MIRA INFORM REPORT

Report Date :

05.11.2012

IDENTIFICATION DETAILS

Name :	GANESH POLYCHEM LIMITED (w.e.f. 23.01.2003)
Formerly Known As :	GANESH POLYCHEM PRIVATE LIMITED
Registered Office :	Udyog Kshetra, 2^nd Floor, Mulund Goregaon Link Road, L.B.S. Marg, Mulund (West), Mumbai – 400 080, Maharashtra
Country :	India
Financials (as on) :	31.03.2011
Date of Incorporation :	07.11.2001
Com. Reg. No.:	11-133900
Capital Investment / Paid-up Capital :	Rs.68.508 Millions
CIN No.: [Company Identification No.]	U24299MH2001PLC133900
TAN No.: [Tax Deduction & Collection Account No.]	MUMG07085B
PAN No.: [Permanent Account No.]	AABCG6160B
Legal Form :	A Closely Held Public Limited Liability Company
Line of Business :	Manufacturing of Specialty Chemicals.
No. of Employees :	60 (Approximately) (In Office + In Factory)

RATING & COMMENTS

MIRA’s Rating :

Ba (54)

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Maximum Credit Limit :	USD 1900000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Exits
Comments :	Subject is a well established and reputed company having good track but the financial details is missing from government department. However, the financial general position of the company appears to be good. Trade relations are reported to be fair. Business is active. Payments are reported to be regular and as per commitment. The company can be considered normal for normal business dealings at usual trade terms and conditions.

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

INDIAN ECONOMIC OVERVIEW

India is developing into an open-market economy, yet traces of its past autarkic policies remain. Economic liberalization, including industrial deregulation, privatization of state-owned enterprises, and reduced controls on foreign trade and investment, began in the early 1990s and has served to accelerate the country's growth, which has averaged more than 7% per year since 1997. India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Slightly more than half of the work force is in agriculture, but services are the major source of economic growth, accounting for more than half of India's output, with only one-third of its labor force. India has capitalized on its large educated English-speaking population to become a major exporter of information technology services and software workers. In 2010, the Indian economy rebounded robustly from the global financial crisis - in large part because of strong domestic demand - and growth exceeded 8% year-on-year in real terms. However, India's economic growth in 2011 slowed because of persistently high inflation and interest rates and little progress on economic reforms. High international crude prices have exacerbated the government's fuel subsidy expenditures contributing to a higher fiscal deficit, and a worsening current account deficit. Little economic reform took place in 2011 largely due to corruption scandals that have slowed legislative work. India's medium-term growth outlook is positive due to a young population and corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy. India has many long-term challenges that it has not yet fully addressed, including widespread poverty, inadequate physical and social infrastructure, limited non-agricultural employment opportunities, scarce access to quality basic and higher education, and accommodating rural-to-urban migration.

Source : CIA

EXTERNAL AGENCY RATING

Rating Agency Name	ICRA
Rating	LONG TERM BANK FACILITIES : ICRA A-
Rating Explanation	Having adequate degree of safety regarding timely servicing of financial obligation it carry low credit risk.
Date	April, 2010

RBI DEFAULTERS’ LIST STATUS

Subject’s name is not enlisted as a defaulter in the publicly available RBI Defaulters’ list.

EPF (Employee Provident Fund) DEFAULTERS’ LIST STATUS

Subject’s name is not enlisted as a defaulter in the publicly available EPF (Employee Provident Fund) Defaulters’ list as of 31-03-2012.

INFORMATION PARTED BY

Name :	Mr. Chetan Gandhi
Designation :	Finance Manager
Contact No.:	91-22-67976611
Date :	03.11.2012

LOCATIONS

Registered Office :	Udyog Kshetra, 2^nd Floor, Mulund Goregaon Link Road, L.B.S. Marg, Mulund (West), Mumbai – 400 080, Maharashtra, India
Tel. No.:	91-22-67976666
Fax No.:	91-22-25653234
E-Mail :	chetangandhi@aartigroup.com suhas.chewle@aartigroup.in info@aartigroup.com
Website :	www.aartigroup.com
Location:	Owned
Factory :	Ban Chem House, P-63, Milap Nagar, MIDC Road No.21, Dombivli (East), Thane – 421 203, Maharashtra, India
Tel. No.:	91-251-2448395 (3 Lines)
Fax No.:	91-251-2451929

