The DCIT, Circle-1, Ahmedabad V. Astral Poly Technik Pvt.Ltd., Ahmedabad

ITA 559/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1390 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 05-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 05-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Assessee Lawyers: VIJAY RANJAN; VARTIK R CHOKSI
• Section: 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER 1. ./ I.T.A. NO.3216/AHD/2011 2. ./ I.T.A. NO. 559/AHD/2012 ( / ASSESSMENT YEARS:2007-08 & 2008-09 RESPECTIVELY ) 1. THE DCIT CIRCLE-1 AHMEDABAD 2. DO- / VS. 1. ASTRAL POLYTECHNIK LTD. 901, PARSHWA TOWER SG HIGH WAY AHMEDABAD-380 051 2. DO- ./ ./ PAN/GIR NO. : AABCA 2951N ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI V.K.SINGH, SR.DR / RESPONDENT BY : SHRI VARTIK R.CHOKSI, AR & VIJAY RANJAN, AR / DATE OF HEARING 05/05/2016 !'# / DATE OF PRONOUNCEMENT 06/06/2016 / O R D E R PER SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER : BOTH THESE APPEALS BY THE REVENUE ARE DIRECTED AG AINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX(A PPEALS)-6, AHMEDABAD DATED 03/10/2011 & 20/12/2011 FOR THE ASSESSMENT YEARS 2007-08 & 2008-09 RESPECTIVELY. ITA NOS.3216/AH D/2011 & 559/AHD/2012 DCIT VS. ASTRAL POLYTECHNIK LTD. ASST.YEARS 2007-08 & 2008-09 RESPECTIVELY - 2 - 2. BEFORE US, AT THE OUTSET, BOTH THE PARTIES SUBMI TTED THAT THOUGH THE APPEALS OF REVENUE PERTAIN TO DIFFERENT ASSESSMENT YEARS, BUT THE ISSUE INVOLVED IN BOTH THE YEARS ARE IDENTICAL EXCEPT FOR THE ASSESSMENT YEARS AND AMOUNTS INVOLVED AND, THEREFORE, THEY HAVE COMM ON SUBMISSIONS TO MAKE. IN VIEW OF THE AFORESAID SUBMISSIONS WE FOR THE SAKE OF CONVENIENCE, PROCEED TO DISPOSE OF BOTH THE APPEALS BY A CONSOLIDATED ORDER. WE THUS PROCEED WITH THE FACTS FOR AY 2007 -08 (IN ITA NO.3216/AHD/2011). 2.1. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIALS ON RECORD ARE AS UNDER:- 2.2. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF CPVC, PVC PIPES AND FI TTINGS. ASSESSEE FILED ITS RETURN OF INCOME FOR AY 2007-08 ON 25/10/ 2007 DECLARING TOTAL INCOME OF RS.NIL AFTER CLAIMING DEDUCTION U/S.80IC OF THE I.T.ACT, 1961. THE CASE WAS SELECTED FOR SCRUTINY AND THERE AFTER ASSESSMENT WAS FRAMED U/S.143(3) OF THE ACT AND THE TOTAL INCOME W AS DETERMINED AT RS.2,27,14,583/-. AGGRIEVED BY THE ORDER OF THE AO , ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A), WHO VIDE ORDER DATED 0 3/10/2011 (IN APPEAL NO.CIT(A)-VI/DCIT, CIR.1/765/09-10) GRANTED SUBSTAN TIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED FOLLOWING GROUNDS:- ITA NOS.3216/AH D/2011 & 559/AHD/2012 DCIT VS. ASTRAL POLYTECHNIK LTD. ASST.YEARS 2007-08 & 2008-09 RESPECTIVELY - 3 - THE LD. CIT(A) ERRED IN LAW AND FACTS IN DELETING T HE ADDITION IN RESPECT OF DEDUCTION U/S.80IC OF RS.4,27,43,358/-. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER TO THE EXTENT MENTIONED ABOVE, SINCE THE ASSESSEE HAS FAILED TO D ISCLOSE HIS TRUE INCOME. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. THE APPE LLANT CRAVES LEAVE OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE N ECESSARY. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ON PERUSING THE COMPUTATION OF INCOME FILED BY THE ASSESSEE, AO NOT ICED THAT THE ASSESSEE HAS CLAIMED DEDUCTION OF RS.10,88,46,178/- U/S.80IC OF THE I.T.ACT, 1961, BEING THE PROFITS OF BADDI UNIT. AO ALSO NOTICED THAT THE ASSESSEE ALSO HAD A AHMEDABAD UNIT. ON COMPARISON OF THE PROFITS OF AHMEDABAD AND BADDI UNIT, HE NOTICED THAT THE ASSES SEE HAD SHOWN ABNORMAL HIGH PROFIT OF 22.71% FROM BADDI UNIT AS C OMPARED TO BOOK LOSS FROM AHMEDABAD UNIT. HE ALSO NOTICED THAT THE ALLOCATION OF COMMON EXPENSES WAS DONE BY THE ASSESSEE ON THE BAS IS OF TURNOVER OF RESPECTIVE UNITS. THE AO ON FURTHER VERIFICATION O F THE DETAILS OF THE ALLOCATION OF EXPENSES CONCLUDED THAT THERE WAS MIS ALLOCATION OF INTEREST EXPENSES WHICH HAD RESULTED INTO INFLATION OF PROFI T OF BADDI UNIT TO THE EXTENT OF RS.22,83,883/-. HE ALSO NOTICED THAT THE ASSESSEE WAS A LONG STANDING REPUTED COMPANY HAVING WELL-ESTABLISHED MA RKET FOR ITS GOODS, ITA NOS.3216/AH D/2011 & 559/AHD/2012 DCIT VS. ASTRAL POLYTECHNIK LTD. ASST.YEARS 2007-08 & 2008-09 RESPECTIVELY - 4 - ITS PRODUCTS FETCH GOOD PRICE IN THE MARKET AND HA D INCURRED EXPENDITURE TO ESTABLISH THE BRAND VALUE. HE FURTHER NOTED THA T THE BRANDS OF THE ASSESSEE WERE WELL-ESTABLISHED EVEN BEFORE THE UNIT AT BADDI COMMENCED ITS PRODUCTION. HE WAS OF THE VIEW THAT ON ACCOUNT OF BRAND AND MARKETING NETWORK, THE ASSESSEE WAS GENERATING PRO FITS AND THE PROFITS ACCRUED TO THE ASSESSEE EVEN PRIOR TO SET UP OF BAD DI UNIT. HE, THEREFORE, CONCLUDED THAT THE ULTIMATE SALE PRICE FOR THE PROD UCT OF THE ASSESSEE CONSISTS OF PROFITS DERIVED FROM MANUFACTURING OF P RODUCT, PROFIT DERIVED FROM THE BRAND VALUE OF THE PRODUCTS AND THE PROFIT DERIVED FROM THE MARKETING NETWORK OF THE PRODUCT. HE ALSO OBSERVED THAT BADDI UNIT WAS DEPENDENT ON THE ESTABLISHED NETWORK OF AHMEDABAD U NIT FOR THE PURPOSE OF MARKETING ITS PRODUCT. HE THEREFORE CON CLUDED THAT THE GOODS MANUFACTURED AT THE BADDI UNIT COULD NOT HAVE BEEN SOLD IN THE MARKET AT THE PRICE WITHOUT THE HELP OF BRAND OF VALUE OR THE MARKETING NETWORK THAT WAS OWNED BY THE ASSESSEE. AO WAS THEREFORE O F THE VIEW THAT THE ASSESSEE SHOULD HAVE TAKEN THE COST AND REASONABLE AMOUNT OF PROFIT AS THE BASIS FOR DETERMINING THE SALE PRICE OF PRODUCT FROM BADDI UNIT