The DCIT, Circle-1(1)(2), Ahmedabad V. M/s. Astral Poly Technik Ltd., Ahmedabad

ITA 3136/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6317 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 05-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: GULAB THAKOR
• Keywords: Transfer pricing
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE, SHRI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHRI S. S. GODARA, JUDICIAL MEMBER ITA NO. 3136/AHD/2015 (ASSESSMENT YEAR: 2012-13) DCIT, CIRCLE 1(1)(1), AHMEDABAD APPELLANT VS. M/S. ASTRAL POLY TECHNIK LTD., 207/1, ASTRAL HOUSE, B/H. RAJPATH CLUB, OFF. S.G. HIGHWAY, AHMEDABAD 380 059 RESPONDENT PAN: AABCA2951N /BY REVENUE : SHRI SURENDRA KUMAR, CIT. D.R /BY ASSESSEE : SHRI VARTIK CHOKSI & GULAB T HAKOR, A.R. /DATE OF HEARING : 01.01.2018 /DATE OF PRONOUNCEMENT : 10.01.2018 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2012-13 A RISES AGAINST THE CIT(A)-1, AHMEDABADS ORDER DATED 20.08.2015 IN CAS E NO. CIT(A)-1/DCIT,CIR- 1(1)(2)/719/2014-15, REVERSING ASSESSING OFFICERS ACTION DISALLOWING/ADDING AMOUNTS OF RS.5,31,60,408/- AND RS.96,81,300/- U/S. 80IC AND ON ACCOUNT OF INTEREST EXPENSES / FOREX LOSS; RESPECTIVELY, IN PR OCEEDINGS U/S.143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE RECORDS PERUSED. ITA NO. 3136/AHD/15 [DCIT VS. M/S. ASTRAL POLY TECH NIK LTD.] A.Y. 2012-13 - 2 - 2. WE COME TO THE FORMER ISSUE OF ALLOCATION OF EXP ENDITURE IN ASSESSEES ELIGIBLE UNIT AT BADDI AND AHMEDABAD RESULTING IN D ISALLOWANCE/ADDITION IN QUESTION OF RS.5,31,60,408/-. THE CIT(A)S FINDING S UNDER CHALLENGE QUA THIS ISSUE DISCUSS THE RELEVANT BACKDROP OF FACTS AS FOL LOWS: 4.3). I HAVE CAREFULLY CONSIDERED THE ASSESSMENT O RDER AND SUBMISSION FILED BY THE APPELLANT. THE ASSESSING OFFICER HAS DISALLOWED D EDUCTION UNDER SECTION 80IC FOR PROFIT ATTRIBUTABLE TO BRAND VALUE AND MARKETING NE TWORK RELYING UPON ASSESSMENT ORDER FOR A.Y. 2007-08 TO 2011-12 AND SIMILAR DISALLOWANC E SO MADE WAS DELETED BY MY PREDECESSOR CIT (APPEALS) FOR ALL THE ASSESSMENT YE ARS. THE APPEAL FILED BY DEPARTMENT AGAINST ABOVE ORDER IS PENDING BEFORE THE HON'BLE A HMEDABAD I.T.A.T. IT IS PERTINENT TO NOTE THAT MY PREDECESSOR CIT (APPEALS) WHILE ADJUDI CATING THE APPEAL OFA.Y.2011-12 VIDE HIS ORDER DATED 22 ND JULY, 2014 HAS REFERRED TO ABOVE APPELLATE ORDER A ND HELD AS UNDER: '4.2 IDENTICAL ISSUE CAME UP IN APPELLANT'S OWN CAS E FOR A.Y. 2010-11. VIDE MY ORDER DATED 16-07-2014 IN APPEAL NO. CIT(A)-VI/DC.C IR.1/122/13-14, IT WAS HELD AS UNDER. '4.2 IDENTICAL ISSUE CAME UP IN APPELLANT'S OWN CAS E FOR A.Y. 2009-10. VIDE MY ORDER DATED 26-03-2013 IN APPEAL NO. CIT(A) -VI/DC.CIR. 1/316/11-12, IT WAS HELD AS UNDER. 3.2 IDENTICAL ISSUE AROSE IN APPELLANT'S OWN CASE I N A.Y. 2008-09. IN ORDER U/S. 143(3) DATED 22-12-2010, SIMILAR DISALLO WANCE WAS MADE. IN THE APPELLANT ORDER DATED 20-12-2011 IN APPEAL NO. CIT(A)- VI/AC!T.CIR.1/292/10-11, MY PREDECESSOR HELD AS UND ER: - 3.2 IDENTICAL ISSUE AROSE IN APPELLANT'S OWN CASE I N A.Y. 2008-09. IN ORDER UNDER SECTION 143(3) DATED 22-12-2010, SIMILA R DISALLOWANCE WAS MADE. IN THE APPELLATE ORDER DATED 20-12-2011 IN AP PEAL NO. CIT (A)- VI/CIT. CIR 1/292/10-11, MY PREDECESSOR HELD AS UND ER: '3.3 I HAVE CONSIDERED THE FACTS OF THE CASE; ASSES SMENT ORDER AND APPELLANT'S WRITTEN SUBMISSION. IT IS NOT IN DI SPUTE THAT IDENTICAL ISSUE CAME UP IN ASSESSMENT YEAR 2007-08 IN WHICH ASSESSING OFFICER RESTRICTED THE DEDUCTION UNDER SE CTION 80 1C. IN THE FIRST APPEAL; UNDERSIGNED DECIDED THE APPEAL BY ORDER DATED 30-10-2011. THE RELEVANT PART OF ORDER IS QUOTED BE LOW- 'I HAVE CONSIDERED THE FACTS OF THE CASE, ASSESSMEN T ORDER AND APPELLANT'S SUBMISSION. ASSESSING OFFICER RESTRICTE D DEDUCTION UNDER SECTION 80 1C ON THE PROFIT OF BADDI UNIT ON THE GROUND THAT PROFIT CLAIMED AS DEDUCTION ALSO INCLUDED MARK ETING AND BRAND VALUE WHICH IS ATTRIBUTABLE TO THE EXISTING U NIT NOT ELIGIBLE FOR THIS DEDUCTION. ASSESSING OFFICER WORKED OUT NO RMAL GROSS PROFIT OF BADDI UNIT AFTER REDUCING EXCISE AND SALE S TAX BENEFITS AVAILABLE TO THE SAID UNIT AND THEREAFTER 35% GROSS PROFIT ON ACCOUNT OF MARKETING AND 5% GROSS PROFIT ON ACCOUNT OF BRAND WERE REDUCED WHILE COMPUTING DEDUCTION UNDER SECTIO N 80 1C. THE FOCUS OF ASSESSING OFFICER'S ARGUMENT IS THAT S INCE A NEW ITA NO. 3136/AHD/15 [DCIT VS. M/S. ASTRAL POLY TECH NIK LTD.] A.Y. 2012-13 - 3 - INDUSTRIAL UNDERTAKING WAS ONLY MANUFACTURING AND WAS USING EXISTING MARKETING SET UP AND BRAND OF THE APPELLAN T COMPANY, ONLY PROFITS DERIVED FROM MANUFACTURING IN THE BADD I UNIT IS ELIGIBLE FOR DEDUCTION AND PROFITS RELATING TO MAR KETING ACTIVITIES AND BRAND ARE NOT ELIGIBLE FOR DEDUCTION UNDER SECT ION 80IC. ASSESSING OFFICER QUANTIFIED THE GROSS PROFIT DERIV ED FROM BRAND AND MARKETING AT RS. 40459475 ON PAGE 23 OF THE ASS ESSMENT ORDER. IT IS NOT IN DISPUTE THAT WHAT IS QUANTIFIED BY THE ASSESSING OFFICER FOR DISALLOWANCE OF DEDUCTION IS GROSS PROFIT ATTRIBUTABLE TO MARKETING AND BRAND VALUE. THE DEDUCTION SECTION 80 1C IS CLAIMED IN RESPECT OF NET PROFIT A ND THEREFORE DISALLOWING GROSS PROFIT ATTRIBUTABLE TO MARKETING AND BRAND VALUE IS NOT CORRECT. IT IS ARGUED BY THE APPELLANT THAT IF MARKETING, WHICH IS A COST CENTRE IN THE CASE OF AP PELLANT COMPANY, IS CONSIDERED A SEPARATE DIVISION THEN MAR KETING EXPENSES DEBITED IN THE PROFIT AND LOSS ACCOUNT OF BADDI UNIT HAS TO BE REMOVED AND REDUCED FROM THE GROSS PROFIT OF MARKETING AND BRAND ACTIVITY ATTRIBUTED BY THE ASSESSING OFFI CER. AS PER THE DETAILS GIVEN, THE MARKETING EXPENSES DEBITED IN TH E PROFIT AND LOSS A COUNT OF BADDI UNIT ARE RS 45732681. IF MARK ETING EXPENSES DEBITED IN THE P&L ACCOUNT OF ELIGIBLE UNI T IS REDUCED FROM THE GROSS PROFIT FROM MARKETING AND BRAND ACTI VITY OF RS 40459475, THEN THERE CAN BE NO DISALLOWANCE OUT OF DEDUCTION CLAIMED BY THE APPELLANT. I AGREE WITH THE APPELLAN T'S LOGIC THAT THE MARKETING EXPENSES DEBITED IN THE P&L ACCOUNT O F ELIGIBLE UNIT HAS TO BE REDUCED FROM THE GROSS PROFIT OF MAR KETING ACTIVITY WORKED OUT BY THE ASSESSING OFFICER. SINCE EXPENSES DEBITED ARE MORE THAN THE GROSS PROFIT COMPUTED BY THE ASSESSIN G OFFICER, THERE CANNOT BE ANY DISALLOWANCE OF DEDUCTION UNDER SECTION 80 1C. THEREFORE WITHOUT GOING INTO MERIT OF ALLOCATION OF GROSS PROFIT TO MANUFACTURING AND MARKETING ACTIVITIES SE PARATELY, NO DISALLOWANCE OUT OF DEDUCTION CLAIMED BY THE APPELL ANT CAN BE MADE. ACCORDINGLY THE DISALLOWANCE OF DEDUCTION MA DE BY THE ASSESSING OFFICER IS DELETED. COMING TO THE MERIT OF SEGREGATING PROFITS ATTRIBUT ABLE TO MARKETING AND BRAND VALUE, APPELLANT SUBMITTED THAT MARKETING WAS NOT DONE BY ANY SEPARATE DIVISION OR UNDERTAKIN G. IT IS DONE THROUGH AGENTS AND DISTRIBUTORS TO WHOM COMMIS SION AND DISCOUNTS WERE GIVEN. MARKETING IS NOT DONE BY WAY OF SEPARATE ACTIVITY AND THEREFORE MARKETING ACTIVITY IS A COST CENTRE. MARKETING COSTS WERE ALLOCATED TO THE ELIGIBLE AND NOT ELIGIBLE UNDERTAKING. DIRECT COSTS ARE DEBITED DIRECTLY AND COMMON EXPENSES ARE ALLOCATED ON THE BASIS OF TURNOVER. SI NCE MARKETING WAS NOT A SEPARATE DIVISION, THERE WAS NO TRANSFER BY THE ELIGIBLE UNDERTAKING TO SO-CALLED MARKETING DIVISION. IN THE ABSENCE OF ANY TRANSFER, THE PROVISIONS OF SECTION 80 IA (8) A RE NOT APPLICABLE. ADMINISTRATION, FINANCE, MARKETING ETC ARE COMMON ACTIVITIES OF BOTH ELIGIBLE AND NON-ELIGIBLE UNDERT AKINGS, THE COSTS ATTRIBUTABLE TO THESE UNDERTAKINGS WERE ALLOC ATED AND THEREFORE THE QUESTION OF TRANSFER OF GOODS AND SERVICE NON- ELIGIBLE UNDERTAKING DOES NOT ARISE. AS REGARDS PROFITS DERIVED FROM BRAND VALUE, APPELL ANT SUBMITTED THAT MOST OF THE PRODUCTS WERE SOLD IN THE BRAND NA ME OF ITS ITA NO. 3136/AHD/15 [DCIT VS. M/S. ASTRAL POLY TECH NIK LTD.] A.Y. 2012-13 - 4 - FOREIGN COLLABORATOR AND THEREFORE ANY PROFIT ATTRI BUTABLE TO APPELLANT'S OWN BRAND WILL NOT BE THERE. AS PER AGR EEMENT WITH THE FOREIGN COLLABORATOR, APPELLANT IS REQUIRED TO IMPORT RAW MATERIAL FROM IT AND SALE ITS FINISHED PRODUCTS IN THE BRAND NAME OF FOREIGN COLLABORATOR. CONSIDERING THIS, THERE IS HARDLY ANY PROFIT ATTRIB UTABLE TO THE BRAND VALUE. THE BASIS OF ASSESSING OFFICER'S DISAL LOWANCE IS THE AAR DECISION IN THE CASE OF ROLLS-ROYCE PIE. IN THAT DECISION, THE MANUFACTURER WAS THE FOREIGN C OMPANY AND SELLING CARS IN INDIAN MARKET THROUGH THE MARKETING PE SETUP IN INDIA. IT WAS THEREFORE HELD THAT PROFIT WAS NOT ON LY DERIVED FROM MANUFACTURING OF CARS BUT ALSO FROM MARKETING THE S OME IN INDIA BY INDIAN PE. THE INDIAN PE WAS ANALYZING AND SCRUT INIZING THE PROPOSALS AND ORDERS AND ACTIVELY INVOLVED IN NEGOTIATING, CONCLUDING OR FULFILLING THE CONTRACTS , SINCE INDIAN PE, WHICH WAS THE MARKETING DIVISION, WAS CARRYING OUT PRESALE, SALE AND POST SALE ACTIVITIES, A DEFINITE PROFIT WA S ATTRIBUTABLE TO THIS UNDERTAKING. IT CANNOT BE SAID THAT INDIAN PE WAS NOT CARRYING OUT PROFITABLE ACTIVITY. THE ISSUE INVOLVE D WAS OF TRANSFER PRICING IN WHICH THE PROFITS OF INDIAN PE WAS TO BE WORKED OUT. THE FACTS OF THE APPELLANT'S CASE A RE ALTOGETHER DIFFERENT. THERE IS NO DIVISION OR UNDERTAKING FOR MARKETING. THE APPELLANT'S EMPLOYEES WERE HANDLING THE MARKETING THROUGH DISTRIBUTORS AND AGENTS. M ARKETING WAS NOT AN INDEPENDENT ACTIVITY. IT WAS ONLY FOR THE PR ODUCTS OF THE APPELLANT COMPANY AND ACCORDINGLY A COST CENTRE RAT HER THAN A PROFIT, CENTRE. COSTS FOR MARKETING WERE DISTRIBUTE D TO BOTH ELIGIBLE AND INELIGIBLE UNDERTAKING. ASSESSING OFFI CER DID NOT FIND ANY FAULT WITH THE SAID ALLOCATION. WHEN THERE WAS NO ELEMENT OF PROFIT IN THE MARKETING, NO PROFIT CAN BE ATTRIBUTE D TO THE MARKETING ACTIVITY WHICH IS ONLY SUPPORTING ACTIVIT Y FOR THE MANUFACTURING DIVISIONS. LIKE HEAD OFFICE EXPENSES, MARKETING EXPENSES WERE ALSO ALLOCATED TO THE ELIGIBLE UNDERT AKING AND THEREFORE PRESUMING ANY PROFIT IN MARKETING ACTIVIT Y IS NOT REQUIRED. ASSESSING OFFICER ALSO REFERRED PROVISIONS OF SECTI ON 80 I A (5) AS PER WHICH THE PROFIT OF THE UNDERTAKING HAS TO BE C ONSIDERED AS IF IT WAS THE ONLY UNDERTAKING OF THE