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TMI Blog2020 (5) TMI 202X X X X Extracts X X X X X X X X Extracts X X X X ..... h Bench. The challan towards the fee of the Tribunal had also been deposited on 24/5/2017. There was thus adequate time to file the appeal at the Tribunal. However the accountant could not attend to work from 26/5/2017 up 13/6/2017 since his grandfather got ill and he unexpectedly went on leave. It was only when he attended the office on 14/6/2017 that he realized that the appeal memo had not been filed. He was immediately asked to travel to Chandigarh and file the appeal. It was under these circumstances that there was a delay of one day in filing the appeal. Affidavit of Sh. Jaswinder Kumar confirming these facts is also being enclosed along with this petition. We would also like to draw your attention to the decision of the Supreme Court in the case of Collector Of Land Acquisition vs. Mst. Katiji reported at 167 ITR 471 wherein It was held that Courts should have liberal and pragmatic approach while condoning delay. It was also observed that at the worst that could happen with the condonation of delay was that the issue would be decided on merits after hearing the parties. In view of these facts and circumstances, it is humbly prayed that the delay of one day in filing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 80IC of the Act, 1961 amounting to Rs. 3,04,41,985/- which was processed under section 143(1) of the Act. Later on the case was selected for scrutiny. The A.O. during the course of assessment proceedings noticed that the assessee declared Gross Profit @ 41.12% and Net Profit @ 35.14%. He also noticed that in the preceding years the Net Profit Rate was 32.72% and that the assessee had not debited any expenses on account of technical know how and no expenses on account of market/customer base or goodwill were debited. The assessee submitted that the partner Shri Mohinder Sethi so experienced person having ample knowledge and he was looking after the business of the assessee. Therefore, no expense on account of technical know how had been incurred / debited. The A.O. observed that there was no plausible explanation regarding using of customer / market base or goodwill of sister concern. The A.O. was also of the view that the assessee was not eligible for deduction under section 80IC of the Act on the profit amounting to Rs. 16,41,874/- by observing as under: 7. Normally, payment of royalty or fees for technical services, customer base, good-will is made at a proportion of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facture his own products, there is no reason that a different approach should be adopted in this assessment year. The senior partner Sh. Mohinder Kumar Sethi has been in this line of business as a partner in different concerns since 1973. It was mainly on account of fall in the ratio of depreciation and interest that the N. P. ratio of the year under assessment improved. There was thus no reason to link up the improvement in the N. P. ratio with probable expense on royalty/expense on technical knowhow, goodwill attributable to M/s Fine Switches Pvt. Ltd. It is also pertinent to mention that the firm has adequate technical staff to carry out its manufacturing activity without support from any other concern. The assessee has been in this line of business since its first assessment year i.e. Assessment Year 2007-08 and no such addition has been made in any of the earlier assessment years where assessment was completed u/s 143(3). Copy of the assessment order for all the earlier assessment years stand enclosed above at page no. 77 to 89 above. No technical knowhow has been provided by M/s Fine Switches or any other concern to the assessee and the assessing officer is only presuming i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the goods were sold to the related party at more than market value. In view of the foregoing, it is held that Ld. AO has rightly concluded that the affairs of the eligible business have been so arranged that it has generated more than ordinary profits. Section 80IA(10) empowers the Assessing Officer to estimate such more than ordinary profits as may be reasonably deemed to have been derived in this manner. The AO in this case has estimated the same @ 2% of the sales which cannot in any way be termed as excessive or unreasonable. Ld AO has rightly held that profit to the extent of 2% of sales is not eligible for deduction u/s 80IC. Since Ground of appeal 2 above has been allowed, the sum of Rs. 43,27,395/- on account of sale of copper wire is not to be reduced again from gross sales of Rs. 8,64,21,123/-. Therefore, the disallowance of deduction u/s 80IC amounting to Rs. 17, 28,422/- (2% of Rs. 8,64,21,123/-) is upheld. 9. Now the assessee is in appeal. 10. Ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that neither the A.O. nor the Ld. CIT(A) appreciated the fact in right perspective and the impugned additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planation of the assessee that increase in the higher rate for the year under consideration was due to low expenses on account of interest and lesser amount of depreciation. The Assessee also explained that one of the partner namely Shri Mohinder Sethi was experienced and that no expense on account of royalty / technical know how had been incurred by the assessee. The claim of the assessee that neither in the preceding year nor in the succeeding year such disallowance has been made in the similar circumstances has not been rebutted. Therefore, considering the totality of the fact as discussed herein above we are of the view that the impugned disallowance made by the A.O. and sustained by the Ld. CIT(A) was not justified, accordingly the same is deleted. 14. The next issue vide ground no. 3 relates to the sustenance of addition of Rs. 1,68,593/- on account amount stated to be charged in excess from sister / related concern. 15. The facts related to this issue in brief are that the A.O. asked the assessee to furnish the details of sale made to sister / related concern and to the outsider during the year under consideration. On scrutinizing the details the A.O. observed that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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