TMI Blog2020 (2) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction claimed on the ground of utilization of expertise of management of non-eligible unit in the eligible units at Tahiwal (HP) - HELD THAT:- Issue to b decided in favour of assessee as relying on M/S CREMICA AGRO FOODS PVT. LTD. [ 2018 (1) TMI 842 - ITAT CHANDIGARH] MAT Computation u/s 115JB - Foreign exchange fluctuation loss addition - HELD THAT:- This issue is accordingly restored to the file of the Assessing Officer for verification of the aforesaid submissions of the assessee. If the assessee has offered the aforesaid amount for taxation in the return filed u/s 115JB of the Act in the subsequent assessment year 2010-11, then this amount should not be added / adjusted in computing the income of the assessee u/s 115JB for the year under consideration. This issue, with the above directions, is restored to the file of the Assessing Officer. . Claim of expenditure incurred on abundant project - assessee could not inadvertently make the aforesaid claim in the return of income, however, the plea for this claim was raised during the assessment proceedings - HELD THAT:- Hon ble Bombay High Court in the case of CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd. [ 2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f utilization of expertise of the management in the eligible units at Tahliwal (HP). 3. That the learned CIT(A)-II has erred in computing books profits u/s 115JB by making the following adjustments:- a) Provision for doubtful debt and advances 1,15,89,656/- b) Foreign exchange fluctuation loss 3,39, 41,455/- c) Provision for diminution in value of investments 5,25,600/- 4. That the learned CIT(A)-II has erred in not allowing claim of ₹ 1,00,51,000/- in respect of expenses on the abandoned project. 5. That the learned CIT(A)-II has erred in not allowing the claim of ₹ 3,19,356/- made during the course of proceedings being the amount of employee s contributing towards Provident Fund having been paid before the due date of filing of return. 6. That the learned CIT(A)-II has erred in confirming the char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 169042/- which was considerably decreased during the year as it was only at ₹ 3707511/- as on 31.3.2009. The Ld. Counsel, therefore, has submitted that the aforesaid figures duly show that the assessee was possessed of sufficient own funds to meet the investment in question. He has relied upon the decision of the Hon'ble Supreme Court in CIT (LTU) Vs. Reliance Industries Ltd. [2019] 410 ITR 466 (SC), wherein, the Hon'ble Supreme Court has confirmed the proposition of law that if the own funds / interest free funds are available with the assessee to meet the investment, presumption will be that the assessee had used its own / interest free funds for the said investment. In view of this, we hold that no interest expenditure disallowance u/s 14A of the Act read with Rule 8D(2)(ii) of the I.T. rules is attracted on this issue. 6. So far as the disallowance of administrative expenditure u/s 14A of the Act read with Rule 8D(2)(iii) is concerned, the Ld. counsel for the assessee has relied upon the decisions of the Hon'ble Delhi High Court in the case of Joint Investments Private Ltd vs CIT ITA No.117/2015 dated 25.2.2015 and further in the case of ACB Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IA (8) (10), 10% of the Profits earned by Tahliwal Unit are considered to be an indirect benefits derived from the parent unit i.e. Phillaur. It may not be out of place to mention that the group has struggled for twelve years to come at this level in the market through Phillaur Unit and had earned very small amount of profits as compared to Tahliwal Unit at present. The assessee has submitted his reply on the issue as follows:- Regarding estimated amount of disallowance @ 10% of deduction u/s 80IC in respect of Tahliwal Unit on account some alleged indirect benefits derived from Phillaur Unit by Tahliwal Unit by applying provisions of sub section 8 10 to section 801 A. In this regard it is submitted that no such benefits have been derived by Talhliwal Unit. Moreover the ^provisions of sub section 8 10 to section 801A are not applicable in these circumstances as these provisions refer to transfer of goods and service. While in the 'instant case there is no such transfer of any goods or service and no business has been transacted between the eligible Unit and other Unit of the assessee company which resulted in excess profit to the eli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by assessee for ahliwal Unit will be determined to be the benefits pertaining to Phillaur Unit who is running the similar business. An amount of₹ 12,16,332/- taken @ 10% of the amount claimed to be exempted (₹ 1,21,63,320/-) u/s 80IC as per Audit report will be added in the business income of the assessee for taxation purposes. In the facts and circumstances of the case and as held in the last assessment year in the case of M/s. Cremica Agro Foods Ltd., Ludhiana on this issue 10% of the net profits (claimed to be exempted by assessee) of Tahliwal Unit will be determined to be the benefits pertaining to Phillaur Unit which is running the similar business. An amount of ₹ 16,05,289/- taken @ 10% of the amount claimed to be exempted (₹ 1,60,52,899/-) u/s 80IC will be added in the business income of the assessee for taxation purposes. 