee s Cross Objection. 9. We have heard both the parties and perused the relevant records available with us, especially the orders of the revenue authorities. We find that Ld. CIT(A) has elaborately discussed the issues no. 1 to 4 raised in the Revenue s Appeal vide para no. 11.1, 11.3, 11.4 & 11.5 and also discussed the Issue No. 1 raised in the Asses .....

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3,532/- is not to be reduced from the total deduction claimed and not to be added to the total income. 11.2. The second adjustment is on account of interest income of ₹ 17,46,4l4/-. As per section 80IC the gross total income should include profit and gains derived by an undertaking or enterprise from any business referred to in the section. The interest income clearly is not from the manufacturing or production business of the appellant. The interest income may be treated as part of busine .....

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,268/- is not to be reduced from the profits and not to be added to the total income. 11.4. The fourth adjustment is also on account of presumptive interest expense on account of loan. The AO stated that no interest charges were booked in Baddi unit. The appellant stated that interest expenses were shown in Baddi unit. In my view, the appellant's contentions have merit. The interest of 12% has been disclosed in the books of account of the Baddi Unit. The addition therefore to the total incom .....

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pted. The deduction should be modified accordingly. The ground of appeal is partly allowed. 9.1 On perusing the above finding of the ld. CIT(A), we find that with regard to ground no. 1 raised by the Revenue s Appeal which is relating to adjustment made by the AO has been on account of freight charges, the AO stated that the Baddi Unit was purchasing goods from Faridabad unit and not debiting freight charges. The AO has only made presumptions. The assessee has stated that Baddi Unit has incurred .....

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account of interest expense of ₹ 16,64,268/- is concerned, we find that the AO made the adjustment stating no interest has been shown in Baddi. The assessee stated that funds on which interest was paid was utilized for Faridabad unit. Hence, Ld. CIT(A) found the merit in the contentions of the assessee. The AO has worked out the interest expenses on a presumptive basis which is not correct. Thus, the Ld. CIT(A) has rightly observed that the amount of ₹ 16,64,268/- is not to be reduce .....

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enses were shown in Baddi unit. . Thus, the Ld. CIT(A) has rightly found the merit in the assessee s contentions. The interest of 12% has been disclosed in the books of account of the Baddi Unit. The addition therefore was rightly deleted by the Ld. CIT(A) and deduction was allowed on this amount, which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) on the issue in dispute and accordingly, dismiss the ground no. 3 raised by the Revenue. 9.4 With regard .....

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