DCIT, New Delhi V. M/s. Indo Asian Fusegear (P) Ltd, New Delhi

ITA 4179/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4051 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 28-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 09-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHYAMA S BANSIA
• Section: 115JB; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH C CC C : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI C.L.SETHI, JM AND SHRI BEFORE SHRI C.L.SETHI, JM AND SHRI BEFORE SHRI C.L.SETHI, JM AND SHRI BEFORE SHRI C.L.SETHI, JM AND SHRI K.D.RANJAN K.D.RANJAN K.D.RANJAN K.D.RANJAN, AM , AM , AM , AM ITA NO. ITA NO. ITA NO. ITA NO.4179/DEL/2010 4179/DEL/2010 4179/DEL/2010 4179/DEL/2010 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2006 2006 2006 2006- -- -07 0707 07 DY.COMMISSIONER OF DY.COMMISSIONER OF DY.COMMISSIONER OF DY.COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -11(1), 11(1), 11(1), 11(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S INDO ASIAN FUSEGEAR (P) M/S INDO ASIAN FUSEGEAR (P) M/S INDO ASIAN FUSEGEAR (P) M/S INDO ASIAN FUSEGEAR (P) LTD., LTD., LTD., LTD., NO.18, KOTLA LANE, NO.18, KOTLA LANE, NO.18, KOTLA LANE, NO.18, KOTLA LANE, ROUSE AVENUE, ROUSE AVENUE, ROUSE AVENUE, ROUSE AVENUE, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. PAN NO.AAACI0142E. PAN NO.AAACI0142E. PAN NO.AAACI0142E. PAN NO.AAACI0142E. (APPELLANT) (RESPONDENT) APPELLANT BY : SMT.SHYAMA S.BANSIA, CIT-DR. RESPONDENT BY : SHRI PRAKASH CHAND YADAV, ADVOCATE. ORDER ORDER ORDER ORDER PER C.L.SETHI PER C.L.SETHI PER C.L.SETHI PER C.L.SETHI, J , J, J , JM : M : M : M : THE ONLY GROUND RAISED BY THE REVENUE IN THIS APPE AL FILED AGAINST THE ORDER DATED 3.6.2010 PASSED BY LEARNED CIT(A) FOR THE AY 2006-07 IS AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.12,40,27,143/- ON ACCOUNT OF DEDUCTION U/S 80IC OF THE ACT. 2. ON PERUSAL OF THE GROUNDS OF APPEAL RAISED BY TH E REVENUE, IT SEEMS THAT IN THE OPINION OF AO WHO HAS FILED THIS APPEAL, THE LEARNED CIT(A) HAS DELETED THE DISALLOWANCE OF `12,40,27,14 3/- ON ACCOUNT OF DEDUCTION U/S 80IC OF THE ACT BUT IT IS NOT THE CAS E WHERE DISALLOWANCE OF ASSESSEES CLAIM OF DEDUCTION U/S 80IC WAS MADE BY THE AO TO THE EXTENT OF `12,40,27,143/-. THE ASSESSEES CLAIM OF DEDUCTION U/S 80IC AT `16,73,09,270/- HAS BEEN REDUCED TO `12,40,27,14 3/-. IN OTHER WORDS, THE AO HAS ALLOWED THE ASSESSEES CLAIM OF D EDUCTION U/S 80IC ITA-4179/DEL/2010 2 TO THE EXTENT OF `12,40,27,143/- AS AGAINST `16,73, 09,270/- CLAIMED BY THE ASSESSEE. THEREFORE, THE ISSUE BEFORE US IS RE GARDING REDUCING THE ASSESSEES CLAIM OF DEDUCTION U/S 80IC FROM `16,73, 09,270/- TO `12,40,27,143/-. 3. THE ASSESSEE FILED ITS RETURN OF INCOME ON 29.11 .2006 SHOWING TOTAL INCOME AT `1,57,47,735/- UNDER THE NORMAL PRO VISIONS OF THE ACT. THE ASSESSEE HAD SHOWN THE TOTAL INCOME AT `17,90,4 5,072/- U/S 115JB OF THE ACT. 4. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF ELECTRICAL SWITCHGEAR, CONTROL GEA R ITEMS AND CFL. IN THE RETURN OF INCOME, THE ASSESSEE MADE A CLAIM OF DEDUCTION U/S 80IC OF THE ACT TO THE EXTENT OF `16,73,09,270/- OUT OF THE TOTAL PROFIT FROM BUSINESS AMOUNTING TO `18,30,57,005/-. THE ASSESSE E SUBMITTED BEFORE THE AO THAT CLAIM OF DEDUCTION U/S 80IC HAS BEEN MADE IN RESPECT OF THE PROFIT FROM ITS UNIT SITUATED AT PAR WANOO (HIMACHAL PRADESH) WHICH WAS A NEWLY ESTABLISHED UNIT FROM 20 .5.2003. THE ASSESSEE SUBMITTED AUDITORS REPORT IN FORM 10CCB S UBSTANTIATING ITS CLAIM FOR DEDUCTION U/S 80IC OF THE ACT. ON PERUSA L OF PROFIT & LOSS ACCOUNT OF THE PARWANOO UNIT, IT WAS FOUND BY THE A O THAT THE ASSESSEE HAD SHOWN THE NET PROFIT AT 25.02% AS AGAINST THE N ET PROFIT FROM ALL OTHER UNITS TAKEN TOGETHER AT 11%. THE AO OBSERVED THAT IF PROFIT OF PARWANOO UNIT IS EXCLUDED FROM THE TOTAL PROFIT, TH EN NET PROFIT OF OTHER UNITS WOULD COME TO ONLY 7.34%. IT WAS FURTHER OBS ERVED BY THE AO THAT THE SALE SHOWN FROM PARWANOO UNIT TO OTHER UNI TS WAS NOT THE ACTUAL SALE. THE ASSESSEE HAD OTHER UNITS AT VARIO US PLACES NAMELY, MURTHAL, JALLANDHAR, NOIDA AND PARWANOO. THE PROFI T RATIO OF ALL THE UNITS WAS WORKED OUT AS UNDER:- ITA-4179/DEL/2010 3 PARTICULARS MURTHAL PLANT JALLANDHAR PLANT NOIDA PLANT PARWANOO PLANT CFL PLANT NET SALES 223706125 191142620 301620596 660011573 2 54365811 PROFIT 4701348 (-)9550772 11279061 165108911 750652 4 % PROFIT 2.10 (-)5.00 3.74 25.02 2.95 5. FROM THE ABOVE WORKING, IT WAS OBSERVED BY THE A O THAT NET PROFIT FOR DIFFERENT UNITS VARIES EXTREMELY I.E. FR OM -5% TO 25.02% THOUGH THE ASSESSEE WAS INVOLVED IN MANUFACTURE OF VARIOUS TYPES OF SWITCHGEARS AT ALL THE UNITS. THE AO FURTHER OBSER VED THAT THE MATERIAL COST AT PARWANOO UNIT HAS BEEN SHOWN ONLY AT 37.59% AS AGAINST 67.37% AT JALLANDHAR UNIT. THE AO FURTHER OBSERVED THAT MANUFACTURING EXPENSES AT PARWANOO UNIT HAS BEEN SH OWN TO THE EXTENT OF 2.77% AS AGAINST MORE THAN 9.4% AT ALL OT HER UNITS. AO ALSO OBSERVED THAT INTEREST CHARGES WERE ALSO DEBITED LE SS IN PARWANOO UNIT IN COMPARISON TO OTHER PLANTS. AO, THEREFORE, STAT ED THAT THE ASSESSEE HAS OVERSTATED THE PROFIT FROM PARWANOO UNIT TO CLA IM HIGHER DEDUCTION U/S 80IC OF THE ACT. THE ASSESSEE WAS THEN ASKED T O SUBSTANTIATE ITS CLAIM OF DEDUCTION U/S 80IC OF THE ACT, IN RESPONSE TO WHICH, THE ASSESSEE SUBMITTED ITS EXPLANATION WHICH HAS BEEN N ARRATED BY THE AO IN PARA 3.3 OF HIS ORDER. IN THE LIGHT OF THE OBSE RVATIONS MADE BY THE AO IN THE ASSESSMENT ORDER, THE AO REDUCED THE ASSE SSEES CLAIM OF DEDUCTION U/S 80IC OF `16,51,08,911/- TO `12,40,27, 143/-. THE REASON GIVEN BY THE AO IN REDUCING THE CLAIM OF DEDUCTION FROM `16,73,09,270/- TO `12,40,27,143/- IS AS UNDER:- (I) NO SEPARATE BOOKS OF ACCOUNTS ARE BEING MAINTAINED FOR PARWANOO UNIT. (II) THE STOCK TRANSFER VOUCHERS FROM PARWANOO UNIT ARE BEING MADE AT A HIGHER VALUE. THAT WAY THE PROFIT OF PAR WANOO UNIT IS BEING OVER-STATED. ITA-4179/DEL/2010 4 (III) THE COST OF PRODUCTION AND OTHER EXPENSES ARE UNDER - STATED FOR PARWANOO UNIT WHICH ARE DIVERTED TO OTHE R UNITS AND CORPORATE OFFICES. 