FOR THE PURPOSE OF DETERMINING THE DEDUCTION U/S.80IC O F THE ACT. HE THEREAFTER RELYING ON THE DECISION IN THE CASE OF R OLLS ROYCE PLC VS. DDIT (19 SOT 42), CONCLUDED THAT THE PROFITS DERIVE D FROM BRAND VALUE TO BE AT 5% AND FROM MARKETING ACTIVITIES AT 35% AN D THEREFORE CONCLUDED THAT 40% OF THE PROFITS OF THE ASSESSEE F ROM BADDI UNIT TO BE FROM BRAND VALUE AND MARKETING ACTIVITIES. HE, TH EREAFTER, RECOMPUTED ITA NOS.3216/AH D/2011 & 559/AHD/2012 DCIT VS. ASTRAL POLYTECHNIK LTD. ASST.YEARS 2007-08 & 2008-09 RESPECTIVELY - 5 - THE PROFITS OF BADDI UNIT BY REDUCING THE PROFIT F ROM BRAND VALUE AND MARKETING AMOUNTING TO RS.4,04,59,475/- AND AFTER F URTHER MAKING A DISALLOWANCE OF RS.22,83,883/- ON ACCOUNT OF MISALL OCATION OF INTEREST, WORKED OUT THE TOTAL DEDUCTION U/S.80IC OF THE ACT AT RS.6,61,02,820/- AS AGAINST THE CLAIM OF ASSESSEE OF RS.10,88,46,178/- AND THEREBY DENIED THE CLAIM OF DEDUCTION TO THE EXTENT OF RS.4,27,43,358/ -. AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, DELETED THE ADDITION BY HOLDING AS UNDER:- 3.3 I HAVE CONSIDERED THE FACTS OF THE CASE; ASSE SSMENT ORDER AND APPELLANT'S SUBMISSION. ASSESSING OFFICER RESTRICTE D THE DEDUCTION UNDER SECTION 801C ON THE PROFIT OF BADDI UNIT ON THE GRO UND THAT PROFIT CLAIMED AS DEDUCTION ALSO INCLUDED MARKETING AND BR AND VALUE WHICH IS ATTRIBUTABLE TO THE EXISTING UNIT NOT ELIGIBLE FOR THIS DEDUCTION. ASSESSING OFFICER WORKED OUT NORMAL GROSS PROFIT OF BADDI UNI T AFTER REDUCING EXCISE AND SALES TAX BENEFITS AVAILABLE TO THE SAID UNIT AND THEREAFTER 35% GROSS PROFIT ON ACCOUNT OF MARKETING AND 5% GRO SS PROFIT ON ACCOUNT OF BRAND WERE REDUCED WHILE COMPUTING DEDUC TION UNDER SECTION 80 1C. THE FOCUS OF ASSESSING OFFICER'S ARG UMENT IS THAT SINCE A NEW INDUSTRIAL UNDERTAKING WAS ONLY MANUFACTURING A ND WAS USING EXISTING MARKETING SET UP AND BRAND OF THE APPELLAN T COMPANY, ONLY PROFITS DERIVED FROM MANUFACTURING IN THE BADDI UNI T IS ELIGIBLE FOR DEDUCTION AND PROFITS RELATING TO MARKETING ACTIVIT IES AND BRAND ARE NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80 1C. ASSESSI NG OFFICER QUANTIFIED THE GROSS PROFIT DERIVED FROM BRAND AND MARKETING A T RS 40459475 ON PAGE 23 OF THE ASSESSMENT ORDER. IT IS NOT IN DISPUTE THAT WHAT IS QUANTIFIED BY THE ASSESSING OFFICER FOR DISALLOWANC E OF DEDUCTION IS GROSS PROFIT ATTRIBUTABLE TO MARKETING AND BRAND VA LUE. THE DEDUCTION UNDER SECTION 801C IS CLAIMED IN RESPECT OF NET PRO FIT AND THEREFORE DISALLOWING GROSS PROFIT ATTRIBUTABLE TO MARKETING AND BRAND VALUE IS ITA NOS.3216/AH D/2011 & 559/AHD/2012 DCIT VS. ASTRAL POLYTECHNIK LTD. ASST.YEARS 2007-08 & 2008-09 RESPECTIVELY - 6 - NOT CORRECT. IT IS ARGUED BY THE APPELLANT