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आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, , , , मुंबई आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण मुंबई मुंबई “केकेकेके ” ” ” ” खंडपीठ मुंबई खंडपीठ खंडपीठ खंडपीठ Income-tax Appellate Tribunal “K”Bench Mumbai सव�ी सव�ी सव�ी राजे�� सव�ी राजे�� राजे��, लेखा राजे�� लेखा लेखा सद�य लेखा सद�य सद�य एवं सद�य एवं एवं रिवश सूद एवं रिवश सूद रिवश सूद, �याियक रिवश सूद �याियक �याियक सद�य �याियक सद�य सद�य सद�य Before S/Sh. Rajendra,Accountant Member & Ravish Sood, Judicial Member आयकर आयकर अपील आयकर आयकर अपील अपील संसंसंसं./I.T.A./4364/Mum/2012, िनधा�रण अपील िनधा�रण िनधा�रण वष� िनधा�रण वष� वष� /Assessment Year: 2007-08 वष� आयकर आयकर अपील आयकर आयकर अपील अपील संसंसंसं./I.T.A./2195/Mum/2015, िनधा�रण अपील िनधा�रण िनधा�रण वष� िनधा�रण वष� वष� /Assessment Year: 2008-09 वष� आयकर आयकर अपील आयकर आयकर अपील अपील संसंसंसं./I.T.A./2196/Mum/2015, िनधा�रण अपील िनधा�रण िनधा�रण वष� िनधा�रण वष� वष� /Assessment Year: 2009-10 वष� Perstorp Chemicals India Pvt.Ltd. Income tax Officer-10(2)(2) 501, 5th Floor, Kesar Solitaire 4th Floor, Aayakar Bhavan, Plot No.5, Sector-19, Sanpada Vs. M.K. Road, Mumbai-400 020. Navi Mumbai-400 705. PAN:AAACP 9450 G (अपीलाथ� /Appellant) (��यथ� / Respondent) Revenue by: S/Shri V. Jenardhanan -DR Assessee by: Shri Mayur Kisnadwala सुनवाई क� तारीख / Date of Hearing: 11/10/2017 घोषणा क� तारीख / Date of Pronouncement: 03/01/2018 आयकर आयकर आयकर अिधिनयम आयकर अिधिनयम अिधिनयम,1961 क� अिधिनयम क� क� धारा क� धारा धारा 254(1)केकेकेके अ�तग�त धारा अ�तग�त अ�तग�त आदेश अ�तग�त आदेश आदेश आदेश Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा लेखा सद�य लेखा लेखा सद�य सद�य, राजे�� सद�य राजे�� राजे�� केकेकेके अनुसार राजे�� अनुसार अनुसार /PER RAJENDRA,AM- अनुसार Challenging the order of the CIT(A)-15,CIT(A)-57 Mumbai the assessee has filed the appeal for the above mentioned assessment years. (A.Y.s).Assessee is engaged in the business of manufacturing of speciality chemicals used in various products,including the paints industry. The details of filing of income,assessed income,date of CIT(A) order etc. are tabulated below:- A.Y. ROI filed on Returned Income Asst. dt. Assessed Income CIT(A)order dt. 07-08 15/11/07 Nil 24/02/2011 Nil 12/03/2012 08-09 27/09/09 Nil 27/01/2015 Rs.24,70,100/- 28/01/2015 09-10 30/9/09 (-) Rs.24.20crore 03/05/2013 (-)23.91 crores 29/01/2015 During the assessment proceedings,the AO found that the assessee had entered into Inter - national Transactions(IT.s)with its Associated Enterprises(AE).He made a reference to the Transfer Pricing Officer(TPO)to determine the Arm’s-Length-Price(ALP)of the IT.s.After receiving the order of the TPO,he made an adjustment of Rs.56,26,647/- to the income of the assessee. ITA/4364/Mum/2012,AY.2007-08: 2.First Ground of appeal is about confirming an upward adjustment of Rs.56.26 lakhs u/s. 92 CA(3)of the Act.During the TP proceedings the TPO found that the assessee had bench - marked the IT.s by using CUP method for import,that it had purchased Penta (Rs.21.10 crores),Sodium Formate(Rs.1.55 crores)and Polyol Acid(Rs.49.88 lakhs).As the assessee did not file details of CUP relating to purchase of Polyol-Acid,so he directed it to furnish
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necessary details.As per the TPO till the passing of order the assessee did not file requisite information.So,he proposed downward adjustment @25% as under :- (Amount in Rs.) Cost of Raw Material 49,88,296 25% downward adjustment 12,47,074 ALP Cost of raw material 37,41,222 105% cost of raw material 39,28,283 He further found that the assessee had purchased trading goods worth Rs.23.61 crores form its AE,that it had used CUP method for benchmarking the IT.s namely,NEO (Rs.6.23 crores), TMP(Rs.1.53 crores),Ethyle(Rs.13.36 lakhs),Nexcoat(Rs.21.22 lakhs) and Polyol Px (Rs.43. 