ITAT PUNE BENCH ‘A’
Honeywell Automation India Ltd.
v.
Deputy Commissioner of Income-tax
IT APPEAL NOs. 401& 402 (Pune) of 2007
[Assessment years 2001-02 & 2002-03]
Date of Decision – September 7, 2011
ORDER
D. Karunakara Rao, Accountant Member –
There are two appeals under consideration for the AYs 2001-02 and 2002-03. The issues are common and therefore, with the consent of the parties, we have decided to take up the appeal no 401/PN/2007 for adjudicating both the appeals as the grounds, facts, and the arguments of the parties are essentially common. Appeal no 401/PN/2007 is filed by the assessee against the impugned order of the CIT(A)- III, Pune dated 29-12-2006 for the A.Y. 2001-02. The grounds of the appeal with the concise ground 1, read as under:
(1) Whether the lower authorities were justified in rejecting the books of accounts and in estimating the amount of deduction under Section 10A to Rs 5,69,99,894 being 50% of the cost as against the amount claimed by the assessee of Rs. 11,95,79,294/-.
(2) The Ld CIT(A) has further erred in upholding disallowance of provisions of Rs 51,53,103 towards leave encashment.
(3) That interest u/s 234D of the Act is chargeable for the period beginning from 1.6.2003.
2. Briefly stated relevant facts of the case for the AY 2001-02 are that the assessee formerly called Tata Honeywell Ltd and being a listed company, has been jointly promoted by Honeywell Inc., USA and Tata group in India, each of whom held 40% of the paid-up share capital of the company in the relevant financial year and the balance 20% was held by the public. Assessee has multiple segments of the business. One segment of the business carried on by the assessee is of designing, supply/erection of automation equipments mainly to the customers in India. The revenues derived from this segment are not eligible for exemption/deduction under Section 10A. The other segment of business is provision of engineering/designing services relating to industrial/business automation systems to overseas customers (substantially to Honeywell associates) from set-up in Software Technology Parks (STP) in Pune and in Chennai. The revenues from this segment of business are claimed exempt under Section 10A of the Act. Assessee filed the return of income on 31.10.2001 declaring the total income of Rs 4,24,16,268 after claiming exemption under section 10A for the STP units amounting to Rs 11,95,79,294/-. Assessee revised the income to Rs 5,41,17,010/- by filing revised return of income. During the scrutiny proceedings, AO noticed certain errors in the books of accounts with reference to the allocation of expenses to the STP units and others and thus, AO invoked the provisions of section 145 of the Act.
3. Relevant questionable parameters for the AO are given in this following table as under:
Segment wise turnover and profits for the year (Rs. In crores)