THAT IF MARKETING, WHICH IS A COST CENTRE IN THE CASE OF APPELLANT COMPANY, IS CO NSIDERED A SEPARATE DIVISION THEN MARKETING EXPENSES DEBITED IN THE PRO FIT AND LOSS ACCOUNT OF BADDI UNIT HAS TO BE REMOVED AND REDUCED FROM TH E GROSS PROFIT OF MARKETING AND BRAND ACTIVITY ATTRIBUTED BY THE ASSE SSING OFFICER. AS PER THE DETAILS GIVEN, THE MARKETING EXPENSES DEBITED I N THE PROFIT AND LOSS ACCOUNT OF BADDI UNIT ARE RS 45732681. IF MARKETI NG EXPENSES DEBITED IN THE P&L ACCOUNT OF ELIGIBLE UNIT IS REDUCED FROM THE GROSS PROFIT FROM MARKETING AND BRAND ACTIVITY OF RS 40459475, THEN T HERE CAN BE NO DISALLOWANCE OUT OF DEDUCTION CLAIMED BY THE APPELL ANT. I AGREE WITH THE APPELLANT'S LOGIC THAT THE MARKETING EXPENSES DEBIT ED IN THE P&L ACCOUNT OF ELIGIBLE UNIT HAS TO BE REDUCED FROM THE GROSS PROFIT OF MARKETING ACTIVITY WORKED OUT BY THE ASSESSING OFFI CER. SINCE EXPENSES DEBITED ARE MORE THAN THE GROSS PROFIT COMPUTED BY THE ASSESSING OFFICER, THERE CANNOT BE ANY DISALLOWANCE OF DEDUCT ION UNDER SECTION 80IC. THEREFORE WITHOUT GOING INTO MERIT OF ALLOCATION OF GROSS PRO FIT TO MANUFACTURING AND MARKETING ACTIVITIES SEPARATEL Y, NO DISALLOWANCE OUT OF DEDUCTION CLAIMED BY THE APPELLANT CAN BE MA DE. ACCORDINGLY THE DISALLOWANCE OF DEDUCTION MADE 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 UNDERTAKING. IT IS DONE THROUGH AGENTS AND DISTRIBUTORS TO WHOM COMMISSION AND DISCOUNTS WERE GIVEN. MARKETING IS NOT DONE BY WAY OF SEPARATE ACTIVITY AND THEREFO RE MARKETING ACTIVITY IS A COST CENTRE. MARKETING COSTS WERE ALLOCATED TO THE ELIGIBLE AND NOT ELIGIBLE UNDERTAKING. DIRECT COSTS ARE DEBITED DIRE CTLY AND COMMON EXPENSES ARE ALLOCATED ON THE BASIS OF TURNOVER. SI NCE MARKETING WAS NOT A SEPARATE DIVISION, THERE WAS NO TRANSFER BY T HE ELIGIBLE UNDERTAKING TO SO-CALLED MARKETING DIVISION. IN THE ABSENCE OF ANY TRANSFER, THE PROVISIONS OF SECTION 80 IA (8) ARE N OT APPLICABLE. ADMINISTRATION, FINANCE, MARKETING ETC ARE COMMON A CTIVITIES OF BOTH ELIGIBLE AND NON-ELIGIBLE UNDERTAKINGS, THE COSTS A TTRIBUTABLE TO THESE UNDERTAKINGS WERE ALLOCATED AND THEREFORE THE QUEST ION OF TRANSFER OF GOODS AND SERVICES TO NON-ELIGIBLE UNDERTAKING DOES NOT ARISE. ITA NOS.3216/AH D/2011 & 559/AHD/2012 DCIT VS. ASTRAL POLYTECHNIK LTD. ASST.YEARS 2007-08 & 2008-09 RESPECTIVELY - 7 - AS REGARDS PROFITS DERIVED FROM BRAND VALUE, APPELLANT SUBMITTED THAT MOST OF THE PRODUCTS WERE SOLD IN THE BRAND NA ME OF ITS FOREIGN COLLABORATOR AND THEREFORE ANY PROFIT ATTRIBUTABLE TO APPELLANT'S OWN BRAND WILL NOT BE THERE. AS PER AGREEMENT WITH THE FOREIGN COLLABORATOR, APPELLANT IS REQUIRED TO IMPORT RAW MATERIAL FROM I T AND SALE ITS FINISHED PRODUCTS IN THE BRAND NAME OF FOREIGN