16 lakhs).As per the TPO,the assessee did not file details of CUP relating to the last item i.e. Polyol Px. He proposed a 25% downward adjustment of Rs.10.79 lakhs as under :- (Amount in Rs.) Cost of Raw Material 43,16,828 25% downward adjustment 10,79,207 ALP Cost of raw material 32,37,621 105% cost of raw material 33,99,502 The TPO further observed that the assessee had not furnished CUP related information about Creosote-Rs.6.34 lakhs.He suggested a 25% downward adjustment(Rs.1.58lakhs)of Creosote also. He also noticed that the assessee had sold Di Penta of Rs.74.03 lakhs. For failure of furnishing of CUP details about the item the TPO suggested an upward adjustment of Rs.18.50 lakhs.He also observed that assessee had claimed research and development income of Rs.1.29 crores,that it had charged a markup of 10% on cost and had adopted the cost plus method for determining the ALP of the IT. It was submitted before him that Arm’s-Length Result were 9.62%,that the transaction represented fair market value.However the TPO did not agree with the submissions made with the assessee.He adopted the following comparables under the head research & development segment:- SN. Name of the Company Data Source Return on total costs 1. Alphageo(india) Limited P 30.31% 2. Choksi Laboratories Limited P 32.00% 3. Dolphin Medical Services Limited P 13.89% 4. Medinova Diagnostic Services Limited P 3.87% 5. N.G. Industries Limited P 31.01% 6. Pfizer Limited-Services Segment Seg-P 3.00% 7. Transgene Biotek Limited-Diagnostic Seg-P -0.03% 8. IDC (India) Ltd. P 15.89% 9. Mindtree Ltd. Seg-P 14.90% 10. Vimta Labs Ltd. C 27.44% 11. Celestial Labs Ltd. P/C 58.35% Mean 20.97%
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As a result,he recommended an adjustment of Rs.12.90 lakhs.In short,adjustment of Rs.56.26 lakhs was made under four heads namely Raw material purchases(Rs.12.47 lakhs),Trading material purchase(Rs.12.37 lakhs),Trading material sale(Rs.18.50 lakhs and R&D income- (Rs.12.90 lakhs).After receiving the order of the TPO,the AO made the an addition of Rs.56, 26,647/- to the income of the assessee .
2.1.Aggrieved by the order of the AO the assessee preferred an appeal before the FAA and made detailed submissions.It was stated that comparables selected by the TPO were not in the field of R&D.After considering the submission of TPO and FAA it was held as under:- “5.6 In view of the facts of the case discussion herein above, the contentions of the appellant are not found to be acceptable and accordingly benchmarkig done by the TPO by adopting a set of comparables which are into R&D activities to benchmark the appellant’s international transaction relating to provisioning of R&D services is found to be justifiable and accordingly the ground of appeal so raised by the appellant is dismissed.” 2.2.During the course of hearing before us,the AR stated that the assessee was not in a position to challenge the adjustments made by TPO under first three heads,that it had picked up 9 comparables for R&D component,that the TPO had rejected one comparable, that he added four new comparables -Sl.No.8-11 of the table,that the CIT(A) had not considered any of the submissions made by the assessee, that he had passed a non-speaking and cryptic order. The DR stated that matter could be decided on merits. 2.3.We have heard rival submissions and perused the material before us.We find that the assessee had not questioned the validity of downward adjustment made by TPO under three heads,that it had objected to upward adjustment made on account of R&D, that the FAA has not mentioned the facts made by the assessee before him,that he has not dealt with any of the arguments of the assessee,that he has not given any finding as to why the comparables selected by TPO should be accepted.In our opinion, the FAA should pass a speaking order while dismissing or accepting the appeal of an assessee.An order,without reasons,in our opinion,is no order.The FAA should have at least discussed the validity of comparable rejected by the TPO or introduced by the TPO.It is a fit case for further verification and inves -tigation.Therefore, in the interest of justice,we restore back the issue to the file of the FAA to determine the ALP of R&D segment. He is directed to pass a speaking and reasoned order after giving full opportunity to the assessee with reference to all the queries object to by the assessee.We decide the issue in favour of the assessee,in part. 3.Next Ground of appeal is about addition made by the AO u/s. 145A of the Act.During the assessment proceedings the AO mentioned that following the provisions of sec. 145A various 3
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decisions and the CBDT circulars,an addition of 24.77 lakhs had to be made to the total income of the assessee as the assessee had not reconciled the modvat.
3.1.Before the FAA,the assessee made detailed submissions and relied upon certain case laws.However,the FAA confirmed the order of the AO holding that unutilized modvat credit/excise duty was required to be included in the value of the closing stock. 3.2.During the course of hearing,before us,the AR contended that the assessee was following exclusive method Modvat purposes,that in the audit report it was specifically mentioned.He referred to the order of the Tribunal in its own case(ITA/6078/Mum/2011)and stated that the order of the FAA for the year under consideration was very cryptic and non speaking.The DR stated that the matter could be decided on merits. 3.3.We find that,while deciding the appeal for the AY.2004-05,in assessee’s own case,the Tribunal had dealt with the issue as under: “13. The first issue relates to the addition made by the AO u/s 145A of the Act. The assessee has followed Exclusive method of accounting for Excise duty and hence the closing stock value declared in the Profit and loss account did not include the value of Excise duty. Hence the AO enhanced the value of closing stock by the amount of duty related to it. The Ld CIT(A) also confirmed the same, but gave a partial relief with regard to some computational error. 14. We heard the parties on this issue. According to the assessee, it has followed Exclusive method for accounting the Excise duty, which means that the “Excise duty account” shall be maintained as a Balance Sheet item, wherein the collection and remittance shall be accounted for and the remaining balance shall be taken to the Balance sheet as an item of Payable/Receivable. Under inclusive method, the Excise duty shall be included in the value of purchases, sales and inventory and hence the same is accounted for through the Profit and loss account. As per the accounting principles, both the methods for accounting for the Excise duty collection and remittance are accepted, since both the methods shall not have any impact on the Net profit. It is only two different forms of preparing the financial statements. 15. However, the provisions of sec. 145A mandates that the value of purchase and sale of goods and inventory shall be adjusted to include the amount of tax, duty, cess or fee actually paid or incurred by the assessee to bring the goods to the place of its location and condition as on the date of valuation. Hence, for the purposes of Income tax, an assessee is required to follow only inclusive method of accounting the tax, duty etc. In the instant case, we notice that the AO has adjusted the value of closing stock only, to include the amount of tax, duty etc., where as the provisions of sec. 145A requires that the value of purchases and sales should also be adjusted to include the amount of tax, duty etc. Thus, the action of the AO, which was approved by Ld CIT(A), was not in accordance with the mandate of the provisions of sec. 145A of the Act. Compliance of provisions of sec. 145A in part only, would give misleading result. Accordingly, we are not able to approve the order of Ld CIT(A) on this issue. 16. Since the provisions of sec. 145A of the Act have not been applied in entirety, we are of the view that this issue requires fresh examination at the end of the AO. Accordingly, we set aside the order of Ld CIT(A) on this issue and restore the same to the file of the AO with the direction to apply the provisions of sec. 145A of the Act to purchases, sales and inventory and make addition, if any, is found to be made. The assessee is also directed to prove to the satisfaction of the AO that both the inclusive method and exclusive method give same financial result.”
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Respectfully following the above,we restore back the matte to the file of the FAA for fresh adjudication,who would pass a reasoned order after affording a reasonable opportunity of hearing to the assessee.Ground no.2 is partly allowed.
