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2012 (4) TMI 267 - BOMBAY HIGH COURT
Commissioner of Income Tax1 Versus M/s.Hindustan Lever Ltd.
Return of income claiming deduction u/s 80I, 80IA and 80HH – AO accepted the claim with little variation - CIT issued a notice under Section 263 mentioning that research expenditure incurred by the assessee is inextricably linked with the business of the assessee and business in those products which are manufactured in the units entitled to a deduction under Sections 80I, 80IA and 80HH - Tribunal set aside the order passed by the CIT holding that the jurisdiction under Section 263 has not been invoked properly - Held that:- As a result of an erroneous order passed by an Assessing Officer, where the Revenue is losing tax lawfully payable by an assessee, the order is prejudicial to the interests of the Revenue -there was a complete failure on the part of the AO to apply his mind to the issue of whether the expenditure which was claimed should be allocated as between the units in respect of which the deduction had been claimed and on whether there was a direct or proximate nexus - jurisdiction under Section 263 was in order and that the Tribunal was not justified in interfering with the order passed by the Commissioner.
Tribunal is right in holding that the entire cess can be claimed against taxable income? - the composite income derived from sale of tea grown and manufactured by the assessee cess payable on green tea leaves is allowable as a business expenditure in computing the composite income under Rule 8 of the Income Tax Rules,1962.