×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
ITA No. 4165/Del/2014 is the department’s appeal preferred against the order dated 19.05.2014 passed by the Ld. CIT (Appeals)-LTU for assessment year 2009-10 whereas the C.O. has been preferred by the assessee for assessment year 2009-10.
2.0 Brief facts of the case are that the assessee company, during the relevant year, was engaged in the business of manufacturing and selling of automobile power-trains and powershift transmissions along with components of heavy duty power trains. The assessee has a unit in Chennai known as MEPZ unit which is situated in the SEZ. The return was filed declaring a loss of Rs. 1,01,47,052/- which was subsequently revised to a loss of Rs. 1,07,82,450/-. The assessment was completed u/s 143(3) of the Income Tax Act, 1961 (hereinafter called 'the Act') at an income of Rs. 47,64,694/- after making certain additions and disallowances which, inter a ia, included addition of Rs. 25,05,972/- being allocation of head office expenses against the MEPZ unit, another amount of Rs. 2,68,251/- being allocation of bank and loan processing charges against MPEZ unit, addition of Rs. 73,54,190/- against goods transferred to MEPZ unit. Apart from this, the Assessing Officer also made a disallowance of Rs. 18,40,692/- out of research and development expenses and a disallowance of Rs. 1,46,892/- by partially disallowing depreciation on computer peripherals which had been claimed by the assessee @ 60% but the AO allowed the depreciation @ 15%.
The Assessing Officer also made a disallowance of Rs. 5,34,683/- being customization charges paid for ERP by treating the same as capital expenditure. The assessee’s appeal before the Ld. Commissioner of Income Tax (Appeals) was partly allowed wherein the Ld. CIT (A) deleted the additions pertaining to the MEPZ unit and now the department has approached the ITAT challenging the deletion by the Ld. Commissioner of Income Tax (A) whereas the assessee has preferred cross objection challenging the upholding of customization charges to be capital in nature.
2.1 The grounds raised in the revenue’s appeal are as under:-
“1. On the facts and the circumstances of the case and in law, the Ld. CIT (Appeals) has erred in holding that the assessee is eligible to set off the loss of MEPZ (10AA) unit against income of taxable units.
2. On the facts and the circumstances of the case and in law, the Ld. CIT (Appeals) has erred in deleting the addition of Rs. 25,05,972/-, made by Assessing Officer on account of proportionate allocation of Head Office expenses to MPEZ (10AA) unit.
3. On the facts and the circumstances of the case and in law, the Ld. CIT (Appeals) has erred in deleting the addition of Rs. 2,68,251/-, made by AO on account of allocation of bank and loan processing charges to MPEZ (10AA) unit.
4. On the facts and the circumstances of the case and in law, the Ld. CIT (Appeals) has erred in deleting the addition of Rs. 73,54,190/-, made by AO on account of price difference in respect of goods transferred to MPEZ (10AA) unit from other units.