4.Next two grounds deal with deduction u/s.10B of the Act.First ground is about not allowing the deduction whereas the second one pertains to adjusting the brought forward losses and depreciation before considering deduction under the said section.During the assessment proceedings,the AO found that the assessee had claimed deduction u/s.10B of the Act,that against the balance taxable income it had claimed set off of carried forward losses.He held that the stand taken by the assessee was not as per the provisions of law,that set off of carried-forward losses for earlier year had to be considered against the total income of the assessee at the first instance,that deduction u/s. 10B could be allowed out of the balance income only,that the provisions of section 10B were similar to provisions of section 80HHC of the Act which restricted the allowability of deduction to a particular extent of deduction, that deduction u/s.10B was allowable only to the extent of eligible business profit and before claiming any exemption/deduction,that brought forward losses and depreciation was required to be reduced from gross business profit,that only net profit so arrived could be considered for computing deduction under the relevant provisions.Accordingly,he did not grant deduc - tion u/s.10B of the Act to the tune of Rs.1.96 crores. He also held that brought forward losses and depreciation were to be considered before allowing deduction u/s. 10B. 4.1.Before the FAA,during appellate proceedings,the assessee made submissions and relied upon certain case laws.After considering available material,he referred to the provisions of section 10B and held that prior to the amendment w.e.f. 1/4/2001 section 10B was about exemption,that the amended section talked about deduction and not about exemption.He further held that the cases relied upon by the assessee were not of any help to it.He finally held that the intention of the legislation was not to grant double benefit under the same section/scheme,that the AO was justified in restricting the deduction and adjusting the brought forward losses and depreciation before allowing deduction. 4.2.Before us,the AR stated that the assessee set up the 10B unit during the year under appeal,that it was maintaining separate account for the unit,that there was no justification in adjusting the brought forward losses and depreciation before allowing the deduction.He relied upon the case of Yokagawa India Ltd.(77taxmann.com.41).The DR supported the orders of
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the AO and the and stated that deduction u/s.10 should be restricted to profit derived from the unit and not to the increased income i.e. the income determined as per TP additions.
4.3.We find that in the case of case of Yokagawa India Ltd.(supra)the Hon’ble Court has held as under: “Section 10A of the Income-tax Act, 1961as originally introduced, provided that any profits and gains derived by an assessee from an industrial undertaking to which the section applied shall not be included in the total income of the assessee. The amendment of the section by the Finance Act, 2000 with effect from April 1, 2001, specifically uses the words “deduction of profits and gains derived by an eligible unit . . . from the total income of the assessee”. The retention of section 10A in Chapter III of the Act after the amendment made by the Finance Act, 2000 would be merely suggestive and not determinative of what is provided by the section as amended, in contrast to what was provided by the unamended section. The true and correct purport and effect of the amended section will have to be construed from the language used and not merely from the fact that it has been retained in Chapter III. The introduction of the word “deduction” in section 10A by the amendment, in the absence of any contrary material, and in view of the scope of the deductions contemplated by section 10A has to be understood as embodying a clear enunciation of the legislative decision to alter the nature of the section from one providing for exemption to one providing for deductions. Though the difference between the two expressions “exemption“ and “deduction”, broadly may appear to be the same, i.e., immunity from taxation, the practical effect of it in the light of the specific provisions contained in different parts of the Act would be wholly different. The above implications would be obvious where loss making eligible units or non-eligible assessees seek the benefit of adjustment of losses against profits made by eligible units. Sub-section (4) of section 10A which provides for pro rata exemption, necessarily involving deduction of the profits arising out of domestic sales, is one instance of deduction provided by the amendment. Profits of an eligible unit pertaining to domestic sales would have to enter into the computation under the head “Profits and gains from business” in Chapter IV and be denied the benefit of deduction. The provisions of sub-section (6) of section 10A , as amended by the Finance Act, 2003, granting the benefit of adjustment of losses and unabsorbed depreciation, etc., commencing from the year 2001-02 on completion of the period of tax holiday also virtually work as a deduction which has to be worked out at a future point of time, namely, after the expiry of the period of tax holiday. The absence of any reference in Chapter VI of the Act to deduction under section 10A can be understood by acknowledging that any such reference or mention would have been a repetition of what has already been provided in section 10A . The provisions of sections 80HHC and 80HHE of the Act providing for somewhat similar deductions would be wholly irrelevant and redundant if deductions under section 10A were to be made at the stage of operation of Chapter VI of the Act. The retention of the provisions of the Act, i.e., sections 80HHC and 80HHE , despite the amendment of section 10A indicates that some additional benefit to eligible section 10A units, not contemplated by sections 80HHC and 80HHE , was intended by the Legislature. Such a benefit can only be understood by a legislative mandate to understand that the stages for working out the deductions under sections 10A and 80HHC and 80HHE are substantially different. From a reading of the relevant provisions of section 10A , it is more than clear that the deduction contemplated therein is qua the eligible undertaking of an assessee standing on its own and without reference to the other eligible or non-eligible units or undertakings of the assessee. The benefit of deduction is given by the Act to the individual undertaking and resultantly flows to the assessee. Circular No. 794, dated August 9, 2000 states in paragraph 15.6 that the export turnover and the total turnover for the purposes of sections 10A and 10B shall be of the undertaking located in specified zones or 100 per cent export oriented 6
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undertakings, as the case may be, and this shall not have any material relationship with the other business of the assessee outside these zones or units for the purposes of this provision. If the specific provisions of the Act (the first proviso to sub-section (1) of section 10A and sub- sections (1A) and (4) of section 10A ) provide that the unit that is contemplated for grant of benefit of deduction is the eligible undertaking and that is also how the contemporaneous circular of the Department understood the situation, it is logical and natural that the deduction of the profits and gains of the business of an eligible undertaking has to be made independently and, therefore, immediately after the stage of determination of its profits and gains. At that stage the aggregate of the incomes under other heads and the provisions for set off and carry forward contained in sections 70 , 72 and 74 of the Act would be premature for application. The deduction under section 10A therefore would be prior to the commencement of the exercise to be undertaken under Chapter VI of the Act for arriving at the total income of the assessee from the gross total income. The somewhat discordant use of the expression “total income of the assessee” in section 10A can be reconciled by understanding the expression “total income of the assessee” in section 10A as “total income of the undertaking”. Therefore, though section 10A , as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of the total income under Chapter VI.” Following the same,we allow the grounds No.3 and 4 in favour of the assessee.
5.Last ground of appeal is about computation of book profit as per the provisions of section 115JB of the Act.While computing the book profit,the AO did not allow the deduction for transfer to loan repayment reserve of Rs.4.94 crores u/s.115JB. 5.1.Before the FAA the assessee made written submissions and relied upon the cases of Amline Textiles (P.) Ltd. (27SOT152) and IOL Ltd. (81TTJ525). He held that the perusal of the P&L account of the assessee proved that the amount of Rs.4.94 crores was appropriation of profit by transfer to loan repayment reserve,that the assessee had not charged the sum transferred to loan repayment reserve in its P&L account, that the nature of such reserve could only be considered to be capital in nature and not chargeable to the P&L account, that the transfer/appropriation was hit by cl.(b) of the Explanation to section 115J of the Act. Finally,he upheld the order of the AO. 5.2.Before us,the AR referred to pg.44 of the PB and stated that loan repaymen reserve (LRR)should be allowed for adjustment under MAT provisions.He referred to the case of Raymond Ltd.(21taxmann.com.60) of the Hon’ble Bombay High Court.He fairly conceded that out of the disputed amount of Rs.13.75 crores an amount of Rs.13.07 crores was allowable and that Rs.67.97 lakhs was to be disallowed.The DR supported the order of the FAA. In his rejoinder,the AR stated that no TP adjustments were made in the earlier years,as far as the income of 10B unit was concerned.About the MAT calculation he referred to the case of
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Genus Electrotech Ltd.(71taxmann.com101)(ITA.s.2826&2840/Ahd/2012AY.2006-07dtd. 11 .05.2016). 5.3.We find that the issue stands directly covered by the order of the Hon’ble Bombay High Court in the case of Raymond Ltd.(supra).First we are reproducing the questions framed by the Hon’ble Court and same read as under: “(a) Whether on the facts and in the circumstances of the case and in law, the ITAT was right in deleting the adjustment made by the AO relating to Redemption of Debentures Reserve amounting to Rs.18.80 crores; (b) Whether on the facts and in the circumstances and in law. the ITAT was right in deleting the disallowance in respect of capital expenditure incurred in respect of Steel Division at Nashik as revenue expenditure? The honorable court held as follow: Re question (a): Section 115JA of the Income Tax Act, 1961 provides in subsection (2) that every assessee being a company shall for the purpose of the section prepare its profit and loss account for the relevant previous year in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956. The explanation to the Section provides that for the purpose of the section, "book profit" means the net profit as shown in the profit and loss account for the relevant previous year prepared under subsection (2) as increased inter alia by "(b) the amounts carried to any reserves by whatever name called". Part III of Schedule VI to the Companies Act, 1956 provides inter alia in Clause 7(l)(b) that, "the expression "reserve" shall not include any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets or retained by way of providing for any known liability". 3. The nature of a Debenture Redemption Reserve (DRR) has been considered by the judgment of the Supreme Court in National Rayon Corpn. Ltd, v. CIT [1997] 227 ITR 7647 93 Taxman 754 . The Supreme Court after adverting to the provisions of Clause 7 of Part III to Schedule VI of the Companies Act, 1956 held that "the basic principle is that an amount set apart to meet a known liability cannot be regarded as reserve". Where a company issues debentures, the liability to repay arises the moment the money is borrowed. By issuing debentures a company takes a loan against the security of its assets. Though the loan may not be repayable in the year of account, the obligation to repay is a present 'obligation. Hence any money set apart in the accounts of the company to redeem the debenture has to be treated as monies set apart to meet a known liability. Consequently, debentures have to be shown in the balance sheet of a company as a liability. Being monies set apart to meet a known liability, a Debenture Redemption Reserve cannot be regarded as a reserve for the purpose of Schedule VI to the Companies Act, 1956. In National Rayon Corpn. Ltd. (supra) the Supreme Court followed its earlier decision in Vazir Sultan Tobacco Co. Ltd. v. CIT [1981] 132 ITR 559 II Taxman 28, in holding that since the concept of reserve and of a provision is well known in commercial accountancy and is used in the Companies Act, 1956, while dealing with the preparation of balance sheets and profit and loss accounts the meaning of that concept would have to be gathered from the meaning attached in the Companies Act itself. The following observations of the Supreme Court are of significance: "The debentures were nothing but secured loans. Merely because the debentures were not redeemable during the accounting period, the liability to redeem the debentures did not cease to exist. It was redeemable or repayable at a future date. But it was a known liability. In the form of balance- sheet prescribed by the Act in Schedule VI, the secured loans have to be shown under the heading “liabilities”. Second loans include (1) debentures, (2) loans and advances from banks, (3) loans and advances from subsidiaries, and (4) other loans and advances. The secured loans might not be immediately repayable, but the liability to repay these loans is an existing liability and has to be shown in the company's balance-sheet for the relevant year of account as a liability. Amounts set apart to pay these loans cannot be "reserve". The interpretation clause of the balance-sheet in Schedule VI of the Companies Act specifically lays down that reserves shall not include any amount written off or retained by way of providing for a known liability." 4. The mere fact that a Debenture Redemption Reserve is labeled as a reserve will not render it as a reserve in the true sense or meaning of that concept. An amount which is retained by way of providing for a known liability is not a reserve. Consequently the Tribunal was correct in holding that the amount which was set apart as a Debenture Redemption Reserve is not a reserve within the meaning of 8
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Explanation (b) to Section 115JA of the Income Tax Act, 1961. No substantial question of law would, therefore, arise. 5. Re question (b): As regards question (b) the Tribunal has relied upon its order in the case of the assessee for Assessment year 1996-97 which in turn relies upon an order for AY 1990-91. That order in turn relied upon the order of the Tribunal for Assessment year 1985-86 which had been confirmed by this Court, treating pre-operative expenses as revenue expenditure. The order passed by the Assessing Officer notes in paragraph 9.1 that the pre-operative expenses related to the following items viz. salary and wages, staff welfare expenses, power, travelling, legal and professional fees and miscellaneous expenses. Evidently these are of a revenue nature. For all these reasons question (b) will not give rise to any substantial question of law. The appeal is accordingly dismissed. There shall be no order as to costs.” From the above,it is clear that the stand taken by the assessee is as per the provisons of law. As far as computation part is concerned,we would like the AO to determine the amount in light of the statement made before us on behalf of the assessee.We decide the last ground of appeal in favour of the assessee,in part. ITA/2195/Mum/2015-AY.2008-09: 6.First Ground of appeal is about upward adjustment of Rs.22.60 lakhs (Rs.60,257/- on account of adjustment to raw material purchases,+Rs.1.02 lakhs, adjustment about packing material + Rs.2.63 lakhs adjustment of trading material sale + Rs.18.34 lakhs adjustment to research and development income). 6.1.We find that the order of the FAA for the year under consideration is also not speaking or a reasoned order.He has just reproduced the order of the TPO and submissions of the assessee.Therefore,in the interest of justice we are remitting back the matter to the file of the FAA for fresh adjudication,who would decide the issue of TP adjustment after affording reasonable opportunity of hearing to the assessee.He is directed pass a speaking order.Ground No.1 is partly allowed in favour of the assessee. 7.GOA-2 deals with setting off of brought forward losses.During the assessment proceedings, the AO did not allow set off of the brought forward losses of the assessee.In the appellate proceedings,the FAA held that the AO had not discussed the issue about setting off of the issue,that he could not adjudicate the issue as the AO had not decided the same. 7.1.Before us,the AR stated that all the material about setting off of brought forward losses was available on record,that the assessee could not compel the AO to write the order, that the assessee had raised a ground in that regard,that the FAA should have decided or should have called for the remand report from the AO.The DR left the issue to the discretion of the bench. 7.2.We find that the assessee had raised a specific Ground before the FAA.Therefore, it was his duty to decide the issue either by calling a remand report from AO or by making further enquiry at his own level.Therefore,we direct the FAA to decide the issue after affording
4364/M/12;2195/M/15 &2196/M/15 Perstorp Chemicals India Pvt.Ltd. reasonable opportunity to the assessee.Second Ground of appeal is decided in favour of the assessee,in part. ITA/ 2196/Mum/2015-A.Y.09-10: 8.First Ground of appeal is about confirming the upward adjustment of Rs.17.25 lakhs under the heads trading material purchased Rs.3.25 lakhs and sale of goods Rs.14.lakhs.We find that while dismissing the appeal filed by the assessee the FAA has referred to two cases of Aztec Software and Technology Services Limited (107 ITD 141)and Shatrunjay Diamonds (261 ITR 258).He has not dealt with argument raised before him by the assessee .Therefore, we are restoring the issue back to file of FAA for fresh adjudication. He is directed to decide the issue after hearing the assessee.Effective ground of appeal is partly allowed. 9.Last ground of appeal in all the appeals is about initiation of penalty u/s.271(1)(c)of the Act.As the issue is premature at this stage,so,we dismiss the grounds,raised by the assessee for all the three years.
As a result, appeal filed by the assessee for all the three AY.s stand partly allowed. फलतः िनधा�रती �ारा दािखल क� गई तीन� िन.व.क� अपील� अंशतः मंजूर क� जाती ह�. Order pronounced in the open court on 3rd January, 2018. आदेश क� घोषणा खुले �यायालय म� !दनांक 03 जनवरी,2018 को क� गई । Sd/- Sd/- (रिवश सूद रिवश सूद रिवश सूद /Ravish Sood) (राजे�� / RAJENDRA) रिवश सूद �याियक सद�य / JUDICIAL MEMBER लेखा लेखा लेखा सद�य लेखा सद�य सद�य / ACCOUNTANT MEMBER सद�य मुंबई Mumbai; �दनांक/Dated : 03.01.2018. Jv.Sr.PS. आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : आदेश आदेश आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत 1.Appellant /अपीलाथ� 2. Respondent /��यथ� 3.The concerned CIT(A)/संब� अपीलीय आयकर आयु�, 4.The concerned CIT /संब� आयकर आयु� 5.DR “ K” Bench, ITAT, Mumbai /िवभागीय �ितिनिध, के खंडपीठ,आ.अिध.मुंबई 6.Guard File/गाड� फाईल स�यािपत �ित //True Copy// आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार Dy./Asst. Registrar आयकर अपीलीय अिधकरण, मुंबई /ITAT, Mumbai. 10