DIRECTORS

AS ON 30.09.2011

Name :	Ms. Hetal Gogri Gala
Designation :	Director
Address :	552-B, Gopal Sadan, Block No.801, 8^th Floor, Jame Jamshed Road, Matunga (West), Mumbai - 400 019, Maharashtra, India
Date of Birth/Age :	10.07.1975
Date of Appointment :	13.09.2005
DIN No.:	00005499

aadhi ghyevy

Name :	Mr. Hemant Ratnakar Bandodkar
Designation :	Director
Address :	RL-72, Milap Nagar, MIDC Residential Zone, Dombivli (East), Thane – 421 203, Maharashtra, India
Date of Birth/Age :	07.12.1973
Date of Appointment :	13.09.2005
DIN No.:	01061791

Name :	Mr. Rashesh Chandrakant Gogri
Designation :	Director
Address :	601, Antariksh, Murar Road Mulund (West), Mumbai - 400 080, Maharashtra, India
Date of Birth/Age :	03.06.1974
Date of Appointment :	07.11.2001
DIN No.:	00066291
Election Commission Identity Card No.:	MT\07\052\802516

Name :	Mr. Ratnakar Tukaram Bandodkar
Designation :	Director
Address :	RL-72, Milap Nagar, MIDC Residential Zone, Dombivli (East), Thane – 421 203, Maharashtra, India
Date of Birth/Age :	27.12.1939
Date of Appointment :	07.11.2001
DIN No.:	00201704

Name :	Mr. Venkateswara Rao Samavedula
Designation :	Additional Director
Address :	Flat No.C-205, Everest Co-Operative Housing Society, G.I.D.C., Vapi, District Valsad, Vapi – 396 195, Gujarat, India
Date of Birth/Age :	01.11.1956
Date of Appointment :	08.02.2011
DIN No.:	01713317

KEY EXECUTIVES

Name :	Mr. Chetan Gandhi
Designation :	Finance Manager

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 30.09.2011

Names of Shareholders	No. of Shares
Aarti Industries Limited, India	1970610
Aarti Industries Limited, India	3
Aarti Industries Limited, India	2
Aarti Industries Limited, India	2
Aarti Industries Limited, India	2
Aarti Industries Limited, India	2
Ratnakar T. Bandodkar Gauri Bandodkar	757211
Gauri R. Bandodkar Ratnakar T. Bandodkar	757211
Pallavi R. Bandodkar Gauri R. Bandodkar	757211
Hemant R. Bandodkar Ratnakar T. Bandodkar	796624
Rashesh C. Gogri Chandrakant Gogri	44000
Aarti R. Gogri Rajendra V. Gogri	243391
Hetal Gogri Gala Jaya C. Gogri	306885
Mirik R. Gogri Rajendra V. Gogri	211645
Rashesh C. Gogri Manisha R. Gogri	291715
Total	6136514

AS ON 30.09.2011

Equity Share Breakup	Percentage of Holding
Category
Bodies corporate	32.11
Directors or relatives of directors	60.47
Other top fifty shareholders	7.42
Total	100.00

BUSINESS DETAILS

Line of Business :

Manufacturing of Specialty Chemicals.

Products :

Item Code No. (ITC Code)	29012990
Product Description	Di-Chloro Di-Phenyl Sulfone
Item Code No. (ITC Code)	29214223
Product Description	Di-Methyl Aniline
Item Code No. (ITC Code)	29209020
Product Description	Di-Methyl Sulphate

Terms :

Selling :

Cash and Credit

Purchasing :

Cash and Credit

PRODUCTION STATUS (AS ON 31.03.2011)

Particulars	Installed Capacity (In M.T. /P.A.)
Di-Chloro Diphenyl Sulfone	3,000
Di-Methyl Aniline	3,500
Di-Methyl Sulphate	5,000

Particulars	Actual Production QTY (KGS)
Di-Chloro Di-Phenyl Sulfone	2528000
Di-Amino Di-Phenyl Sulfone	84275
Di-Methyl Aniline	2486691
Di-Methyl Sulphate	4853494