6. THE AO THEN WORKED OUT THE WORKING OF DEDUCTION AVAILABLE TO THE ASSESSEE U/S 80IC OF THE ACT BY OBSERVING AND C ALCULATING AS UNDER:- 3.6 WHEN ALL THE ABOVE FACTS WERE POINTED OUT, THE ASSESSEES REPRESENTATIVE ATTENDED AND SUBMITTED TH AT EVEN IF THE COMPARISON OF PROFIT HAS TO BE MADE, IT SHOULD BE OF THE LIGHT UNITS I.E. PARWANOO, MURTHAL AND NO IDA FROM WHICH SIMILAR TYPE OF PRODUCTS I.E. MCB AND RCBS AR E BEING MANUFACTURED. NO COMPARISON OF THE PROFIT OF JALLA NDHAR OR CFL UNIT CAN BE MADE BECAUSE THEY ARE INVOLVED IN MANUFACTURING OF ENTIRELY DIFFERENT PRODUCT. FURTH ER, IT WAS SUBMITTED BY THE ASSESSEES REPRESENTATIVE THAT THE MAIN REASON FOR MORE PROFIT AT PARWANOO UNIT IS BECAUSE OF THE EXCISE EXEMPTION THAT THE UNIT IS GETTING. THE ELE MENT OF EXCISE BENEFIT IS TO THE EXTENT OF RS.5,88,64,337/- WHICH IS NOT AVAILABLE TO OTHER UNITS. IN SPITE OF ALL THE SUBMISSIONS MADE BY THE ASSESSEE, THE FACT REMAINS THAT THE PRO FIT OF PARWANOO UNIT IS OVER-STATED BECAUSE PROFIT IS SHOW N AT 25.02% WHICH COMES TO 16.1% EVEN IF THE CREDIT FOR ELEMENT OF EXCISE BENEFIT IS CONSIDERED. HENCE, TH E CLAIM OF THE ASSESSEE U/S 80IC OF THE I.T.ACT BEING 25.02 % OF THE TURN OVER IS NOT ALLOWED. HOWEVER, THE ASSESSEES CONTENTION THAT THE PROFIT OF LIGHT UNITS I.E. MURT HAL, NOIDA AND PARWANOO UNITS SHOULD BE COMPARED AND CREDIT FO R EXCISE BENEFIT SHOULD BE ALLOWED, SEEMS TO BE GENUI NE. HENCE, THE CLAIM OF DEDUCTION IS RESTRICTED TO THE AVERAGE NET PROFIT OF MURTHAL, NOIDA AND PARWANOO UNITS WHE RE SIMILAR PRODUCTS ARE BEING MANUFACTURED. THE DEDUC TION ALLOWABLE U/S 80IC OF THE I.T.ACT IS, THEREFORE, WO RKED OUT AS BELOW:- TOTAL TURN OVER OF THE PARWANOO UNIT: RS.66,00,11, 573/- TOTAL TURN OVER OF THE MURTHAL UNIT: RS.25,57,23, 874/- TOTAL TURN OVER OF THE NOIDA UNIT: RS.32,22,39,22 4/- TOTAL TURN OVER OF THE PARWANOO, MURTHAL AND NOIDA UNITS : RS.123,79,74,671/- TOTAL PROFIT BEFORE TAX OF THE 3 UNITS: RS.18,10,8 9,320/- ITA-4179/DEL/2010 5 LESS: EXCISE DUTY BENEFIT IN PARWANOO UNIT : RS.5,88,64,337/- PROFIT ALLOCABLE TO 3 UNITS ON THE BASIS OF TURN OVER: RS.12,22,24,983/- PROFIT OF PARWANOO UNIT ON THE BASIS OF TURN OVER: RS.6,51,62,806/- ADD : EXCISE BENEFIT : RS.5,88,64,337/- TOTAL PROFIT OF PARWANOO UNIT : RS.12,40,27,143/ - 3.7 ACCORDINGLY, REJECTING THE BOOK RESULTS BY APPL YING THE PROVISIONS OF SECTION 145 OF THE I.T.ACT, THE P ROFIT OF PARWANOO UNIT IS WORKED OUT AT RS.12,40,27,143/-. THE CLAIM U/S 80IC OF THE I.T.ACT IS ALLOWABLE TO THE E XTENT OF RS.12,40,27,143/- AS AGAINST THE CLAIM OF DEDUCTION OF RS.16,51,08,911/-. PENALTY PROCEEDINGS U/S 271(1)( C) OF THE I.T.ACT ARE INITIATED ON THIS POINT FOR MAKING EXCESSIVE CLAIM U/S 80IC OF THE I.T.ACT. 7. BEING AGGRIEVED, THE ASSESSEE PREFERRED AN APPEA L BEFORE THE LEARNED CIT(A). 