The assessee contended that the fall in GP rate was due to an increase in power and fuel costs. The Assessee provided detailed documentary evidence to support this claim. Also, the assessee received non-compete fees from its subsidiary, which prevented it from selling products to certain customers, impacting its GP rate. \u00a0The Revenue claimed that the fall in GP rate was due to the diversion of profits to the subsidiary entity which claimed deductions under section 80IC.\u00a0 Further alleged that this was a colorable mechanism to reduce tax liability. The Hon\u2019ble Tribunal agreed with the CIT(A) that the fall in GP rate was justified due to increased power and fuel costs.\u00a0 The Hon\u2019ble Tribunal observed that the assessee provided sufficient documentary evidence to support this claim.\u00a0 Additionally, the Hon\u2019ble Tribunal also noted that any adjustment for alleged profit diversion should have been made in the hands of the subsidiary entity under section 80IA (10), not in the hands of the assessee.\u00a0 The Hon\u2019ble Tribunal also held that on Non-compete fees acknowledged that the non-compete fees received by the assessee impacted its ability to sell products to certain customers, which was a valid business consideration affecting its GP rate. \u00a0(AY 2012-13, 20013-14) \u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 80IC : Special category States-Fall in gross profit rate-Diversion of profits to subsidiary-May require scrutiny at the hands of the subsidiary under section 80IA (10) and not the Assessee. [S,80IA(10)] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-50351","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-d67","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/50351","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=50351"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/50351\/revisions"}],"predecessor-version":[{"id":50352,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/50351\/revisions\/50352"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=50351"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=50351"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=50351"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}