ASSESSEE. MARKET ING, HEAD OFFICE EXPENSES, PURCHASES, ACCOUNTING ETC. ARE CA RRIED OUT FROM AHMEDABAD OFFICE AND THE RELATED COSTS WERE DEBITED TO THE BADDI UNIT. THE PROFIT OF ELIGIBLE UNIT IS WORKED O UT AS IF THIS WAS THE ONLY UNDERTAKING. ALL COSTS RELATING TO THE ELI GIBLE UNDERTAKING WERE DEBITED AND PROFITS WERE WORKED OU T ACCORDINGLY. IN THE WORKING OF PROFIT OF ELIGIBLE U NDERTAKING, THERE IS NO VIOLATION OF SECTION 80 IA (5). THE DEC ISION OF THE SUPREME COURT IN THE CASE OF LIBERTY INDIA RELIED U PON BY THE ASSESSING OFFICER IS NOT APPLICABLE TO THE FACTS OF THE APPELLANT'S CASE SINCE FOR WORKING OUT PROFIT OF ELIGIBLE MANUF ACTURING UNDERTAKING SALES VALUE OF THE PRODUCTS SOLD IS TO BE CONSIDERED. ANY OTHER INCOME NOT RELATING TO SALE OF MANUFACTUR ED GOODS WILL BE OUTSIDE THE PURVIEW OF DEDUCTION UNDER SECT ION 80 I A. THE APPELLANT WORKED OUT ELIGIBLE PROFIT BY TAKING SALES VALUE OF PRODUCTS MANUFACTURED. NO OTHER INCOME WAS CONSIDE RED WHICH ITA NO. 3136/AHD/15 [DCIT VS. M/S. ASTRAL POLY TECH NIK LTD.] A.Y. 2012-13 - 5 - IS NOT RELATING TO SALE OF MANUFACTURED GOO DS THEREFORE APPELLANT'S CASE IS NOT HIT BY THE DECISION OF APEX COURT. AFTER CONSIDERING THE APPELLANT'S SUBMISSION ON ALL THE ISSUES RAISED BY THE ASSESSING OFFICER, I AM OF THE VIEW T HAT THERE IS NO MARKETING DIVISION THE CASE OF APPELLANT AND THEREF ORE THERE WAS NO TRANSFER OF GOODS FROM ELIGIBLE TO NON-ELIGIBLE UNDERTAKING. IN THE ABSENCE OF MARKETING DIVISION BEING A SEPARA TE UNDERTAKING, NO PROFIT CAN FOE ATTRIBUTED TO THE MA RKETING ACTIVITY. AS REGARDS BRAND VALUE, THE SAME IS OWNED BY THE FOREIGN COLLABORATOR THERE CAN'T BE ANY PROFIT ATTR IBUTABLE TO BRAND. THE DISALLOWANCE OF DEDUCTION MADE BY THE ASSESSIN G OFFICER IS THEREFORE WITHOUT ANY BASIS AND THE SAME CANNOT BE SUSTAINED ON MERIT ALSO. THE ADDITION MADE BY THE A SSESSING OFFICER IS ACCORDINGLY DELETED.' SINCE FACTS ARE IDENTICAL IN THIS YEAR ALSO, THE AF ORESAID APPELLATE ORDER IS DIRECTLY APPLICABLE TO THE ISSUE THIS YEAR ALSO. IN VIEW OF THE AFORESAID REASONING, IT IS HELD THAT THERE IS N O MARKETING DIVISION IN THE CASE OF APPELLANT AND THEREFORE THE RE WAS NO TRANSFER, OF GOODS FROM ELIGIBLE TO NON-ELIGIBLE UN DERTAKING. IN ABSENCE OF MARKETING DIVISION BEING A SEPARATE UNDE RTAKING, NO PROFIT CAN BE ATTRIBUTED TO THE MARKETING ACTIVITY. THE REDUCTION IN DEDUCTION UNDER SECTION 80IC MADE BY THE ASSESSI NG OFFICER IS THEREFORE NOT SUSTAINABLE. ACCORDINGLY THE ADDI TION MADE BY THE AO IS DELETED. IN VIEW OF THE ABOVE DISCUSSION, AS FACTS OF YEAR U NDER CONSIDERATION ARE IDENTICAL TO FACTS OF EARLIER ASSESSMENT YEARS AND FOLLOWING THE ORDER OF MY PREDECESSORS CIT(APPEALS), DISALLOWANCE OF RS.5,31,60,408/- MADE BY ASSESSING OFFICER IS DELETED. THESE GROUNDS OF APPEAL ARE ALLOWED. 3. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY C ONTENDS THAT THE ASSESSING OFFICER HAD RIGHTLY ALLOCATED ASSESSEES BRAND VALUE AND MARKETING NETWORK EXPENSES SO AS TO MAKE THE IMPUGNED DISALLO WANCE. IT IS EVIDENT THAT THIS ISSUE HAS NOT COME UP FOR THE FIRST TIME BEFORE THI S TRIBUNAL. CASE RECORDS INDICATE THAT A CO-ORDINATE BENCHS ORDER DATED 06.06.2016 F OR ASSESSMENT YEARS 2007-08 & 2009-10 HAS DECIDED THE VERY ISSUE IN ASSESSEES FA VOUR IN REVENUES APPEALS. HONBLE JURISDICTIONAL HIGH COURTS JUDGMENT IN TAX APPEAL NO. 481 OF 2017 HAS AFFIRMED THE TRIBUNALS ABOVE ORDER UPHOLDING CIT(A )S ACTION. THE VERY FACTUAL POSITION CONTINUED IN ASSESSMENT YEARS 2010-11 & 20 11-12 AS WELL SINCE REVENUES APPEALS STAND DECLINED IN THIS TRIBUNALS COMMON ORDER IN ITA NO. 2666 & 2667/AHD/2014 DECIDED ON 29.11.2017. THE RE VENUE IS FAIR ENOUGH IN NOT PINPOINTING ANY DISTINCTION ON FACTS OR LAW IN ALL THESE ASSESSMENT YEARS. WE ITA NO. 3136/AHD/15 [DCIT VS. M/S. ASTRAL POLY TECH NIK LTD.] A.Y. 2012-13 - 6 - THEREFORE SEE NO REASON TO ADOPT A DIFFERENT APPROA CH IN THE IMPUGNED ASSESSMENT YEAR. THE REVENUES FIRST SUBSTANTIVE GROUND IS AC CORDINGLY DECLINED. 4. THIS LEAVES US WITH LATTER ISSUE OF DISALLOWANCE OF RS.96,81,300/- ON ACCOUNT OF INTEREST EXPENSES AND FOREX LOSS MADE IN THE COURSE OF ASSESSMENT AS DELETED IN LOWER APPELLATE PROCEEDINGS AS FOLLOWS: 5.3). I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AND THE SUBMISSION FILED BY THE APPELLANT THE ASSESSING OFFICER HAS DISALLOWED DEDUCTION UNDER SECTION 80IC FOR ALLOCATION OF INTEREST EXPENDITURE RELYING UPON ASS ESSMENT ORDER FOR A.Y. 2007-08 TO 2011-12 AND SIMILAR DISALLOWANCE SO MADE WAS DELETE D BY MY PREDECESSOR CIT(APPEALS) FOR ALL THE ASSESSMENT YEARS. THE APPEAL FILED BY D EPARTMENT AGAINST ABOVE ORDER IS PENDING BEFORE THE HON'BLE AHMEDABAD I. T.A. T. IT IS PERTINENT TO NOTE THAT MY PREDECESSOR CIT (APPEALS) WHILE ADJUDICATING THE APPEAL OF A.Y. 2011-12 VIDE HIS ORDER DATED 22ND JULY, 2014 HAS REFERRED TO ABOVE APPELLA TE ORDER AND HELD AS UNDER: '5.2 IDENTICAL ISSUE CAME UP IN APPELLANT'S OWN CASE FOR A.Y. 2010-11. VIDE MY ORDER DATED 16-07-2014 IN APPEAL NO. CIT(A)-VI/D C.CIR.1/122/13-14, IT WAS HELD AS UNDER: '5.2 IDENTICAL ISSUE CAME UP IN APPELLANT'S OWN CAS E FOR A.Y. 2009- 10. VIDE MY ORDER DATED 26-03-2014 IN APPEAL NO. CI T(A)- VI/DC.CIR.1/316/11-12, IT WAS HELD AS UNDER: 5.3 IDENTICAL ISSUE CAME UP FOR CONSIDERATION IN T HE PRECEDING A.Y. 2008-09 IN THE APPELLANT'S OWN CASE. VIDE MY ORDER OF EVEN DATE IN APPEAL NO. CIT(A)-VI/DC. CIR. 1/239/11-12, IT WAS H ELD AS UNDER: '4.4 THE CONTENTIONS OF THE LD. A.R. ARE TENABLE. T HE ALLOCATION OF INTEREST EXPENDITURE BETWEEN THE H.P. UNIT AND GUJARAT UNIT WAS BEING DONE CONSISTENTLY ON DAILY P RODUCT BASIS. IN THE IMMEDIATELY PRECEDING YEAR, INTEREST EXPENDI TURE OF RS. 22.83 LAKHS WAS ALLOCATED TO THE H.P. UNIT. IN THE YEAR UNDER CONSIDERATION SINCE NO BORROWED FUNDS WERE UTILIZED BY THE H.P. UNIT, INTEREST EXPENDITURE WAS NOT ALLOCATED TO IT. THE CONTENTION THAT THE H.P. UNIT WAS GENERATING ENOUGH PROFITS/CA SH SURPLUS AND WAS IN A POSITION TO ADVANCE SURPLUS MONEY TO T HE HEAD OFFICE (INSTEAD OF UTILIZING THE FUNDS BORROWED BY THE HEAD OFFICE) WAS NOT CONTROVERTED BY THE A.O. AS REGARDS THE FOR EIGN EXCHANGE GAIN/LOSS, IN THE REASONS RECORDED FOR RE- OPENING, THIS ISSUE WAS FIGURING THEREIN. HOWEVER, IN THE YEAR UN DER CONSIDERATION, A.O. DID NOT ALLOCATE THE FOREIGN EX CHANGE GAIN TO H.P. UNIT, WHEREAS IN THE SUBSEQUENT A. Y. 2009-10 THE FOREIGN EXCHANGE LOSS WAS ALLOCATED BETWEEN THE TWO UNITS. IN THE PRECEDING A.Y. 2007-08 THE INTEREST EXPENDITURE ALL OCATED BY THE APPELLANT TO THE H.P. UNIT OF RS. 22.83 LAKHS WAS N OT DISTURBED BY THE A.O. THUS, THE AO'S APPROACH IN ALLOCATING INTEREST EXPENDITURE AND FOREIGN EXCHANGE GAIN/LOSS BETWEEN THE TWO UNITS HAS BEEN INCONSISTENT IT IS VARYING MERELY ON THE BASIS OF ITA NO. 3136/AHD/15 [DCIT VS. M/S. ASTRAL POLY TECH NIK LTD.] A.Y. 2012-13 - 7 - THE ASSESSABILITY OF HIGHER OR LOWER INCOME. TAKIN G INTO ACCOUNT THE TOTALITY OF THE FACTS, I DO NOT FIND ANY REASON TO DISTURB THE ALLOCATION AS BEING DONE BY THE APPELLANT CONSISTEN TLY OVER THE YEARS. I AM THE VIEW THAT IMPUGNED DISALLOWANCE IS NOT SUSTAINABLE. IT IS DELETED. ACCORDINGLY, GROUND N O. 3,4 & 5 ARE ALLOWED. GROUND NO. 6 IS AN ALTERNATE CLAIM AND HAS BECOME INFRUCTUOUS IN VIEW OF MY FINDING ABOVE. ACCORDINGL Y, IT DISMISSED.' IN THE PRECEDING A.Y. 2008-09, A.O. ALLOCATED INTER EST EXPENDITURE BETWEEN THE TWO UNITS BUT DID NOT ALLOC ATE THE FOREIGN EXCHANGE GAIN BETWEEN THE TWO UNITS. WHEREA S IN THE YEAR UNDER CONSIDERATION HE HAS ALLOCATED INTEREST EXPENDITURES AND THE FOREIGN EXCHANGE