8. AFTER CONSIDERING THE AOS ORDER, ASSESSEES SUB MISSIONS AND VARIOUS DECISIONS AND DECIDING THE QUESTION WHETHER AO WAS JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT U/S 145 OF THE AC T AND IN THEN REDUCING THE CLAIM OF DEDUCTION, THE LEARNED CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY CONCLUDING AS UNDER:- THE FACTS AND SUBMISSIONS MADE BY THE APPELLANT SH OW THAT THE AO HAS COMPLETELY IGNORED THE REASONS PROV IDED BY THE APPELLANT REGARDING THE HIGHER RATE OF PROFI T FROM THE PARWANOO UNIT. IT IS ALSO SEEN THAT THE CORPOR ATE OFFICE EXPENSES HAVE BEEN ALLOCATED ON THE BASIS OF THE TU RNOVER OF THE UNITS IN PROPORTION TO THE TOTAL TURNOVER. THE AO HAS NOT BROUGHT ANY FACTS ON THE BASIS OF WHICH THE OBS ERVATION HAS BEEN MADE THAT THE RECORDS AND REGISTERS ARE INCOMPLETE OR INACCURATE. THE AO HAS ALSO NOT POIN TED OUT ANY FACTS ON THE BASIS OF WHICH IT HAS BEEN STATED THAT NO SEPARATE BOOKS OF ACCOUNTS ARE MAINTAINED DESPITE T HE FACTS THAT THE REPORT OF THE AUDITOR AND TRIAL BALA NCE IS ON RECORD. IN THE CASE OF SURESH KUMAR BAJORIA VS. IT O ITA-4179/DEL/2010 6 REPORTED IN 2008 (113 TTK-0364-ITAT (JAIPUR) ON A S IMILAR ISSUE, THE HONBLE ITAT HELD AS UNDER: ASSESSEE HAS SUPPLIED THE GOODS TO ITS SISTER CONC ERN AND THE AO OBSERVED THAT THE EXPENSES INCURRED BY THE ASSESSEE THE UNIT ARE SUPPRESSED TO CLAIM THE DEDUC TION U/S 80IC OF THE ACT. WHILE FRAMING THE ASSESSMENT ORDER THE AO ESTIMATED THE PROFIT OF THE ASSESSEE BY INVO LVING THE PROVISIONS OF SECTION 145 OF THE I.T.ACT AND RE STRICTED THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IC. TH E HONBLE BENCH HELD THAT THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD WITH REGARD TO THE SUPPRESSION O F THE EXPENSES AND THE ASSESSEE HAS ALSO NOT MADE THE OVE R BILLING AND ALL PURCHASES MADE ARE GENUINE AND THE ASSESSEE IS ALLOWED THE EXEMPTION OF EXCISE DUTY AN D THEREFORE THE AO IN ABSENCE OF ANY MATERIAL CAN NOT ESTIMATE THE GROSS PROFIT OTHER THAN THAT DECLARED BY THE ASSESSEE. IT WAS FURTHER HELD THAT NO ADDITION ON ACCOUNT OF SUPPRESSION OF EXPENSES CAN BE MADE BY THE AO AN D THUS THE ADDITION ON ACCOUNT OF ESTIMATION OF GROSS PROFIT WAS DIRECTED TO BE DELETED. IT IS ALSO PERTINENT TO NOTE THAT IN AY 2004-05 AN D 2007-08 THE APPELLANTS CLAIM OF DEDUCTION U/S 80IC HAS BEEN ACCEPTED BY THE AO. IN VIEW OF THE FACTS DISCUSSED ABOVE AND THE JUDIC IAL PRECEDENTS ON THE SUBJECT I AM OF THE CONSIDERED OP INION THAT THE AO WRONGLY INVOKED THE PROVISIONS OF SECTI ON 145 OF THE ACT IN THE PRESENT CASE WITHOUT BRINGING ANY FACTS ON RECORD. THE DISALLOWANCE MADE BY THE AO IS DELETED AND THIS GROUND OF APPEAL IS ALLOWED. 