COLLABORATOR. CONSIDERING THIS, THERE IS HARDLY ANY PROFIT ATTRIBUTABLE TO THE BRAN D VALUE. THE BASIS OF ASSESSING OFFICER'S DISALLOWANCE IS THE AAR DECISION IN THE CASE OF ROLLS-ROYCE PIC. IN TH AT DECISION, THE MANUFACTURER WAS THE FOREIGN COMPANY AND SELLING CA RS IN INDIAN MARKET THROUGH THE MARKETING PE SETUP IN INDIA. IT WAS THEREFORE HELD THAT PROFIT WAS NOT ONLY DERIVED FROM MANUFACTURING OF CARS BUT ALSO FROM MARKETING THE SAME IN INDIA BY INDIAN PE. THE INDIAN PE WAS ANALYZING AND SCRUTINIZING THE PROPOSALS AND ORDER S AND ACTIVELY INVOLVED IN NEGOTIATING, CONCLUDING OR FULFILLING T HE CONTRACTS. SINCE INDIAN PE, WHICH WAS THE MARKETING DIVISION, WAS CA RRYING OUT PRESALE, SALE AND POST SALE ACTIVITIES, A DEFINITE PROFIT WA S ATTRIBUTABLE TO THIS UNDERTAKING. IT CANNOT BE SAID THAT INDIAN PE WAS N OT CARRYING OUT PROFITABLE ACTIVITY. THE ISSUE INVOLVED WAS OF TRAN SFER PRICING IN WHICH THE PROFITS OF INDIAN PE WAS TO BE WORKED OUT. THE FACTS OF THE APPELLANT'S CASE ARE ALTOGETHER DIFFERENT. THERE IS NO DIVISION OR UNDERTAKING FOR MARKETING. THE APPELLANT'S EMPLOYEES WERE HANDLING THE MARKETING THROUGH DISTRIBUTORS AND AGENTS. MARK ETING WAS NOT AN INDEPENDENT ACTIVITY. IT WAS ONLY FOR THE PRODUCTS OF THE APPELLANT COMPANY AND ACCORDINGLY A COST CENTRE RATHER THAN A PROFIT CENTRE. COSTS FOR MARKETING WERE DISTRIBUTED TO BOTH ELIGIB LE AND INELIGIBLE UNDERTAKING. ASSESSING OFFICER DID NOT FIND ANY FAU LT WITH THE SAID ALLOCATION. WHEN THERE WAS NO ELEMENT OF PROFIT IN THE MARKETING, NO PROFIT CAN BE ATTRIBUTED TO THE MARKETING AC TIVITY WHICH IS ONLY SUPPORTING ACTIVITY FOR THE MANUFACTURING DIVISIONS . LIKE HEAD OFFICE EXPENSES, MARKETING EXPENSES WERE ALSO ALLOCATED TO THE ELIGIBLE UNDERTAKING AND THEREFORE PRESUMING ANY PROFIT IN M ARKETING ACTIVITY IS NOT REQUIRED. ITA NOS.3216/AH D/2011 & 559/AHD/2012 DCIT VS. ASTRAL POLYTECHNIK LTD. ASST.YEARS 2007-08 & 2008-09 RESPECTIVELY - 8 - ASSESSING OFFICER ALSO REFERRED PROVISIONS OF SECTI ON 80IA (5) AS PER WHICH THE PROFIT OF THE UNDERTAKING HAS TO BE CONSI DERED AS IF IT WAS THE ONLY UNDERTAKING OF THE ASSESSEE. MARKETING, HEAD O FFICE EXPENSES, PURCHASES, ACCOUNTING ETC ARE CARRIED OUT FROM AHME DABAD OFFICE AND THE RELATED COSTS WERE DEBITED TO THE BADDI UNIT. T HE PROFIT OF ELIGIBLE UNIT IS WORKED OUT AS IF THIS WAS THE ONLY UNDERTAK ING. ALL COSTS RELATING TO THE ELIGIBLE UNDERTAKING WERE DEBITED AND PROFIT S WERE WORKED OUT ACCORDINGLY. IN THE WORKING OF PROFIT OF ELIGIBLE U NDERTAKING, THERE IS NO VIOLATION OF SECTION 80IA (5). THE DECISION OF THE SUPREME COURT IN THE CASE OF LIBERTY INDIA RELIED UPON BY THE ASSESSING OFFICER IS NOT APPLICABLE TO THE FACTS OF THE APPELLANT'S CASE