LOSSES BETWEEN THE TWO UNI TS. AS SEEN FROM THE CHART FURNISHED BY THE APPELLANT (REPRODUC ED AT PAGE- 40 OF THIS ORDER) THE FOREIGN EXCHANGE LOSS WAS RS. 31.24 LAKHS IN A.Y. 2006-07, FOREIGN EXCHANGE GAIN WAS RS. 87.0 9 LAKHS IN A.Y. 2007-08 , FOREIGN EXCHANGE GAIN WAS RS. 115.63 LAKHS FOR A.Y. 2008-09, FOREIGN EXCHANGE LOSS WAS RS. 733.67 LAKHS IN A.Y. 2009-10, FOREIGN EXCHANGE GAIN WAS RS. 300.54 LAKHS IN A.Y. 2010-11 AND FOREIGN EXCHANGE GAIN WAS RS. 24.47 LAK HS IN A.Y. 2011-12. IRRESPECTIVE THE FOREIGN EXCHANGE GAIN OR LOSS, APPELLANT HAS BEEN ALLOCATING THE ENTIRE GAIN OR LO SS ONLY TO THE GUJARAT UNIT, WHICH IS NOT ELIGIBLE FOR DEDUCTION U /S. 80IC. ALL OTHER FACTS REMAINING THE SAME IN THE YEAR UNDE R CONSIDERATION, FOLLOWING MY ORDER FOR A.Y. 2008-09, I AM OF THE VIEW THAT THE ALLOCATION OF INTEREST EXPENDITURE AN D FOREIGN EXCHANGE LOSS WAS NOT WARRANTED. ACCORDINGLY, IMPUG NED DISALLOWANCE IS DELETED. THESE GROUNDS OF APPEAL AR E ALLOWED.' FACTS REMAINING THE SAME IN THE YEAR UNDER CONSIDER ATION, FOLLOWING THE ABOVE MENTIONED ORDER, IMPUGNED ADDIT ION IS DELETED. THIS GROUND OF APPEAL IS ALLOWED.' IN VIEW OF THE ABOVE DISCUSSION, AS FACTS OF YEAR U NDER CONSIDERATION ARE .. OF EARLIER ASSESSMENT YEARS, FOLLOWING THE ORDER OF MY DISALLOWANCE OF RS.96,81,300/- MADE BY ASSESSING OFFICER . APPEAL ARE ALLOWED. 5. HEARD BOTH THE PARTIES REITERATING THEIR RESPECT IVE STANDS AGAINST AND IN SUPPORT OF CIT(A)S ORDER DELETING THE IMPUGNED DIS ALLOWANCE. WE NOTICE HEREIN AS WELL THAT THE CIT(A) HAS FOLLOWED HIS EARLIER YE ARS ORDER(S) IN DELETING THE IMPUGNED DISALLOWANCE. CASE RECORDS INDICATE THAT THE REVENUE HAS LOST THE VERY ISSUE IN ASSESSMENT YEAR 2008-09 BEFORE THIS TRIBUN AL. LEARNED CO-ORDINATE BENCH THEREIN OBSERVED THAT ASSESSEE HAD BEEN HAVING SUFF ICIENT RESERVES AND SURPLUS TO MEET ITS IMPUGNED INTEREST LIABILITY. THE SAME FAC TUAL POSITION CONTINUES HEREIN AS WELL SINCE LEARNED DEPARTMENTAL REPRESENTATIVE FAIL S TO HIGHLIGHT ANY SUCH FACTUAL ITA NO. 3136/AHD/15 [DCIT VS. M/S. ASTRAL POLY TECH NIK LTD.] A.Y. 2012-13 - 8 - DISTINCTION FROM THE RELEVANT MATERIALS ON RECORD. WE THUS ADOPT CONSISTENCY QUA THIS LATTER ISSUE AS WELL TO AFFIRM CIT(A)S FINDIN GS. 6. THE REVENUES APPEAL IS ACCORDINGLY DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 10 TH DAY OF JANUARY, 2018.] SD/- SD/- ( PRAMOD KUMAR ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER AHMEDABAD: DATED 10/01/2018 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0