GENERAL INFORMATION

Customers :

Wholesaler and Retailers

No. of Employees :

60 (Approximately) (In Office + In Factory)

Bankers :

State Bank of India, Commercial Branch, N.G.N. Vaidya Marg, Mumbai – 400 023, Maharashtra, India

Facilities :

Working Capital : Rs.200.000 Million (State Bank of India)

Secured Loans	31.03.2011 Rs. In Millions	31.03.2010 Rs. In Millions
Rupee term loans from banks	0.000	13.172
Working capital loans from banks	36.974	61.410
Other debt	22.898	18.582
Total	59.872	93.164

Notes:

Working Capital

· PCFC/EPC Rs.34.523 Millions (Previous Year Rs.29.467 Millions), Cash Credit Rs.2.452 Millions Total Rs.36.974 Millions

Other Debt

· FBP

Unsecured Loans	31.03.2011 Rs. In Millions	31.03.2010 Rs. In Millions
Loans from directors	6.643	32.144
Other debt	34.067	46.167
Total	40.710	78.311

Note:

Inter Corporate Loan Rs.33.492 Millions (Previous Year Rs.45.492 Millions) others Rs.0.575 Million (Previous Year Rs.0.675 Million) Total Rs.34.067 Millions (Previous Year Rs.46.167)

Banking Relations :	--
Auditors :
Name :	Vora Sanghavi and Associates Chartered Accountants
Address :	203, Chheda Bhavan, 98, Surat Street, Masjid (East), Mumbai – 400 009, Maharashtra, India
Tel. No.:	91-22-23481063
Income-tax PAN of auditor or auditor's firm :	AAAPV8139M
Associates/Subsidiaries :	Aarti Industries Limited Address: Plot No.801/23, GIDC Estate, Phase III, Valsad, Vapi - 396 195, Gujarat, India
Related Parties :	Aarti Industries Limited Anushakti Chemicals and Drugs Limited Aarti Healthcare Limited Aarti Drugs Limited Hindustan Monomers Private Limited Poise Chemicals Private Limited

CAPITAL STRUCTURE

As on 30.09.2011

Authorised Capital :

No. of Shares	Type	Value	Amount
7000000	Equity Shares	Rs.10/- each	Rs.70.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
6136514	Equity Shares	Rs.10/- each	Rs.61.365 Millions

As on 31.03.2011

Authorised Capital :

No. of Shares	Type	Value	Amount
7000000	Equity Shares	Rs.10/- each	Rs.70.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
6850800	Equity Shares	Rs.10/- each	Rs.68.508 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2011	31.03.2010	31.03.2009
SHAREHOLDERS FUNDS
1] Share Capital		68.508	31.140	31.140
2] Share Application Money		0.000	0.000	3.600
3] Reserves & Surplus		410.224	284.096	249.795
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		478.732	315.236	284.535
LOAN FUNDS
1] Secured Loans		59.872	93.164	119.632
2] Unsecured Loans		40.710	78.311	76.723
TOTAL BORROWING		100.582	171.475	196.355
DEFERRED TAX LIABILITIES		34.315	28.428	22.787
TOTAL		613.629	515.139	503.677
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		339.174	321.857	273.071
Capital work-in-progress		0.000	0.000	59.085
INVESTMENT		0.000	0.000	0.000
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	72.314	72.275	54.732
	Sundry Debtors	157.893	113.701	115.363
	Cash & Bank Balances	10.968	4.664	7.845
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	165.342	71.543	50.925
Total Current Assets		406.517	262.183	228.865
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	86.249	52.849	42.262
	Other Current Liabilities	0.000	2.777	9.955
	Provisions	45.813	13.275	5.127
Total Current Liabilities		132.062	68.901	57.344
Net Current Assets		274.455	193.282	171.521
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		613.629	515.139	503.677