SIN CE FOR WORKING OUT PROFIT OF ELIGIBLE MANUFACTURING UNDERTAKING SALES VALUE OF THE PRODUCTS SOLD IS TO BE CONSIDERED. ANY OTHER INCOME NOT RELA TING TO SALE OF MANUFACTURED GOODS WILL BE OUTSIDE THE PURVIEW OF D EDUCTION UNDER SECTION 80IA. THE APPELLANT WORKED OUT ELIGIBLE PRO FIT BY TAKING SALES VALUE OF PRODUCTS MANUFACTURED. NO OTHER INCOME WAS CONSIDERED WHICH 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 THAT THERE IS NO MARKETING DIVISION IN THE CASE OF APPELLANT AND THEREFORE THERE WAS NO TRANSFER OF GOODS FROM ELIGIBLE TO NON-ELIGIBLE UNDERTAKING. IN THE ABSENCE OF MARKETING DIVISION BEING A SEPARATE UNDERTAKING, NO PROFIT CAN BE ATTRIBUTED TO THE MARKETING ACTIVITY. AS REGARDS BRAND VALUE, THE SAME IS OWNED BY THE FOREIGN COLLABORATOR AND THERE CAN'T BE ANY PRO FIT ATTRIBUTABLE TO BRAND. THE DISALLOWANCE OF DEDUCTION MADE BY THE ASSESSING OFFICER IS THEREFORE WITHOUT ANY BASIS AND THE SAME CANNOT BE SUSTAINED ON MERIT ALSO. THE ADDITION MADE BY THE ASSESSING OFFICER IS ACCORDINGLY DELETED. 4. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. ITA NOS.3216/AH D/2011 & 559/AHD/2012 DCIT VS. ASTRAL POLYTECHNIK LTD. ASST.YEARS 2007-08 & 2008-09 RESPECTIVELY - 9 - 5. BEFORE US, LD.SR.DR SUPPORTED THE ORDER OF TH E AO. ON THE OTHER HAND, LD.AR(S) REITERATED THE SUBMISSIONS MADE BEFO RE THE AO AND LD.CIT(A). HE SUBMITTED THAT THE BOOKS OF ACCOUNT OF BADDI UNIT ARE AUDITED AND NO DEFECT HAS BEEN POINTED OUT BY THE A UDITORS AND THEREFORE NO ADJUSTMENTS TO THE PROFITS OF BADDI UNIT COULD H AVE BEEN UNDERTAKEN BY AO. HE FURTHER SUBMITTED THAT THE CLAIM OF DE DUCTION U/S.80IC OF THE ACT FOR THE IMPUGNED YEAR WAS SECOND YEAR OF CLAIM AND THAT THE ASSESSEE HAD ALSO CLAIMED DEDUCTION U/S.80IC OF THE ACT IN AY 2006-07 AND THE CLAIM OF ASSESSEE WAS ALLOWED IN THE ASSES SMENT ORDER FRAMED U/S.143(3) OF THE ACT. HE ALSO PLACED ON RECORD TH E COPY OF THE SAID ORDER. HE FURTHER SUBMITTED THAT THE CLAIM OF DE DUCTION IN AY 2006-07 HAS NOT BEEN DISTURBED BY REVENUE EITHER BY REOPEN ING THE ASSESSMENT U/S.147/148 OF THE ACT OR BY INVOKING REVISIONARY POWERS U/S. 263 OF THE ACT, MEANING THEREBY THAT CLAIM OF THE DEDUCTION U/ S.80IC OF THE ACT AS MADE BY THE ASSESSEE HAS BEEN FOUND TO BE IN ORDER. HE FURTHER SUBMITTED THAT SINCE THERE ARE NO CHANGE IN THE FACTS OF THE CASE BETWEEN AY 2006- 07 AND THE YEAR UNDER CONSIDERATION, THE CLAIM OF A SSESSEE NEEDS TO BE ACCEPTED IN TOTO. HE THUS, SUPPORTED THE ORDER OF THE LD.CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO DE NYING THE CLAIM OF DEDUCTION U/S.80IC OF THE ACT. WE FIND THAT LD.CIT (A) WHILE DECIDING THE ISSUE IN FAVOUR OF ASSESSEE HAS GIVEN A FINDING THA T THERE WAS NO ITA NOS.3216/AH