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2014 (4) TMI 776 - AT - Income TaxApplicability of section 80IA(10) of the Act Held that:- Though provisions of section 80IB(8) are applicable, the AO mentioned that the provisions of section 80IB(10) are applicable - Mentioning of wrong provisions of section is not fatal - The intention of the AO was to recompute the profit of Kathua and Kallakal Units by substituting the market value of the goods transferred from Kallakal unit to Kathua unit - the assessee failed to give proper explanation for the peak variation - The contention of the assessee could be accepted that the price charged by Kallakal Unit is market value for the purpose of section 80IA(8) if the Kallakal Unit charges same price for other customers of it - The assessee having failed to offer any satisfactory explanation for exceptional variation in price charged by Kallakal unit to Kathua unit as evidenced by exceptionally low profit in Kallakal Unit in the relevant year and there is always lesser of expenses vis-a-vis sales of Kathua Unit in comparison to the Kallakal Unit - the assessee arranged the transaction between the units in such a manner to increase the profit of Kathua Unit and reduce the profit of Kallakal Unit - the AO is justified in redrafting of Profit and Loss A/c. assessee's three units so as to bring the true profit for taxation. In the preceding year the Department has no grievance and that the expenses incurred were pure and simple administrative expenses, monitoring the requirement of finance and other action which are necessary for running of the business - in the absence of any details made available by the assessee to establish that particular expenses were incurred for its particular unit out of its three units, the expenses have to be treated one for all the three units which has to be divided based on the proportion of the turnover - the assessee having failed to furnish satisfactory explanation to the discrepancies noticed by the AO, including the nomenclature of various commodities mentioned in the sale bills, the assessee's unit-wise accounts are not reliable the AO is justified in redrawing the Profit and Loss A/c. based on the turnover of the assessee's units so as to grant deduction u/s. 80IB of the Act Decided against Assessee. Computation of deduction u/s 80IB of the Act Allocation of expenses Held that;- Deduction u/s 80IA/80IB is allowable in respect of profit derived from the eligible undertaking Relying upon ACIT vs. Asea Brown Boveri Ltd. [2007 (4) TMI 284 - ITAT BOMBAY-E] - the profit derived from the eligible undertaking for the purpose of deduction u/s 80IA/80IB are the net profits derived from the eligible undertakings and such net profit has to be worked out after deducting all expenses, direct or indirect - head office expenses or expenses which are common to all the units will have to be spread over and charged against the receipts of all the units there is no infirmity in the order of the CIT(A) thus, the action of the AO in allocating the head office expenses to Banaskatha unit in the ratio of turnover to work out the profit of the said unit eligible for deduction u/s 80IB Decided against Revenue. Excise duty refund Capital receipt or not Held that:- The decision in CIT vs. Dharam Pal Prem Chand Ltd. [2008 (11) TMI 231 - DELHI HIGH COURT] followed - the assessee being entitled to exemption of Excise Duty, Excise Duty paid from current account and refunded in the next month would not make it any the less income derived from the industrial undertaking eligible for deduction u/s. 80IB of the Act the order of the CIT(A) upheld Decided against Revenue.
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