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2011
	SALES
		Income	851.957
		Other Income	2.113
		TOTAL (A)	854.070
Less	EXPENSES
		Consumption materials changes inventories	502.927
		Manufacturing service costs	94.398
		Employee related expenses	18.939
		Administrative selling other expenses	59.020
		TOTAL (B)	675.284
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		178.786
Less	INTEREST & FINANCIAL EXPENSES (D)		10.084
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		168.702
Less/ Add	DEPRECIATION/ AMORTISATION (F)		21.809
	PROFIT BEFORE TAX (E-F) (G)		146.893
Less	TAX (H)		16.602
	PROFIT AFTER TAX (G-H) (I)		163.495
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		219.048
Less	APPROPRIATIONS
		Transfer to General Reserve	16.350
		Interim Dividend	0.000
		Dividend Tax	0.000
	BALANCE CARRIED TO THE B/S		366.193
	EARNINGS IN FOREIGN CURRENCY
		F.O.B. Value of Export Sales	585.904
	TOTAL EARNINGS		585.904
	IMPORTS
		Packing Materials	4.760
		Raw Materials	134.848
	TOTAL IMPORTS		139.608
	Earnings Per Share (Rs.)		23.87

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2010	31.03.2009
	SALES
		Income	467.907	769.634
		Other Income	2.228	3.020
		TOTAL (A)	470.135	772.654
Less	EXPENSES
		Manufacturing and other expenses	357.334	572.686
		Purchase of Goods traded in	14.493	32.022
		Office & Administrative Expenses	4.237	4.099
		Selling & Distribution Expenses	15.094	13.870
		Increase/decrease in stock	(13.781)	1.758
		Non Operating Expenses	0.000	0.000
		TOTAL (B)	377.377	624.435
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		92.758	148.219
Less	INTEREST & FINANCIAL EXPENSES (D)		22.593	28.359
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		70.165	119.860
Less/ Add	DEPRECIATION/ AMORTISATION (F)		22.022	18.470
	PROFIT BEFORE TAX (E-F) (G)		48.143	101.390
Less	TAX (H)		13.841	9.303
	PROFIT AFTER TAX (G-H) (I)		34.302	92.087
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		188.651	106.298
Less	APPROPRIATIONS
		Transfer to General Reserve	3.905	9.734
		Interim Dividend	0.000	0.000
		Dividend Tax	0.000	0.000
	BALANCE CARRIED TO THE B/S		219.048	188.651
	EARNINGS IN FOREIGN CURRENCY
		F.O.B. Value of Export Sales	295.391	520.708
	TOTAL EARNINGS		295.391	520.708
	IMPORTS
		Packing Materials	2.161	5.004
		Raw Materials	79.276	67.650
	TOTAL IMPORTS		81.437	72.654
	Earnings Per Share (Rs.)		11.02	29.57

Particulars	31.03.2012
Sales Turnover (Approximately)	900.000

Expected Sales (2012-2013) : Rs.1000.000 millions

The above information has been parted by Mr. Chetan Gandhi

KEY RATIOS

PARTICULARS		31.03.2011	31.03.2010	31.03.2009
PAT / Total Income	(%)	19.14	7.30	11.92
Net Profit Margin (PBT/Sales)	(%)	17.24	10.29	13.17
Return on Total Assets (PBT/Total Assets}	(%)	19.70	8.24	20.20
Return on Investment (ROI) (PBT/Networth)		0.31	0.15	0.36
Debt Equity Ratio (Total Liability/Networth)		0.49	0.76	0.89
Current Ratio (Current Asset/Current Liability)		3.08	3.81	3.99

LOCAL AGENCY FURTHER INFORMATION

DETAILS OF SUNDRY CREDITORS:

Particulars	31.03.2011 (Rs. in millions)	31.03.2010 (Rs. in millions)	31.03.2009 (Rs. in millions)
Sundry Creditor
- Due small micro enterprises	0.000	0.000	42.262
- Due others	86.249	52.849
Total	86.249	52.849	42.262

Sr. No.	Check List by Info Agents	Available in Report (Yes / No)
1]	Year of Establishment	Yes
2]	Locality of the firm	Yes
3]	Constitutions of the firm	Yes
4]	Premises details	No
5]	Type of Business	Yes
6]	Line of Business	Yes
7]	Promoter's background	Yes
8]	No. of employees	Yes
9]	Name of person contacted	Yes
10]	Designation of contact person	Yes
11]	Turnover of firm for last three years	Yes
12]	Profitability for last three years	Yes
13]	Reasons for variation <> 20%	--
14]	Estimation for coming financial year	Yes
15]	Capital in the business	Yes
16]	Details of sister concerns	Yes
17]	Major suppliers	No
18]	Major customers	No
19]	Payments terms	Yes
20]	Export / Import details (if applicable)	No
21]	Market information	--
22]	Litigations that the firm / promoter involved in	Yes
23]	Banking Details	Yes
24]	Banking facility details	Yes
25]	Conduct of the banking account	--
26]	Buyer visit details	--
27]	Financials, if provided	Yes
28]	Incorporation details, if applicable	Yes
29]	Last accounts filed at ROC	Yes
30]	Major Shareholders, if available	Yes
31]	Date of Birth of Proprietor/Partner/Director, if available	Yes
32]	PAN of Proprietor/Partner/Director, if available	No
33]	Voter ID No of Proprietor/Partner/Director, if available	Yes
34]	External Agency Rating, if available	Yes

LITIGATION DETAILS

GANESH POLYCHEM LTD, MUMBAI VS ASSESSEE ON 10 AUGUST, 2012

IN THE INCOME TAX APPELLATE TRIBUNAL

MUMBAI BENCHES "G", MUMBAI

BEFORE SHRI DINESH KUMAR AGARWAL (J.M.)

AND SHRI RAJENDRA SINGH (A.M.)

ITA No. 8515/Mum/2010

Assessment Year : 2006-07

Ganesh Polychem Limited, Income Tax Officer, 2nd floor, Udyog Kshetra, Range - 10(3)(1), Mulund, Mumbai. Goregaon Link Road, Vs.

Mumbai 400 080.

PAN : AABCG6160B

(Appellant) (Respondent) Assessee by : Shri Vijay Mehta

Department by : Shri Pavan Ved

Date of hearing 07-08-2012

Date of pronouncement 10-08-2012

ORDER

PER DINESH KUMAR AGARWAL, J.M.

This appeal preferred by the assessee is directed against the order dtd. 21-09-2010 passed by the ld. CIT(A) for A.Y. 2006-07.

2. Briefly stated facts of the case are that the assessee company is engaged in the business of manufacturing of chemicals. It filed the return declaring total income at 'Nil'. However, the assessment was completed at an income of Rs. 93,750/-as per regular computation and Rs. 20,33,250/- as per section 115JB of the Income Tax Act, 1961 (the Act) vide order dtd. 29-12-2008 passed u/s 143(3) of the Act. On appeal 2

ITA No. 8515/MUM/2010

the ld. CIT(A) while confirming the addition made by the A.O. dismissed the appeal.

3. Being aggrieved by the order of the ld. CIT(A) the assessee is in appeal before us.

4. Grounds No. 1 & 4 are general in nature which do not require any adjudication and, hence, the same are rejected.

5. Ground No. 2 and 2.1 are against the adjustment of brought forward losses and depreciation before allowing exemption u/s 10B of the Act.

6. Brief facts of the above issue are that during the course of assessment proceedings the A.O. observed that the assessee has two manufacturing units i.e. one at Wapi and another at Dombivli. The A.O. further noted that as per computation of income, the assessee has computed business income of Rs. 3,81,87,055/- and claimed deduction of Rs. 3,25,58,019/- u/s 10B, resulting into the balance sum of income of Rs. 56,29,036/- which has been set off against brought forward business losses and unabsorbed depreciation of A.Y. 2004-05. The A.O. also observed that the claim of deduction u/s 10B of the Act from total income before setting off brought forward losses was not correct, hence, the A.O. asked the assessee to justify its claim. In response to the same, the assessee filed explanation dtd. 3-12-2008 claiming its computation to 3

ITA No. 8515/MUM/2010

be correct. The A.O. further observed that the assessee has not satisfied the basic condition for deduction u/s 10B of the Act. The A.O. referred to provision of section 4 of the Act and also Section 2(45) of the Act. The A.O. further observed that as per Sections 66 to 80 income computed under various heads of income and set off of intra/inter-head losses and carry forward of unabsorbed losses/allowances and as per Section 80B(5), the gross total income mean the total income computed in accordance with the provisions of the Act, before making any deduction under chapter VI-A of the Act. The A.O. further observed that the total income can be computed only after allowing intra-head set off u/s. 70 of the Act and inter-head u/s 71 of the Act. The A.O. further observed that provisions of section 10B is clear which provides that deduction of profits and gains as are derived by an undertaking shall be allowed from the total income of the assessee, merely because it falls under Chapter III which is titled "incomes which do not form part of the income", the same cannot be considered to be exemption provision so as to deny the assessee benefit of sections 70 & 71 of the Act. The A.O. also relied on in the case of CIT vs. Shirke Construction Equipment Ltd., 291 ITR 280 and IPCA Laboratories. In view of these facts, the A.O. rejected the claim of deduction u/s 10A/10B amounting to Rs. 56,29,036/-. On appeal the ld. CIT(A) following the decision in Sword Global (I) P. Ltd. vs. ITO 306 ITR (A.T.) 286 (Chennai), ITAT decision in ACIT vs. Jewellery Solutions Int. Pvt. Ltd. 28 SOT 405 and the decision of Hon'ble 4

ITA No. 8515/MUM/2010

Karnataka High Court in CIT vs. Himatsingike Seide Ltd. 286 ITR 255 upheld the views of the A.O. in making the adjustment of brought forward before allowing deduction u/s 10A/10B of the Act.

7. At the time of hearing the ld. counsel for the assessee, at the outset, submits that this issue stands covered in favour of the assessee by the decision of the Tribunal in Capgemini India (P) Ltd. vs. Addl. CIT (2011) 141 TTJ (Mumbai) (UO) 33, the decision of Hon'ble Karnataka High Court in CIT and Another vs. Yokogawa India Ltd. (2012) 341 ITR 385 (Karn) and the recent decision of Hon'ble jurisdictional High Court in CIT vs. Black & Veatch Consulting (P.) Ltd. (2012) 20 taxmann.com 727 (Bombay) in Income Tax Appeal lodging No. 1237 of 2011 dtd. 9-4-2012. He also placed on record the copy of the above decisions.

8. On the other hand, the ld. D.R. while relying on the order of the A.O. and the ld. CIT(A) also relied on the decision of Hon'ble Kerala High Court in CIT vs. Patspin India Ltd. (2011) 15 taxmann.com 122(Ker.)

9. We have carefully considered the submissions of the rival parties and perused the material available on record. We find that the issue involved in the present case is no more res integra and is covered by the aforesaid recent decision of Hon'ble jurisdictional High Court in the case of CIT vs. Black & Veatch Consulting (P.) Ltd. since reported in (2012) 208 Taxman 144 (Mag.) wherein it has been held that brought forward unabsorbed depreciation and losses of unit, income of which is not 5

ITA No. 8515/MUM/2010

eligible for deduction u/s 10A, cannot be set off against current profit of eligible unit for computing deduction u/s 10A.

10. Respectfully following the above authoritative pronouncement of the Hon'ble jurisdictional High Court which is binding on us, we direct the A.O. to allow the claim of the assessee in accordance with the above decision. Accordingly we while reversing the order passed by the A.O. and the ld. CIT(A) on this account, allow the grounds taken by the assessee.

11. Ground No. 3 and 3.1 are against the non-allowance of provision of fringe benefit tax Rs. 1,28,000/- from the book profits u/s 115 JB of the Act.

12. Brief facts of the above issue as observed and held by the ld. CIT(A) in para 4 of his order are as under:-

".........From the perusal of the order, I find that the A.O. has not discussed the issue in assessment order. Before me it was claimed that same is covered by Cir. No. 8/2005 dated 29-08-2005. However, the said circular talks about fringe benefit tax paid and not about the provision for FBT tax. Accordingly, I do not find any infirmity in the order of the A.O. and contention of the appellant is therefore rejected."

13. At the time of hearing the ld. Counsel for the assessee while reiterating the same submission as submitted before the ld. CIT(A) refers to answer to question No. 103 of Circular No. 8 of 2005 dtd. 29-8-2005 reported in (2005) 277 ITR 20 (Statutes) which reads as under:- 6

ITA No. 8515/MUM/2010

"Whether FBT would be allowable deduction while computing "book profit" under section 115JB?

Answer: FBT is a liability qua employer. It is an expenditure laid out or expended wholly and exclusively for the purposes of the business or profession of the employer. However, sub-clause (ic) of clause (a) of section 40 of the Income-tax Act expressly prohibits the deduction of the amount of FBT paid, for the purposes of computing the income under the head "Profits and gains of business or profession". This prohibition does not apply to the computation of "book profit" for the purposes of section 115JB. Accordingly, the FBT is an allowable deduction in the computation of "book profit" under section 115JB of the Income-tax Act." He further submits that according to Explanation 1 of section 115JB of the Act "book profit" means net profit as shown in the P&L account for the relevant previous year prepared under sub-section (2) as increased by the sum mentioned in sub-clause (a) to (i) of the said explanation. He further submits that in the above sub-clauses (a) to (i) there is no reference of addition of fringe benefit tax. He further submits that the provision of fringe benefit tax in the books of accounts is ascertained liability according to the Act, therefore, the said amount cannot be added to the book profits of the assessee. He, therefore, submits that the addition made by the A.O. and sustained by the ld. CIT(A) be deleted.

14. On the other hand, the ld. D.R. supports the order of the A.O. and the ld. CIT(A).

15. We have carefully considered the submissions of the rival parties and perused the material available on record. We find that the facts are not in dispute inasmuch as it is also not in dispute that the A.O. has not discussed the above issue at all in the assessment order. However, the 7

ITA No. 8515/MUM/2010

ld. CIT(A) without examining the relevant entries in the books of accounts and the P&L account has upheld the order of the A.O. Since the order passed by the Revenue Authorities on this account is not a speaking order inasmuch as it requires examination of facts, therefore, in the interest of justice, we consider it fair and reasonable that the matter should go back to the file of the A.O. and accordingly we set aside the order passed by the Revenue Authorities on this account and send back the matter to the file of the A.O. to decide the same afresh in the light of our observation hereinabove and according to law after providing reasonable opportunity of being heard to the assessee. The grounds taken by the assessee are, therefore, partly allowed for statistical purpose.

16. In the result, the assessee's appeal stands partly allowed for statistical purpose.

Order pronounced on 10-8-2012.

Sd/- Sd/-

(RAJENDRA SINGH) (DINESH KUMAR AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 10-8-2012

RK

8

ITA No. 8515/MUM/2010

CONTINGENT LIABILITIES (AS ON 31.03.2011):

(a) Estimated amount of contracts remaining to be executed on capital accounts and not provided for Rs. 1.858 Millions.Net of advances. (Previous year: Rs. 1.823 Millions).

(b) In respect Bank Guarantee Issued by company's bankers Rs.9.710 Millions (Previous year: Rs. 8.766 Millions).

(c) In respect of Bill Discounting not matured Rs. 22.898 Millions (Previous Year: 18.582 Millions)

FORM 8:

Corporate identity number of the company	U24299MH2001PLC133900
Name of the company	GANESH POLYCHEM LIMITED (w.e.f. 23.01.2003)
Address of the registered office or of the principal place of business in India of the company	Udyog Kshetra, 2^nd Floor, Mulund Goregaon Link Road, L.B.S. Marg, Mulund (West), Mumbai – 400 080, Maharashtra, India
This form is for	Modification of charge
Type of charge	Immovable property Book debts Movable property (not being pledge)
Particular of charge holder	State Bank of India, Commercial Branch, N.G.N. Vaidya Marg, Mumbai – 400 023, Maharashtra, India Email: chintancs@rediffmail.com
Nature of instrument creating charge	Memorandum of Deposit for creation of charge
Date of instrument Creating the charge	29.09.2011
Amount secured by the charge	Rs. 121.000 millions
Brief of the principal terms an conditions and extent and operation of the charge	Rate of interest CC / WCDL : 0.50% above SBAR EPC / PCFC / EBD / EBN : 3% below SBAR or such other rate as may be decided by the Bank from time to time or as per RBI Direction. Terms of repayment Repayable on Demand. Margin For CC / WCDL Limits : 25% on domestic and imported RM, SIP, FG and Receivables 50% on stores and spares or such other rate as may be decided / fixed by Bank from time to time. Extent and operation of the charge The charge is to operate as a security for the due repayment of revised Limits of Rs. 121.000 millions [CC/WCDL – 85.000 millions, EPC/PCFC (Within CC Limit) - (85.000 millions), EBD/EBN (Within CC Limit) - (85.000 millions), LC – 17.500 millions, BG – 12.500 millions, For. Cont. – 6.000 millions] availed or to be availed by the Company together with interests, costs, charges, comm., expenses, fees, penalty and all other moneys payable by the Company to the Bank in terms of the said revised limit from time to time. Other All other Terms and Conditions are as per Sanction Letter of the Bank and Loan Documents executed and entered into by the Company with Bank from time to time.
Short particulars of the property charged (Including location of the property)	All those piece and parcels of lands known as Plot No. 7 in the Functional Automobile Ancillaries Industrial Estate, Dombivali and buildings and erections thereon and together with all fixed Plants and Machineries, fixtures and fittings therein (both present and future) situated at Village Sagon and Asde Golavli Part and outside the limits of kalyan Dombivali Municipal Corporation Taluka and registration sub district Kalyan, district and registration district Thane containing by admeasurement 2440 square meters or thereabouts and bounded as follows : on or towards North by : Plot No. 6 and C-1 on or towards South by : Road on or towards East by : Plot No. 8 on or towards West by : Road.
Date of instrument modifying the charge	03.02.2009
Particulars of the present modification	By this Modifications, total limits are revised and charge fixed to Rs. 121.000 millions. Further the revised limit is additionally secured by creation of EM on Plot No. 7 in the Functional Automobile Ancillaries Ind. Estate, Dombivali and buildings and erections thereon together with all fixed P and M, fixtures and fittings therein (both present and future) situated at Village Sagon and Asde Golavli Part admeasuring 2440 square meters together with existing Hypothecation and Mortgage Charge.

CONTINGENT LIABILITIES

(a) Estimated amount of contracts remaining to be executed on capital accounts and not provided for Rs.1.823 millions Net of advances.

(b) In respect Bank Guarantee Issued by company’s bankers Rs.8.766 millions.

(c) In respect of Bill Discounting not matured Rs.18.582 millions.

FIXED ASSETS:

· Land

· Goodwill

· Buildings

· Plant and Machinery

· Furniture and Fixtures

· Computer Systems

· Office Equipments

· Vehicles

· Technical Know-how

Check List by Info Agents	Available in Report (Yes / No)
1) Year of Establishment	Yes
2) Locality of the firm	Yes
3) Constitutions of the firm	Yes
4) Premises details	Yes
5) Type of Business	Yes
6) Line of Business	Yes
7) Promoter's background	--
8) No. of employees	Yes
9) Name of person contacted	Yes
10) Designation of contact person	Yes
11) Turnover of firm for last three years	Yes
12) Profitability for last three years	Yes
13) Reasons for variation <> 20%	--
14) Estimation for coming financial year	Yes
15) Capital in the business	Yes
16) Details of sister concerns	Yes
17) Major suppliers	No
18) Major customers	Yes
19) Payments terms	Yes
20) Export / Import details (if applicable)	No
21) Market information	--
22) Litigations that the firm / promoter involved in	--
23) Banking Details	Yes
24) Banking facility details	--
25) Conduct of the banking account	--
26) Buyer visit details	--
27) Financials, if provided	No
28) Incorporation details, if applicable	--
29) Last accounts filed at ROC	--
30) Major Shareholders, if available	--

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.53.66
UK Pound	1	Rs.86.37
Euro	1	Rs.69.24

INFORMATION DETAILS

Information Gathered by :	PJA
Report Prepared by :	BSN

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	6
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	6
--PROFITABILIRY	1~10	6
--LIQUIDITY	1~10	6
--LEVERAGE	1~10	6
--RESERVES	1~10	6
--CREDIT LINES	1~10	6
--MARGINS	-5~5	-
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	YES
--OTHER ADVERSE INFORMATION	YES/NO	YES
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		54

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
-	NB	New Business	-

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.