9. HENCE, THE DEPARTMENT IS IN APPEAL BEFORE US. 10. THE LEARNED DR MERELY SUPPORTED THE AOS ORDER. 11. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFUL LY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 12. IN THE COURSE OF HEARING OF THIS APPEAL, THE LE ARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE IDENTICAL ISSUE O F REDUCING THE ITA-4179/DEL/2010 7 ASSESSEES CLAIM OF DEDUCTION U/S 80IC BY THE AO HA D ARISEN IN THE AY 2005-06 ON SIMILAR REASONS GIVEN BY THE AO IN THE P RESENT ASSESSMENT YEAR AND THAT ISSUE HAS BEEN DECIDED BY THE ITAT DE LHI BENCH C, NEW DELHI VIDE ITA NO.3069/DEL/2010 WHERE THE TRIBUNAL VIDE ITS ORDER DATED 12.11.2010 HAS UPHELD THE ORDER OF CIT(A) BY HOLDING AND OBSERVING AS UNDER:- 6. AFTER HEARING BOTH THE SIDES IN DETAIL, WE FIND THAT THE ASSESSEE WAS MAINTAINING SEPARATE BOOKS OF ACCOUNT FOR ELIGIBLE UNIT (PARWANOO UNIT). THIS ASPECT HAD BEE N ESTABLISHED BY THE REPORT OF THE AUDITOR. THE UNIT IS LOCATED AT TAX FREE ZONE AT PARWANOO AND OTHERS LOCATED AT NOIDA, JALANDHAR AND MURTHAL. CIT (A) HAD RIGHTLY ACCEPTE D THIS FACT IN HIS ORDER. THE OTHER BASIS ON WHICH THE A SSESSING OFFICER REDUCED THE CLAIM OF DEDUCTION WAS THAT THE ASSESSEE HAS SUPPLIED THE GOODS TO THE SISTER CONCE RN AND HAS TRANSFERRED IN THE PROFITS FOR HIGHER CLAIM OF DEDUCTION U/S 80IC AND INVOKED THE PROVISIONS OF SECTION 145. IN THIS REGARD, WE HOLD THAT REVENUE HAS NOT BROUGHT ANY PO SITIVE MATERIAL ON RECORD TO SHOW THAT THERE WAS OVER OR I NFLATED BILLING FOR ENHANCING THE PROFIT. THE OTHER GROUND OF REVENUE THAT EXPENSES WERE UNDER-STATED TO INFLATE THE PROFIT OF THE TAX EXEMPTED UNIT LOCATED AT PARWANOO IS ALSO NOT PROVED BY ANY POSITIVE AND ACCEPTABLE EVIDENCE. THUS, THE REVENUE HAS ALSO FAILED TO ESTABLISH THAT ASSES SEE HAS MADE OVER BILLING IN RESPECT OF THE SALES AND SUPPR ESSED THE PURCHASES RELATED TO ELIGIBLE UNIT. THE ASSESS EE WAS ENJOYING TAX EXEMPTION FROM CENTRAL EXCISE DUTY FOR ELIGIBLE UNIT WHICH HAD LED TO THE HIGHER RATE OF P ROFIT FOR THIS UNIT. FURTHER THERE WAS A PRODUCT DIFFERENT IATION IN THE UNIT LOCATED AT PARWANOO. THE UNIT LOCATED AT PARWANOO WAS MANUFACTURING HIGH CLASS AND MULTIPLE MCBS, AS WELL AS RCCBS DURING THE YEAR UNDER CONSIDERATION. THE SALE FOR THE YEAR FOR THIS UNIT INCREASED FROM RS.9.33 CRORES IN THE IMMEDIATE PRECEDING YEAR TO RS.31.68 CRORES. THE HIGHER RATE OF PROFIT WAS AL SO ON ACCOUNT OF EXEMPTION FROM PAYMENT OF EXCISE DUTY AN D DIFFERENTIATION IN THE PRODUCT. THE UNIT LOCATED A T PARWANOO WAS PRODUCING HIGH VALUE PREMIUM PRODUCTS LIKE RESIDUAL CURRENT CIRCUIT BREAKERS (RCCBS) AND PREMI UM RANGE OF MINIATURE CIRCUIT BREAKERS (MCBS). THE PR ODUCTS MANUFACTURED AT OTHER UNITS WERE NOT COMPARABLE WIT H THE PRODUCT MANUFACTURED AT