D/2011 & 559/AHD/2012 DCIT VS. ASTRAL POLYTECHNIK LTD. ASST.YEARS 2007-08 & 2008-09 RESPECTIVELY - 10 - MARKETING DIVISION AND, THEREFORE, THERE WAS NO TRA NSFER OF GOODS FROM ELIGIBLE TO NON-ELIGIBLE UNDERTAKING AND IN THE ABS ENCE OF MARKETING DIVISION BEING A SEPARATE UNDERTAKING, NO PROFIT CO ULD BE ATTRIBUTED TO THE MARKETING ACTIVITY. WITH RESPECT TO BRAND VALUE, THE LD.CIT(A) HAS GIVEN FINDING THAT THE SAME IS OWNED BY THE FOREIGN COLLA BORATOR AND THERE CANNOT BE ANY PROFIT ATTRIBUTABLE TO BRAND. HE HAS FURTHER GIVEN A FINDING THAT AO HAD QUANTIFIED THE GROSS PROFIT ATTRIBUTABL E TO MARKETING AND BRAND VALUE AND DISALLOWANCE AND THAT SINCE DEDUCTI ON U/S.80IC IS CLAIMED IN RESPECT OF NET PROFIT AND, THEREFORE, DI SALLOWING GROSS PROFIT ATTRIBUTABLE TO MARKETING AND BRAND VALUE IS NOT CO RRECT AND THAT FURTHER, SINCE THE MARKETING EXPENSES DEBITED TO THE PROFIT & LOSS ACCOUNT ARE MORE THAN GROSS PROFIT COMPUTED BY THE AO, THAT THE RE CANNOT BE ANY DISALLOWANCE OF DEDUCTION U/S.80IC OF THE ACT. BEF ORE US, REVENUE HAS NOT PLACED ANY MATERIAL TO CONTROVERT THE FINDINGS OF LD.CIT(A). WE FURTHER FIND THAT THE ASSESSEE HAD CLAIMED DEDUCTIO N U/S.80IC IN AY 2006-07 ALSO AND THE CLAIM HAS BEEN ALLOWED IN THE ASSESSMENT FRAMED U/S.143(3) OF THE ACT, AND THAT NO REOPENING OF ASS ESSMENT U/S.147/148 OR U/S.263 HAS BEEN INITIATED FOR WITHDRAWING THE CLAI M MEANING THEREBY THAT THE CLAIM OF ASSESSEE HAS BEEN ACCEPTED BY REVENUE AND HAS ATTAINED FINALITY. IN VIEW OF THE AFORESAID REASONS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) AND THUS GROUND RA ISED BY THE REVENUE IS DISMISSED. AS A RESULT, REVENUES APPEAL FOR AY 20 07-08 IS DISMISSED. ITA NOS.3216/AH D/2011 & 559/AHD/2012 DCIT VS. ASTRAL POLYTECHNIK LTD. ASST.YEARS 2007-08 & 2008-09 RESPECTIVELY - 11 - 7. NOW, WE TAKE UP REVENUES APPEAL IN ITA NO.559/ AHD/2012 FOR AY 2008-09. 7.1. BEFORE US, SINCE BOTH THE PARTIES HAVE ADMITTE D THAT THE FACTS IN THE CASE OF ASSESSMENT YEAR 2008-09 (IN REVENUES APPEA L) ARE IDENTICAL TO THE FACT OF AY 2007-08, WE THEREFORE FOR THE REASON S GIVEN HEREINABOVE WHILE DISPOSING OF REVENUES APPEAL IN ITA NO.3216/ AHD/2011 FOR AY 2007-08 AND FOR SIMILAR REASONS, DISMISS THE GROUND OF REVENUE FOR ASSESSMENT YEAR 2008-09 ALSO. 8. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 06 /06/2016 SD/- SD/- ( S.S. GODARA ) ( ANIL CHATURVEDI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 06/ 06 /2016 &.., .(../ T.C. NAIR, SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. )*+ , / CONCERNED CIT 4. , ( ) / THE CIT(A)-6, AHMEDABAD 5. /01 ((*+ , *+# , ) / DR, ITAT, AHMEDABAD 6. 145 6 / GUARD FILE. / BY ORDER, / ( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD