TMI Blog2017 (9) TMI 1408X X X X Extracts X X X X X X X X Extracts X X X X ..... is itself ignoring the alternate contentions of the assessee that if any deduction has to be reduced u/s 80IC in respect of Panel Division that has to be reduced only by ₹ 28,405/-. We allow Ground No.1 taken by the assessee and set aside the order of the Ld.CIT(A) confirming the reduction of the deduction claimed u/s 80IC of the Act by ₹ 10,28,461/-. Thus, Ground No.1 and 1.2 taken by the assessee are allowed while Ground No.1 taken by the revenue stands dismissed. Claim of the deduction u/s 10B - Held that:- Direct the AO to allow the deduction u/s 10B in respect of the disallowance made u/s 40A Profit of the eligible unit for deduction u/s 10B computation - corporate expenses allocation - GP of eligible unit - Held that:- We noted that in the case of the assessee, the profits of the eligible unit were not higher in comparison with the other business. GP rate of eligible unit was 25.20% as compared to the GP rate of other units in aggregate at 29.97%. While the net profit ratio of the eligible unit was 5.87% as compared to the net profit of other units at 15.09%. We noted that in the case of Catvision Products Ltd. [2003 (1) TMI 265 - ITAT DELHI-C]. This Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have no business to start with. Thus, rights of the similar nature specified in section 32(1)(ii) of the Act Claim of depreciation - Held that:- The assessee in the original computation of income reduced a sum of ₹ 6,68,071/- out of the claim of depreciation in respect of building for which the assessee was declaring income under the had income from “house property” but we noted during the impugned assessment year, after the merger, the assessee was not earning any rent and the building being used by the assessee himself, therefore, the assessee filed the revised computation of income and claimed the depreciation on the building amounting to ₹ 6,68,071/-. The assessee has also explained the reasons for the short claim of the depreciation to the AO since the building was not more used for rental purpose. We, therefore, set aside the order of Ld. CIT(A) on this issue and allow the depreciation to the assessee - ITA No.3143/Del/2013 And ITA No.3364/Del/2013 - - - Dated:- 22-9-2017 - SHRI P.K.BANSAL, VICE PRESIDENT AND SH. AMIT SHUKLA, JUDICIAL MEMBER For The Appellant : Sh. Anil Bhalla, CA For The Respondent : Sh. Anshu Prakash, Sr.DR ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e market value of the inter unit transfer but could not discharge the onus which in our opinion lie on him to ascertain the market value in respect of the component which were transferred by the assessee from one unit to the other unit. The onus lies on the AO to bring the comparative instance if the AO was not able to bring any comparative instance, he should adopted the market value on the basis of the value as determined by the Government of India, Excise Department i.e cost plus 10%. Ignoring this value in our opinion, will tantamount to that provision of section 80IA(a) of the Act has not been correctly applied by the AO and, therefore on the basis itself ignoring the alternate contentions of the assessee that if any deduction has to be reduced u/s 80IC in respect of Panel Division that has to be reduced only by ₹ 28,405/-. We allow Ground No.1 taken by the assessee and set aside the order of the Ld.CIT(A) confirming the reduction of the deduction claimed u/s 80IC of the Act by ₹ 10,28,461/-. Thus, Ground No.1 and 1.2 taken by the assessee are allowed while Ground No.1 taken by the revenue stands dismissed. 7. Ground No.1.3 since not pressed by the assessee stan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ison with the other business. GP rate of eligible unit was 25.20% as compared to the GP rate of other units in aggregate at 29.97%. While the net profit ratio of the eligible unit was 5.87% as compared to the net profit of other units at 15.09%. We noted that in the case of Catvision Products Ltd. 84 TTJ (Del) 241. This Tribunal has held that only the direct expenditure has to be considered while working out the profit for the purpose of deduction u/s 80IC. Mumbai Bench of the ITAT also in the matter of DCW Ltd. 132 TTJ (Mum.) 442 held for the purpose of section 80IA that indirect expenses cannot be reckoned in the computation of determining the profits of the eligible undertaking. Ld. DR even though vehemently referred to the order of the AO but could not brought to our knowledge any contrary decision. We, therefore, confirmed the order of Ld. CIT(A) in deleting the reduction made by the AO in the deduction u/s 10B of the Act amounting to ₹ 35,83,048/-. Thus, Ground No.2 of the revenue stands dismissed. 13. Ground No.3 of the revenue related to the restricting the disallowance of ₹ 4,23,507/- u/s 14A r.w. Rule 8D of the Act. 14. We heard the rival submissions on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue s appeal relates to the claim of the depreciation on goodwill amounting to ₹ 5,35,254/-. The AO did not accept the contention of the assessee that the goodwill is eligible for depreciation as in tangible assets. When the matter went before the Ld. CIT(A), the Ld. CIT(A) allowed the depreciation to the assessee. 18. We heard the rival submissions and carefully considered the order of the tax authorities below. In our opinion, the issue involved is duly covered in favour of the assessee by the decision of this Tribunal in the case of Controls Switchgear Contractors Ltd. in ITA No.511/Del/2011 for the AY 2007-08. No contrary decision was brought to our knowledge. We, therefore, confirm the order of the Ld. CIT(A) allowing the depreciation on goodwill of the assessee, thus this ground is allowed. 19. Now, there remains Ground Nos.3 5 and additional ground taken by the assessee before the Ld. CIT(A). Ground No.3 relates to the disallowance of leave encashment u/s 43B of the Income Tax Act. The facts relating to this ground are that the assessee claimed a sum of ₹ 23,60,025/- on account of the leave encashment paid u/s 43B in the revised return, the claim was for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounting to ₹ 6,68,071/-. 23. After hearing rival submissions and going through the order of the tax authorities below, we noted that the assessee in the original computation of income reduced a sum of ₹ 6,68,071/- out of the claim of depreciation in respect of building for which the assessee was declaring income under the had income from house property but we noted during the impugned assessment year, after the merger, the assessee was not earning any rent and the building being used by the assessee himself, therefore, the assessee filed the revised computation of income and claimed the depreciation on the building amounting to ₹ 6,68,071/-. The assessee has also explained the reasons for the short claim of the depreciation to the AO since the building was not more used for rental purpose. We, therefore, set aside the order of Ld. CIT(A) on this issue and allow the depreciation to the assessee amounting to ₹ 6,68071/-. Thus, the Ground No.5 taken by the assessee is allowed. 24. Ground No.6 relates to not adjudicating the additional ground with regard to the gratuity amounting to ₹ 10,62,376/- before the Ld. CIT(A). 25. We heard the rival sub ..... X X X X Extracts X X X X X X X X Extracts X X X X
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