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Income Tax Appellate Tribunal, DELHI ‘B’ BENCH,
Before: SHRI N.K. BILLAIYA, & MS. MADHUMITA ROY
PER N.K. BILLAIYA, ACCOUNTANT MEMBER,
This appeal by the Revenue is preferred against the order of the
Commissioner of Income Tax [Appeals] - 38, New Delhi dated
27.02.2017 pertaining to Assessment Year 2004-05.
The solitary grievance of the Revenue is that the ld. CIT(A) erred
in deleting the disallowance of Rs. 4,65,33,658/- on account of
deduction claimed u/s 80IB of the I.T. Act, 1961.
At the very outset, the ld. counsel for the assessee stated that
the quarrel has been settled by the Tribunal in assessee’s own case in
Assessment Year 2003-04 which is the immediately preceding
Assessment Year and in Assessment Year 2005-06, which is the
immediately succeeding Assessment Year.
The ld. DR fairly conceded to this.
We have carefully considered the orders of the authorities below
and have carefully perused the order of this Tribunal in assessee’s own
case in Assessment Years 2003-04 and 2005-06. We find force in the
contention of the ld. counsel for the assessee. We find that this
Tribunal in ITA No. 4794/DEL/2012 for Assessment Year 2003-04 has
considered an identical quarrel. The relevant findings of the co-
ordinate bench read as under:
“11. This is a second round of appellate proceedings. The ITAT C Bench of the Delhi Tribunal in ITA 1562/Del/2007 for the same A.Y. 2004-05 vide order dt. 19th December, 2008, has remanded the issue to the file of the A.O. by observing as under.
“8.2. We have considered the facts of the case and rival submissions. It is clear that the provision contained in section 80IA(8) is applicable to the facts of this case. But as earlier pointed out, what is required to be found out is whether “the market value of transferred goods on the date of transfer” in the Indian market. This has not been done either at the stage by the Ld. Counsel, this matter is restored to the file of the AO for fresh adjudication after hearing the assessee. The matter shall be decided in the light of directions contained in this order as aforesaid. Thus, these grounds are also treated as allowed for statistical purposes.. ”
During the course of assessment proceedings, on a query, the AO submitted that gum base is not easily available in the market and that there are hardly any manufacturers of that quality of gum base used by the assessee in its products. It was submitted that even if certain manufacturers of gum base are found, the quality standards do not match with that of the assessee. On the ground that there are no comparative prices available in the market, the assessee adopted the transfer price of gum base at the imported cost.
The A.O. for verifying the market price of gum base, issued notices u/s 132(6) to M/s Perfetti Van Melle. In response, it was submitted that this company was dependent on imported gum base only. The AO carried out an internet search and found that a company by name M/s Sun Euro Base was having an international high quality gum base factory and that M/s Candico of Mohan Cooperative Industrial Estate, New Delhi was its customer. Notices u/s 133(6) were issued and it was found from the information gathered, that the base price of gum base in the local market ranges from Rs.52/- to Rs.96/- only. Accordingly the transfer price of Unit IV i.e. gum base unit was determined as under by the A.O.
“4.5. The transfer price of Unit IV on the basis of above fair market value is worked out as below.
S.No. Type of gum Quantity Produced Rate Amount - Rs. base (Kgs) (transfer price) Rs.
Non-acidic 1431732 95 136014540 2. Acidic 106528 114 12144192 3. Orion 77584 58 4499872 4. Lotto 59533 121 7203493 15,98,62,097
4.6. As per the original computation of the assessee the transfer price from Unit IV (gum base unit) was declared at Rs.20,79,38,948/- profit of this unit was claimed at Rs.5,26,17,830/-. After recomputation as above the said transfer
price comes to Rs. 15,98,62,097/- and the profit is worked out as below. Gumbase Quantity Base Price Cost of production Transfer Profit Kg. Price Non- 1431732 90 1288558 136014540 7158660 acidic 80 Acidic 106528 109 11611552 12144192 532640 Orion 77584 58 4499872 4499872 -
Lotto 59533 7203493 7203493 - 121 Total: 76,91,300
13.1. There are four types of gum base. In the case of orion and lotto the cost of production was adopted as the market price by the Assessing Officer. This is not tenable in view of decisions relied upon by the assessee in the case of JCIT vs.Cipla Ltd. ((supra) Mumbai Bench of the Tribunal and the judgement of the HonT>le Gujarat High Court in the case of Anil Starch Products Ltd. vs. CIT (supra).
13.2. The A.O. on the one hand observed that the gum base sold ranges from Rs.50 to Rs.96 and that the information obtained from M/s Perfetti Van Melle was Rs.168/- for the year 2003-04 and Rs. 124/- per kg for the A.Y. 2004-05. The A.O. has applied price of Rs.95 per kg in respect of non acidic gum base. There is no logic given by him by adopting these rates. Thus, rates adopted by the A.O. for all the four types of gum base, in our opinion, has rightly been held as incorrect by the First Appellate Authority.
As there is no other material available on record, to challenge the transfer price declared by the assessee, which is on the basis of invoices from CAFOSA, we have no other alternative but to/uphold this claim. In the result we dismiss this appeal by the Revenue.
As no distinguishing decision has been brought to our notice,
respectfully following the findings of the co-ordinate bench [supra],
the appeal of the Revenue is dismissed.
In the result, the appeal filed by the Revenue in ITA No.
5960/DEL/2017 is dismissed.
The order is pronounced in the open court on 09.08.2021 in the
presence of both the rival representatives.
Sd/- Sd/-
[MADHUMITA ROY] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 09th August, 2021
VL/