6.2 The Ld. CIT(A) has deleted the addition based on the decision taken in the case of the assessee for the A.Y. 2006-07 in the Appeal No. 03/ROT/IT/CIT(A)-l/LDH/2016-17 dated 26.10.2016 by holding as under:- I have considered the facts of the case, the basis of the additions made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s with respect to the deduct ion claimed u/s 80IC amounting to ₹ 1,21,63,320/- in respect of Tahliwal unit which has been reduced by the Assessing Officer by 10% of the amount of net profits for the reason that the assessee is manufacturing biscuits on its own account as well as doing job work for ITC Limited at Tahliwal , H.P. and further i t is also manufacturing biscuits at Phillaur unit , which is not eligible for any deduct ion of its profits. The Assessing Officer has held that since same business is being done at Phillaur unit , Tahliwal unit has derived benefits by way of knowhow, goodwill, trade name, etc. of Phillaur Unit and held that 10% of the profits earned by the Tahliwal unit were indirect benefits derived from the Phillaur Unit as per the provisions of sect ion 80IA(8) (10) of the Act .The Assessing Of f icer reduced the same from the deduct ion claimed u/s 80IC of the Act amounting to ₹ 12,16,332/- 30. Before the Ld.CIT(Appeals) the assessee contended that it had specified all conditions laid down u/s 80IC(2) (a) ( i i ) of the Act and had right ly claimed the deduct ion, while the Assessing Of f icer had wrongly interpreted the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profits to the extent of 10% has been done by the Assessing Officer on estimate basis without demonstrating by way of evidence whether any expenses on account of knowhow, goodwill, trade name, etc. had been incurred by the Phillaur unit with respect to Tahliwal unit . The same has not been demonstrated even before us. Further as rightly held by the Ld.CIT(A) , the provisions of sect ion 80IA (8) and 80IA (10) cannot be invoked in the present case in the absence of any transact ion between the two units. The Ld. DR has not pointed out any infirmity in the order of the Ld.CIT(Appeals) . We, therefore, uphold the order of the Ld.CIT(Appeals) in deleting the reduction of profits of the Tahliwal unit by 10% of the profits amounting to ₹ 16,16,332/- . The ground of appeal No.4 raised by the Revenue is, therefore, dismissed. 6.4 As the matter stands adjudicated, following the ratio laid down which is squarely applicable to the appeals before us, the grounds raised by the Revenue on this issue are hereby dismissed. Respectfully following the above referred to decision, Ground No.2 is accordingly allowed in favour of the assessee and the disallowance / reduction mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e adjustment made /confirmed by the CIT(A) on this issue is upheld. 10. Ground No.4: Vide ground No.4, the assessee has agitated the action of the Ld. CIT(A) in not allowing the claim of expenditure incurred on abundant project. The Ld. Counsel for the assessee in this respect has submitted that the assessee could not inadvertently make the aforesaid claim in the return of income. However, the plea for this claim was raised during the assessment proceedings but the Assessing Officer did not consider the said claim as the same was not claimed in the return of income. A plea was raised before the Ld. CIT(A) also. However, the Ld. CIT(A) dismissed the claim on the ground that since the claim was not made in the return of income, hence, could not be considered at appellate stage. The Ld. counsel in this respect has relied upon the decision of the Hon'ble Supreme Court in the case of National Thermal Power Ltd vs CIT (1998) 229 ITR 383 (SC) and has submitted that the Hon'ble Supreme Court has held that the ITAT has jurisdiction to examine a question of law which even did not arose before the lower authorities but was raised first time before the ITAT. In this respect, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aforesaid decision, if the contribution to the Provident Fund ESI is paid before the date of filing of the return, then no disallowance warranted on this issue. 14. That Ld. DR, on the other hand, has relied on the findings of the lower authorities on this aspect. 15. We find that this issue stands adjudicated by the Tribunal in the case of New Time Contractors Builders (P) Ltd vs DCIT (supra), wherein, the Tribunal while replying upon the decision of the Hon'ble jurisdictional High Court of Punjab Haryana in the case of CIT vs Hemla Embroidery Mills (P) Ltd. [2014] vs 366 ITR 167 (P H) has held as under :- (10) We have considered the submissions of both the parties and perused the material available on record. In the present case, it is an admitted fact that there was delay in depositing the employees' contribution of provident fund and ESIC. However, it is accepted by the AO that the deposit was made before filing of the return of income on 27.09.2013. (11) On a similar issue the Hon'ble Jurisdictional High Court in the case of CIT vs. Hemla Embroydery Mills (p.) Ltd.(supra) held as under: The sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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