Hindustan Unilever Ltd. v. Deputy Commissioner of Income Tax

Parties Involved

Facts Summary

Hindustan Unilever Ltd. (HUL) is engaged in the manufacture, trading, and marketing of Fast-Moving Consumer Goods and Specialised Chemicals. For the assessment year 2004-05, HUL filed its return of income declaring a total income of Rs.939,16,19,420. The return was selected for scrutiny, and notices under sections 143(2) and 142(1) of the Income Tax Act, 1961 were issued. During the assessment proceedings, the Assessing Officer (AO) raised several issues regarding the allocation of head office expenses, disallowance under section 14A, adjustment to the value of closing stock of raw materials and packaging materials, reduction in deduction under section 80HHC, and other miscellaneous issues. The Commissioner of Income Tax (Appeals) (CIT(A)) passed an order on 24/11/2017, which was challenged by HUL and the Revenue in separate appeals before the Income Tax Appellate Tribunal (ITAT). The appeals raised multiple grounds concerning the computation of deductions under sections 10B and 80-IB, the nature of certain receipts, and transfer pricing adjustments.…

Legal Issues

• 1. Allocation of head office expenses for calculation of deduction under section 801B and section 10B
• 2. Disallowance under section 14A in respect of expenditure in relation to tax-free income
• 3. Adjustment to the value of closing stock of raw materials and packing materials by Rs. 43,31,47,338/- representing the unutilised balance of Cenvat as on 31.3.2004
• 4. Reduction in deduction under section 80 HHC by an amount of Rs. 9,26,74,373/- in respect of sales proceeds not realised
• 5. Denial of the exemption u/s 10B in respect of the miscellaneous income of Rs. 73,805/-
• 6. Denial of the exemption u/s 10B in respect of internal transfer of Rs. 5,42,40,340/-

Judgment Outcome

Decided in favour of Partly Assessee / Partly Revenue.

Precedents Relied Upon

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