TMI Blog2018 (11) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... erence in power & fuel expenses was explained by the assessee stating that Vijayawada unit is supported by backup of DG sets and it was operating electrical flameless furnaces for Vijayawada unit. CIT should not have take up the case for revision basing on the additions made in Assessment Years 2011-12. Each A. Yr. is independent and record also is separate. AO has called for all the details necessary before allowing the deduction under section 80IC and there is no error in the assessment order. The Ld. Pr. CIT was unable to specify any issue which made the assessment as erroneous or prejudicial to the interests of the Revenue - decided in favour of assessee. - ITA No. 310/VIZ/2017 - - - Dated:- 6-11-2018 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, HON BLE ACCOUNTANT MEMBER For The Assessee : ShriG.V.N. Hari Advocate. For The Department : ShriD.K. Sonawal CIT DR ORDER PER D. S. SUNDER SINGH, ACCOUNTANTMEMBER This appeal by the assessee is directed against the order of Principal Commissioner of Income Tax, Vijayawada, dated 14/03/2017 under section 263 of Income tax act for the Assessment Year2012-13. 2. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,77,16,431/-, the expenditure debited to Vijayawada plant was ₹ 4,57,02,276/- and to Rudrapur unit was ₹ 20,14,155/-. The Ld. Pr. CIT further observed that finance costs debited to Vijayawada unit was at ₹ 2,83,89,878/- and to Rudrapur unit was only of ₹ 59,11,678/-. From net profit point of view as well as expenditure debited to the profit loss account, the Ld. Pr. CIT observed discrepancies. The Ld. Pr. CIT further observed that the assessee declared huge profit in the case of Rudrapur plant and marginal profit in the case of Vijayawada plant thereby the Ld. Pr. CIT suspected correctness of the claim made by the assessee under section 80IC of the Act. Accordingly, the Ld. Pr. CIT issued show-cause notice, for which the assessee has filed a detailed explanation, explaining the reasons for less profit in Vijayawada unit and substantial profit in Rudrapur plant stating that the exemption from Central Excise Duty as the unit is located in backward area and submitted the information item wise in tabulated form supporting the claim and the reasons for deriving more profit from Rudrapur plant, both on technical as well as the items of expenditure. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure and inflated the profit of the Rudrapur plant to claim the excess deduction. In this case, as stated earlier, the case was taken for scrutiny and in the course of scrutiny proceedings, the Assessing Officer has called for the details regarding the claim of deduction under section 80IC and also the report under section 10CCB, which was furnished by the assessee during the course of assessment proceedings. The ld. counsel for the assessee, drew our attention at page No. 2 of the paper book and submitted that as per the computation of total income, the gross total income was worked out to ₹ 1,70,95,278/- and the deduction under section 80IC was worked out to ₹ 1,25,93,958/- both the computation of total income as well as adjusted statement of income for Rudrapur plant was placed before the Assessing Officer at the time of assessment. The Assessing Officer, by issuing notice under section 142 along with questionnaire, has called for the details of the expenditure debited under various heads vide letter dated 21/10/2013, which was furnished by the assessee. The Assessing Officer also further called for the details vide letter dated 15/04/2014 in respect of claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 Location of the unit Autonagar, Vijayawada, Andhra Pradesh Rudrapur, Uttarakhand 4 Finished Product Liners within tolerance of 10 microns with Bharat-IV specifications Liners with open tolerance as per the market demand with Bharat-11 specifications 5 Customers Vehicle manufacturers like Ashok Leyland, Tata Motors, Mahindra, Eicher, etc. , International customers like Johndeere Replacement market like mechanics, re-boring workshops and automobile spare Parts 6 Quality of the output TS 16949 Certified No such certification 7 Year of establishment 1974 2007 8 Privileges No privileges Excise duty exemption enjoyed by the unit CST concession Power concession 9 Area ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Employees Benefit Expenses 6,32,67,719 1,52,82,472 1. Strength of Employees is more. 2. Labour cost per head is more in Vijayawada 3. The staff welfare cost is more because the worker hove to work before Electrical Furnace in Vijayawada. 4. Dress code and other amenities have to be provided to workers in Vijayawada as per the norms of ISO/QS 9000. 5. Since the plant area is large in Vijayawada, more labour is required. 6. Basic wage structure is high because of aged workforce. 2. Depreciation 3,84,41,046 53,35,536 1. The cost of machinery is more in Vijayawada because sophisticated machinery is required to maintain quality standards. 2. The machinery in Vijayawada is required for processing right from aw material to Finished products. 3. Since the quantity of production is Is more than that of Rudrapur unit 3. Finance costs 2,83,89,878 59,11,678 1. Since the out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 Miscellaneous Expenses 85,37,576 19,45,237 The other expenses under this head are also high in Vijayawada Unit because of high volume of production and this is head office of the assessee - company. 9. In respect of managerial remuneration to the Vijayawada unit, it was explained by the assessee that after commencement of Rudrapur plant, there was no increase in managerial remuneration, therefore, no expenditure is required to be allocated and debited to Rudrapur plant. In the case of labour expenses, ld. counsel for the assessee explained that labour expenses were totally related to the Vijayawada plant. Regarding power and fuel, the assessee explained that it was dependent on the plant capacity, usage of the plant and average consumption, power backup etc. and the details furnished in the tabular information. The assessee also submitted before the Ld. Pr. CIT that Vijayawada unit is operating Electrical flameless furnaces for the purpose of manufacturing rough castings which activity is absent in Rudrapur plant. There are power backup DGs sets at Vijayawada unit that were in use during th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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