Balaji Powertronics Vs DCIT (ITAT Delhi)
Excise-Duty Waiver Is Capital Receipt; TP Adjustments Must Exclude Excise & CST— Backward-Area Incentives Cannot Inflate Margins—TP Reworked
Delhi Tribunal dealt with extensive TP adjustments & additional claim that excise-duty exemption for the Himachal Pradesh 80-IC unit was a capital receipt. Assessee manufactured UPS, inverters & stabilizers in a backward-area unit enjoying excise-duty waiver of 12.50% & CST waiver of 2%. DRP had confirmed TP adjustment of ₹21.89 crore without granting margin adjustments for backward-area incentives & without appreciating Assessee’s product profile or segmental differences between manufacturing & trading.
Tribunal accepted Assessee’s contention that excise-duty & CST benefits directly impacted profitability & that OP/OR must be recomputed excluding such levies. Tribunal followed Sheela Foams Ltd. where similar adjustments were directed.
On the additional ground, Tribunal held that excise-duty exemption of ₹30.35 crore constituted capital receipt, relying on Shree Balaji Alloys, Ponni Sugars, PC Jeweller & other precedents, and allowed exclusion under both normal provisions & AMT. Grounds relating to TP comparables, benchmarking of manufacturing vs trading, applicability of 80-IA(8)/(10) & selection of wrong comparables were restored to AO for de novo adjudication. Grounds not pressed were dismissed. Appeal partly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT DELHI
