TMI Blog2022 (12) TMI 206X X X X Extracts X X X X X X X X Extracts X X X X ..... was denied to the assessee by the AB. The facts as thrashed out by the CIT(A) referring to the supporting evidences culled out from the assessment order itself taken into consideration by the CIT(A), we find are not rebutted by the Revenue. We find that the unrebutted facts on record are that the unit has duly been set up in the leased premises, electricity usage demonstrates the claim of the assessee, machinery has been purchased by the new unit. These facts are not disputed by the Revenue, ACs have been manufactured and sold. These have also been accepted by the AO Excise Tax records and all contemporaneous evidence remains unassailed on record. Accordingly, in the facts as they stand, we find that the facts as available on record cannot be faulted with. Being satisfied by the reasoning and conclusion drawn by the ld. CIT(A), the ground No. 2 raised by the Revenue is dismissed. Disallowance u/s. 36(1)(iii) - investment was made in the sister concern - HELD THAT:- The facts taken into consideration available on record namely that the assessee had sufficient interest free funds available sources in the year under consideration and the availability also in the year when the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-iteration, the parties have unanimously submitted that the arguments advanced in ITA 281/CHD/2018 would address the grounds in the other appeal also. Accordingly, in the said background the arguments advanced by the parties on the issues arising are addressed. 3. The ld. Sr. DR inviting attention to the assessment order specific page 29 of the assessment order submitted that he would be arguing ground No. 2 raised by the Revenue first as for Ground No. 1 he would merely be relying on the assessment order. 4. Thus, addressing Ground No. 2 attention was invited to page 29 of the assessment order. Referring to the order, it was his submission that the assessee has claimed 80IC deduction for its Kala Amb Unit. The said unit, it was submitted, came into operation on 08.01.2010 and the AO considering the expenses claimed in respect thereof required the assessee vide ordersheet entry dated 08.03.2013 to furnish the reasons for low expenses. The assessee, it was submitted, explained vide reply dated 15.03.2013 that inadvertently labour expenses and electricity expenses by mistake were booked in the name of a sister concern M/s. Amrit Aircon System Pvt. Ltd. from whom the specific p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication for power connection etc. have already been submitted to your goodself. 4.2. The explanation offered by the assessee, it was submitted, was faulted with by the AO. The AO held that the assessee had not provided evidence which had been sought earlier. The specific shortcomings set out in the assessment order highlighted by the Sr. DR and heavily relied upon by the Revenue are extracted hereunder for completeness. These read as under: It is to be noted that even after issue of show cause dated 22.03.2013 assessee company had not given any evidence or proof to prove that i) old machines of its sister concern M/s. Amrit Aircon System Pvt. Ltd. have not been used in the production of the Kala Amb unit of the assessee company; ii) the high electricity consumption after commencement of Kala Amb unit is exclusively due to setting up of new machines; iii) the electrical capacity of the new machines is high enough to justify the high consumption after 08.01.2010; iv) the new unit is an integrated and independent one; v) the old machines have not been used after 08.01.2010 and electricity connection to old machines was disconnected. 4.3. Accordingly, it was his submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cient time had been given to the assessee to reply to the ordersheet entry dated 22.03.2010, the Inspection/Enquiry Report of the ITO and ITI and the reply filed, it was submitted, was considered. It has been extracted in pages 33 to 36 of the order. As a result of this, the AO, it was submitted, has passed a detailed order elaborating the reasons why 80IC claim of the assessee was to be disallowed. 4.6. Heavy reliance was placed upon the reasons set out in the assessment order: In view of the above, following facts are proved beyond doubt: 1. The manufacturing process of the assessee company is similar to its sister concern i.e. M/s. Amrit Aircon Systems Pvt. Ltd. and both are in the business of manufacturing of Air Conditioners. 2. The old machines belonging to the sister concern of the assessee company i.e. M/s. Amrit Aircon System Pvt. Ltd. have been used by the sister concern for production in M/s. Amrit Aircon System Pvt. Ltd. during the earlier period before the commencement of production in the Kala Amb Unit. This means that the old machines have been used for production of finished goods by M/s. Amrit Aircon System Pvt. Ltd. in the period prior to commence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in its year of commencement of production and also in the later years. 8. As per plan of installation of machinery and manufacturing process, it is not possible to run the unit without the use of old machines of M/s. Amrit Aircon System Pvt. Ltd. 9. The wages and salary of the assessee company for the month of January 2010, February 2010 and March 2010 have been borne by its sister concern M/s. Amrit Aircon System Pvt. Ltd. 10. Assessee company has failed to prove that the new machines have started production of finished goods after disconnection of electricity to the old machines of its sister concern i.e. it has failed to prove that the production in Kala Amb unit has taken place exclusively out of new machines only without the use of old machines. The assessee company has failed to prove that the old machines of M/s. Amrit Aircon Systems Pvt. Ltd. have not been put to use in the manufacturing process of the assessee company and have been lying idle since commencement of production in Kala Amb unit from 0(sic)S.01.2010. It has failed to prove that electrical capacity of new machines is so huge that high production in Kala Amb unit from 08.01.2010 to 31.03.2010 is p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the Inspection Report carried out u/s. 131. Accordingly, relief granted by the CIT(A) it was submitted, is unjustified on facts. 5. The ld. AR appearing on behalf of the assessee relied upon the synopsis filed. Addressing these issues, attention was also invited to the sequence of dates stated to be emerging from the single paged document filed on 02.07.2021. The submissions summed up in the synopsis read alongwith the 97 paged Paper Book on submissions on facts and 128 paged Paper Book on decisions was heavily relied upon. It was submitted that these have been relied upon to argue that relief granted to the assessee by the CIT(A) on facts was fully justified on facts. 5.1. For ready reference, we first extract the relevant chart of dates wherein documents available in the respective Paper Book are highlighted and the sequence of events is stated to be emerging: Event Date Relevant Page of Paper book Return Filed on 13.10.2010 Date of start of commercial production at Kala Amb unit (The other units were working at 100% capacity and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nology, hence manufacturing of ACs started may suddenly require to be stopped. It was his submission that every change in technology/knowledge of how AC was to be rated or considered most suitable dictated that new requirements were required to be inbuilt in the product being manufactured. These marketing gimmicks and strategies often resulted in manufacturing of products which were thus found to be out of sync with the marketing requirements. Hence, manufacturing of certain type of ACs at times had to be stopped abruptly. The earlier activity consequently had to be stopped. The expenses incurred for setting up the new plant, it was submitted, is accepted by the AO. It The heavy use of electricity usage by the assessee has also been noticed by the AO resulted in sale worth of Rs. 22 Crore which also has been noticed by the AO. The business was carried on, it was submitted, till Sept., 2011, however, on account of some problems, the assessee had to shut down its AC manufacturing unit in the highly competitive market and the assessee instead started manufacturing activity of products for Philips lights and luminaries from 29.03.2013 from the same premises. This fact, it was submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as passed on 31.03.2013. In the said background, it was his submission that the assessee admittedly before the AO did not get a reasonable opportunity to argue its case although a reply was made available. It was submitted that a meaningful and effective opportunity for a fair hearing admittedly was before the First Appellate Authority. These facts itself will show that the AO without giving an effective opportunity to the assessee to address the material available on record passed the unfair and incorrect order. 5.6. In the said background, attention was invited to pages 7 to 12 of the impugned order wherein all allegations made by the AO had been tabulated by the assessee for the benefit of the First Appellate Authority. These, it was submitted, have been extracted in para 8 by the ld. CIT(A). These facts it was submitted, have not been not rebutted by the Revenue in the present proceedings. These were heavily relied upon. 5.7. It was argued that the Revenue is aggrieved that the Inspector's Report was discarded. This report, it was submitted, has no relevance as the two persons deputed to inspect could not distinguish between the machinery required for manufacturing AC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id for the period of 5 years. Now, we would like to explain that assessee is a newly established unit which is evident from following points: Unit at Kala Amb is an Independent Unit started with an investment of Rs. 94 Lacs in Machinery which includes a complete oven unit, assembling unit, conveyor line, gas charging line etc. The List of machineries purchased by assessee (Pg 61 of PB) along with their electricity load (Pg 62-63 of PB) and line diagram (Pg 64 of PB) depicting manufacturing process of air conditioners is forming part of paper book. Clearance certificate dated 06.05.2009 from Himachal Pradesh Pollution Control Board (HPPCB) was obtained after due inspection of site and machinery. The certificate is forming part of paper book at Pg 55 to Pg 56. Separate registration was obtained from the Director of Industries (DIC) which is a Nodal Agency and legally recognized authority of the Government to regulate setting up of industries wherein date of commencement of production is mentioned as 08.01.2010. The registration certificate is forming part of paper book at Pg 52 to Pg 54. Separate inspection has been done by Central Excise Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be sold by them. The assessee company has invested appx. Rs. 94 Lacs in the Plant Machinery up to 31.03.2010 which is sufficient enough to run a plant at the initial stage In the F.Y 2008-09 as well as in the initial months of year under consideration, M/s. Amrit Aircon System Private Limited was working in full swing and there was no intention of the said concern to reduce its production and transfer its machinery to assessee company. From the details of machinery purchased by assessee in the year under consideration, it is clear that all the machineries necessary for the production of AC's has been newly purchased by the assessee in its own unit. Initially, the Kala Amb unit was established for manufacturing and assembling of AC's, however, at the time of physical inspection of machinery i.e. 29.03.2013, the assessee was engaged in the manufacturing/assembling of Phillips goods for which totally different type of machinery is used by the assessee It is also pertinent to note that assessee has stopped production of AC's in the month of September 2011 and the related machinery was not in working condition at the time of physical verificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption is concerned, the assessee has itself admitted that due to inadvertent error, a portion of these expenditures is claimed by M/s. Amrit Aircon System Private Limited. This fact was brought to the notice of the AO during the course of assessment proceedings and it was also explained to the AO that the portion of expenditure excessively claimed by M/s. Amrit Aircon System Private Limited has already been disallowed by the AO of that concern in its assessment order passed u/s. 143(3) of the Act. The copy of the order passed by AO u/s. 143(3) of the Act in the case of M/s. Amrit Aircon System Private Limited is forming part of paper book at Pg 49 to Pg 51. Regarding a quantum jump in the electricity expenditure in the months of Jan-March, as pointed by the AO, as compared to the very low expenditure in the earlier months, it is submitted that the AO has failed to appreciate the fact that M/s. Amrit Aircon (P) Ltd. had a turnover of approx Rs. 8 Cr in the months of Oct-Dec 2009 whereas M/s. Amber Enterprises (P) Ltd. had a turnover of Rs. 22.63 Cr in the months of Jan-March 2010. Since, Amrit Aircon's business had reduced by a huge extent, thus it had a turnover of around ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.1. It is also relevant to extract the specific objections of the AO tabulated by the assessee and addressed by the assessee before the First Appellate Authority in para 8: 8. Contesting the aforesaid observations of the AO, the appellant insisted that the eligibility criterion for the claim of deduction under section 80IC was fulfilled in all parameters and that the disallowance of the said claim was not only unwarranted but also arbitrary. The appellant's contention with regard to each of the objections of the AO was furnished in an annotated form during the appellate proceedings. It would be apposite to extract the same here in below: Sr. No. AO's Comments Assessee's submissions 1. The assessee and its sister concern namely M/s AmritAircon System Private Limited are engaged in the same line of business. There is no bar in the Act which prohibits the assessee to carry on the same business as carried by its sister concern at the same place where premises of sister concern is situated and therefore, the deduction claimed u/s 80-IC of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction cycle, manufacturing process, machinery deployed investments made and technology used are key decisive factors. Therefore, the ITO and 777, on whose report the AO has placed Reliance and who are not technical persons, cannot draw a conclusion in the inspection of only few hours that assessee is not an integrated and independent unit. As per inspectors, there was no clear demarcation of machinery of assessee and M/s Amrit Aricon System Private Limited at factory premises, it is submitted that production cycle is a technical process and only technical persons like production manager can explain it better and as evident from the Page 5 of statement of Sh. Sanjay Sharma (Production Manager) as recorded during the course of physical inspection, that machinery installed in the working area of assessee is purely related to assessee itself and bills of machinery were also produced by him. Moreover, the assessee has prepared separate lease deed from the premises taken on rent from M/s Amrit Aricon System Private Limited wherein the area taken on rent is clearly identifiable. Lastly and most importantly, at the time of Inspection i.e. FY 2012-13, there was no productio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be said that the unit was incapable of carrying out the production in January 2010. 7. The use of old electricity connection of M/s Amrit Aircon System Private Limited by assessee and high consumption of electricity from January 2010 to March 2010 proves that machinery of M/s AmritAircon System Private Limited has been used by assessee in its year of commencement of production as well as in the subsequent years. It is an admitted fact that and till the date of sanction of its own electricity load, the assessee has used the electricity connection of M/s AmritAircon System Private Limited and there is no violation of conditions of section 80-IC of the Act. Further, the high consumption of electricity by assessee as compared to M/s Amrit Aircon System Private Limited is obvious due to the fact that in the entire FY 2009-10 and more so majorly upto December 2009, M/s Amrit Aircon System Private Limited had made sales of Rs. 55.50Crores as against the sales of Rs.22.63 Crores achieved by the Kala Amb unit in a period of 8th January 2010 to March 2010 and which obviously would have a huge upward effect on the consum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf sufficient by the AO has not, been clarified by him while passing the Assessment Order. 11. The old machinery of M/s AmritAircon System Private Limited has not been transferred in books of assessee in order to avoid disallowance of deduction u/s 80-IC of the Act. This conclusion of AO is rather his own belief without any fact on record. 12. The value of new machinery installed on 08.01.2010 was Rs.57,50,308/-not Rs.94,70,803/- and therefore, the assessee is using old machinery of its sister concern which is more than 20% of the value of new machinery and therefore, the assessee has violated the conditions of section 80-IC of the Act. It is a fact on record that all major machineries worth Rs.81.22 Lakhs were installed and running in the assessees unit by January 2010 and it is not mandatory that all the machinery including gensetsetc must be installed for start of commercial production . 13. The unit was never capable of producing goods of its own and therefore, has never came into existence. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that withdrawal of the claim of deduction under section 80IC is unsustainable. The eligible new unit, admittedly, commenced operations from the leased premises with the aid of electricity connection and labour, also taken on lease from the sister concern viz. Amrit Aircon Pvt. Ltd. In the assessment proceedings, it was admitted that the expenses on electricity, fuel, wages salary amounting to Rs. 7,57,793/- were inadvertently booked in the accounts of the sister concern, which was subsequently taken care of in the assessment proceedings of the said sister concern for the A.Y. 2010-11. The eligible unit of the appellant company was set up with a capital outlay of approximately Rs. 94 lakhs in purchase and procurement of plant and machinery. Besides, all the necessary legal clearances for setting up of the unit was stated to have been complied with. The eligibility conditions as specified in section 80IC is seen to have been met in entirety. Merely because the new unit was set up in leased premises, it's existence and operationality cannot be doubted. It is not the case of the Assessing Officer that there was no investment in plant and machinery for setting up the eligible uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e premises after the closure of the manufacturing of air conditioners and any conclusion drawn on such basis cannot be relied upon to deny the claim of deduction to the appellant under section 80IC of the Act. It is a fact on record that at the time of inspection in March, 2013, the process of manufacturing of air-conditioners stood ceased since November, 2011 and the plant and machinery installed at the said premises with substantial modification was, instead, seen to have been used for the production of Philips luminaries. In such a situation, it is nothing but presumptuous on the part of the inspecting team to observe or comment that the machines installed in the unit were old or appeared to have old power connection of more than 5-6 years vintage or that the old machines of the sister concern were used in the manufacturing of air-conditioners at the relevant point of time. Reliance on such observations of the inspecting team falls in the realm of giving credence to tendentious or fanciful thinking. The report beset with such fatalities cannot be relied upon to draw any adverse inference with regard to the existence of the facility for manufacture of air conditioners at the rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material used by it in arriving at its finding. Such a finding is vitiated because of the use of inadmissible material. In this regard, the decision of the Hon'ble Chandigarh Bench of the Tribunal in the case of M/s. Shiva Exports Vs. ITO as reported in 28 SOT 512 is directly in support of the appellant wherein under similar circumstances, the claim of deduction under section 80-IA was allowed. On similar lines is another decision of the Hon'ble Chandigarh Tribunal in the case of ACIT Vs. M/s. Octave Exports, MANU/IG/0282/2014 : 165 TTJ 425. Considering the whole gamut of facts, it is held that the action of the AO in disallowing the claim of deduction under section 80-IC of the Act is not based on correct reasoning and hence not sustainable. The grounds of appeal pertaining to the aforesaid impugned issue are, thus, considered allowed. (emphasis supplied) 8. On a careful consideration of the entirety of facts before us, as referred to hereinabove from the record we find no infirmity in the order. In the face of the unrebutted factual findings on record, the suspicions aroused by the Report have no credibility. The reliance placed by the Revenue accordingly on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt on 30.11.2012. This, it was submitted, was furnished on 18.01.2013. The assessee, it was submitted, thereafter vide ordersheet entry dated 04.02.2013 was required to furnish details of allocation of expenses amongst various units. The assessee was required to explain why expenses may not be allocated on the basis of turnover of each unit as it was noticed that the expenses pertaining to all the units have been entered for all the units, however, it was noticed that they have mostly been debited to non 80IC units. The assessee, it was submitted, as per reply dated 28.03.2013 claimed that the books of account of each unit were maintained as an independent unit and were consequently accounted for in that unit only. 9.1. The AO considering the record, it was submitted, concluded that no proof or evidence had been submitted to prove that the expenses relating to interest other than term loan, Directors remunerations and bill discounting charges were exclusively related to that unit only. Accordingly, it was concluded that the assessee company was claiming more expenses in the non-exempted units and less from the exempted units. It was submitted that by this type of allocation, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal ground may be dismissed. 10.3. For ready reference, the submissions advanced by the assessee heavily relied upon in the present proceedings are extracted from pages 3 to 6 of the synopsis is reproduced hereunder: OUR SUBMISSIONS: 1. Regarding first issue of disallowance made by AO u/s. 36(1)(iii) of the Act, our point wise submission is as under: a) Issue of disallowance made by AO u/s. 36(1)(iii) of the Act on account of Building under Construction (BUC) During the year under consideration, the assessee has made additions of Rs. 2,38,00,011/- under the head Building under Construction (as evident from page 1 of the paper book wherein under the head of Fixed Asset, balance of Capital Work in Progress (CWIP) has been separately shown) and unit wise details of the same are tabulated below. These additions were made out of sufficient own funds of Rs. 88,13,69,061/- in the shape of Share Capital (Rs. 1,79,04,800/-) and Reserves and Surplus (Rs. 86,34,64,261/-) which is much more the total balance of Building under Construction of Rs. 2,38,00,011/-. The same is evident from Consolidated Balance Sheet forming part of paper book at Pg 1 of the Paper Book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Selaqui Unit V NIL NIL NIL NIL Selaqui Unit VI 28,99,301 NIL NIL 28,99,301 Kala Amb NIL NIL NIL NIL Total 2,09,17,237 1,10,50,061 10,12,102 3,29,79,299 From a perusal of above chart, your goodself would notice that the units namely Kala Amb Unit, Kasna Unit and Unit-V-Selaqui in respect of which disallowance of interest has been made by the AO have not incurred any finance cost. Therefore, at a first instance there is no question of disallowing interest in respect of these units. Now coming on the second thought that if these units have not raised any borrowed funds then from which source these units have met their capital needs, it is submitted that on consolidated basis, the group has interest free own funds of Rs. 88,13,69,061/- in the shape of Share Capital and Reserves and Surplus whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,82,37,705 2,95,56,053 2,91,17,134 5,46,07,533 2008-09 69,01,06,517 3,21,75,414 5,88,31,506 10,35,40,643 From a perusal of above chart, your goodself would appreciate that the sufficient own funds were available with the assessee in the year of making investments as well as in the subsequent years as compared to borrowed funds taken by assessee and therefore, to take a presumption that investment has been made out of borrowed funds would be baseless and against the facts of the case. It is also pertinent to mention here that the AO has not been able to prove any nexus between the borrowed funds with the investments made in the sister concern and the said fact is clearly admitted by CIT(A) in his order dated 08.12.2017 in Para 19 of the order. d) For all the issues sited above and after a perusal of above chart, the submissions of the assessee and findings of the CIT(A)-Patiala are as under: Objections of the AO Findings of the CIT(A)-Patiala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. We have heard the rival submissions and perused the material available on record. The relevant finding of the ld. CIT(A) under challenge in the present proceedings is reproduced hereunder: 15. Challenging the action of the AO, the appellant contended that the amount appearing in the balance sheet of the company under the head CWI P is related only to the building under construction, as is clearly demonstrated in the unit-wise audited balance sheet maintained by the appellant. It was further submitted that the amount spent on the construction of building was out of own non-interest-bearing funds which were more than sufficient to cover up the expenses on that account and, therefore, no capitalization of interest was called for on the CWI P on building. Regarding the amount spent on installation of machinery, it was contended that there was no CWI