PARWANOO. THE ASSESSEE HAS ITA-4179/DEL/2010 8 ESTABLISHED THAT THE PRICE OF MULTIPLE MCBS CANNOT BE AGGREGATE OF EQUAL NUMBER OF SINGLE POLE MCBS. THE RE IS PRICE DIFFERENTIATION ON THIS ACCOUNT ALSO. THE UN ITS LOCATED AT JALANDHAR, NOIDA AND MURTHAL ARE OLD UNITS WHICH ARE HAVING OLD MACHINERY IN COMPARISON TO THE NEWLY ESTABLISHED UNIT AT PARWANOO WHICH HAD ALSO GIVEN H IGHER RATE OF PROFITABILITY. CONSIDERING ALL THESE FACTS AND CIRCUMSTANCES, WE UPHOLD THE ORDER OF THE CIT (A). 13. IN THIS CASE, THE AO HAS REDUCED THE ASSESSEES CLAIM OF DEDUCTION OF `16,51,08,911/- TO `12,40,27,143/- BY APPLYING THE AVERAGE PROFIT OF 16.1% OF ALL UNITS OF THE ASSESSE E AS AGAINST THE ACTUAL PROFIT OF 25.02% SHOWN BY THE ASSESSEE IN PA RWANOO UNIT ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT. THE AO S FINDINGS THAT NO SEPARATE BOOKS OF ACCOUNT WERE BEING MAINTAINED FOR PARWANOO UNIT HAVE BEEN FOUND TO BE NOT BASED ON ANY MATERIAL BY THE LEARNED CIT(A). THE AO HIMSELF, IN THE ASSESSMENT ORDER, H AS SHOWN THE SEPARATE SALES AND PROFIT OF EACH UNIT WHICH GOES T O PROVE THAT SALES AND PROFITS OF EACH UNIT WERE SEPARATELY WORKED OUT . THE AOS FINDING THAT THE STOCK TRANSFER VOUCHER FROM PARWANOO UNIT TO OTHER UNIT WERE MADE AT A HIGHER VALUE IS ALSO NOT BASED ON ANY EVI DENCE. THE AO HAS FAILED TO BRING ANY INSTANCE WHERE THE STOCK WAS TR ANSFERRED FROM PARWANOO UNIT AT A HIGHER RATE THAN MARKET RATE TO OTHER UNITS. THE AO ALSO FAILED TO POINT OUT ANY ITEM OF EXPENSES RELAT ING TO PARWANOO UNIT WHICH HAS BEEN DEBITED TO OTHER UNITS. THE AO HAS MADE HIS WORKING MERELY ON ASSUMPTION AND PRESUMPTION WITHOUT POINTI NG OUT ANY SPECIFIC DEFECT OR DISCREPANCY IN THE ACCOUNTS OF T HE ASSESSEE IN RESPECT OF PARWANOO UNIT AS WELL AS OTHER UNITS. T HE AOS FINDING THAT SIMILAR PRODUCTS ARE BEING MANUFACTURED AT ALL UNIT S IS ALSO NOT CORRECT AS SO OBSERVED BY THE TRIBUNAL IN ITS ORDER FOR AY 2005-06. THE TRIBUNAL WHILE DELETING THE DISALLOWANCE MADE BY TH E AO IN AY 2005-06 HAS ALSO OBSERVED THAT THE UNITS LOCATED AT JALLAND HAR, NOIDA AND MURTHAL ARE OLD UNITS WHICH ARE HAVING OLD MACHINER Y IN COMPARISON TO THE NEWLY ESTABLISHED UNIT AT PARWANOO WHICH HAD GI VEN HIGHER RATE OF ITA-4179/DEL/2010 9 PROFITABILITY. THEREFORE, RESPECTFULLY FOLLOWING T HE TRIBUNALS ORDER PASSED IN EARLIER AY 2005-06, WE UPHOLD THE ORDER O F CIT(A) IN DELETING THE DISALLOWANCE OF ASSESSEES CLAIM OF DEDUCTION U /S 80IC BY WAY OF REDUCING THE SAME FROM `16,51,08,911/- TO 12,40,27, 143/-. THE ORDER OF LEARNED CIT(A) IS THUS UPHELD. 14. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 6 TH MAY, 2011. SD/- SD/- (K.D.RANJAN (K.D.RANJAN (K.D.RANJAN (K.D.RANJAN) )) ) (C.L.SETHI (C.L.SETHI (C.L.SETHI (C.L.SETHI) )) ) ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATED : 06.05.2011. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR