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2014 (4) TMI 520 - AT - Income TaxRestriction of assessee's claim for excess deduction u/s 80IB/80IC of Act – Held that:- Re-allocation made by A.O. on adhoc basis cannot be sustained having regard to all facts that expenditure on advertisement & publicity and schemes was in nature of selling expenses - Allocation made by assessee of said expenses on basis of turnover was quite reasonable - Allocation so made by assessee also cannot be said to have resulted in allocation of large amount of expenses to non-eligible business as alleged by A.O. - Since gross profit ratio as shown by assessee in trading segment was 12.92% and even after allocating advertisement, schemes and promotions expenses on basis of turnover, profit of trading segment was 6.59%. - Reallocation of said expenses made by A.O. on adhoc basis was not supported or substantiated by him and same, cannot be accepted as reasonable basis - Keeping in view decision of Supreme Court in Consolidated Coffee Ltd. v. State of Karnataka [2000 (11) TMI 136 - SUPREME Court] allocation of expenses made by assessee between eligible business and non-eligible business for purpose of computing deduction u/s 80IB/80IC of Act was reasonable - No justifiable reason for A.O. to disturb same and make re-allocation on adhoc basis – Delete addition made by A.O. by restricting claim of assessee for deduction u/s 80IB/80IC of Act by re-allocating common indirect expenses - Decided partly in favour of Assessee. Transfer pricing adjustment - Transfer pricing adjustment in respect of guarantee given by Appellant on behalf of its Associated Enterprises – Held that:- Similar issue relating to determination of Arm's Length Rate of guarantee commission was involved in case of M/s Nimbus Communications Ltd. [2013 (9) TMI 204 - ITAT MUMBAI] - A.O. is accordingly directed to recompute addition to be made on account of transfer pricing adjustment in respect of guarantee commission by taking Arm's Length Rate of guarantee commission at 0.5% - Decided partly in favour of Assessee.
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