P of machinery as per the balance sheet of the appellant company as plant and machinery were purchased at various units and were also put to use during the year under consideration. It was also averred that the appellant company had voluntarily capitalized interest of Rs. 39,77,405/- under the head plant and machinery in its vari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds for its business purposes and the fact that it has followed a systematic accounting system of recognizing the interest cost for the specific purposes for which the borrowed funds have been used. On the other hand, it is evident from the impugned assessment order that the AO has not proved any nexus of borrowed funds with the amount spent on building under construction in additions made to the machinery. In the circumstances, and respectfully following the judicial precedents of the jurisdictional Benches of the Tribunal and the jurisdictional High Court, the disallowance of Rs. 17,54,534/- Rs. 8,56,995/- aggregating to Rs. 26,11,529/- is directed to be deleted. The grounds of appeal pertaining to this issue are, thus, treated as allowed. 17. The next ground of appeal [Ground Nos. 2.1 2.2] pertains to the disallowance of interest of Rs. 17,70,000/- computed @ 12% on the investment of Rs. 1,47,50,000/- made by the appellant in its sister concern. The case set up by the AO is that the appellant is having interest expenditure in its profit and loss account and simultaneously it has shown a total investment of Rs. 1,47,50,000/- in the shares and share application of its sis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Bright Enterprises Private Limited MANU/PH/2105/2015 : [2016] 381ITR 107. 19. The submissions of the appellant have been considered. The same issue had come up for consideration in the appellant's own case for the immediately preceding Assessment Year 2009-10 wherein there was a finding that the said investments have not been made in the year under consideration. It has also been held that no borrowed funds have been used for the purposes of making such investments and further more the investments have been made in a group concern falling under the same management. On the other hand, the AO has not been able to prove any nexus between the borrowed funds with the investments made in the sister concern. Accordingly, considering the facts of the case and in view of the detailed findings in the appellate order in the appellant's own case for the immediately preceding year, the disallowance made by the AO is, hereby, directed to be deleted. The grounds of appeal pertaining to the aforesaid issue are, thus, allowed. 12. We on a careful consideration of the entire facts and circumstances as available on record and considering the same in the light of the submissions ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AY 2010-11 and the reason for making the disallowance are identical for the AY 2011-12. The aforesaid assessment order for the AY 2010-11 was agitated in appeal which has been decided earlier vide the order dated 08.12.2017 in Appeal No. 82/IT/CIT(A)/PTL/2013-14 and accordingly for similar reasons and findings as given in the said appellate order, the impugned disallowance of deduction u/s. 80-IC is not sustainable. Hence, these grounds of appeal are allowed accordingly. 6. Vide grounds Nos. 1.1 to 1.2, the appellant has sought to challenge action of the AO in making a disallowance of Rs. 11,82,030/- computed 12% on the investments of Rs. 99,40,000/- made by the appellant in its sister concerns. The case set up by the AO is that the appellant is having interest expenditure in its profit and loss account and simultaneously it has shown a total investment of Rs. 99,40,000/- in the shares of its sister concerns namely M/s. Amber Aviation (I) Pvt. Ltd. of Rs. 98,50,000/- and M/s. Amber Organic Farming Pvt. Ltd. of Rs. 90,000/-. The AO mentions that the said investment in M/s. Amber Aviation (I) Pvt. Ltd. was made by the appellant in the earlier years and the same cannot be said to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant of Rs. 90,000/- only in the shares of M/s. Amber Organic Farming Pvt. Ltd. made in the year under consideration, the appellant submitted that it had sufficient own funds to the tune of Rs. 67.61 Crores as on 31.03.2011 and even the net profit before taxes for the said year are Rs. 23.00 Crores and thus the same are more than sufficient to cover the minor investment amount of Rs. 90,000/-. The appellant also furnished detailed chart of borrowed funds versus the utilization of the same for business purposes to support the argument that no borrowed funds have been utilized for making the said investment. 8. The submissions of the appellant have been considered. The said issue had come up for consideration in the appellant's own cases for the AY 2009-10 and AY 2010-11 wherein in respect of the investment of the appellant in its sister concern namely M/s. Amber Aviation (I) Pvt. Ltd., there is a finding that the said investment has not been made out of borrowed funds and further more the appellant had sufficient own funds to make the said investment. Even in respect of the investment of Rs. 90,000/- made by the appellant in its sister concern M/s. Amber Organic Farming P ..... X X X X Extracts X X X X X X X X Extracts X X X X
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