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2010 (2) TMI 911 - ITAT, MUMBAIDeduction u/s.80-IB(10) - assessee's appeal is against not allowing deduction u/s.80-IB in respect of profits of Unit-I though the same was allowed by the A.O. at the rate of 25%. The Revenue is aggrieved against the decision of the learned CIT(A) that Unit-II was a new unit and not an extension of Unit-I and hence 100% deduction be allowed in respect of profit of Unit-II - Assessing Officer observed that the assessee failed to produce Attendance register. He opined that there were inflated numbers of employees. He, therefore, disallowed 20% of the expenses claimed by the assessee under the head Salary and wages' – Held that:- In the absence of any specific finding given by the A.O. in respect of salary paid to employees of Unit-I, the learned CIT(A) held that no addition could be made, Assessing Officer could not have made any addition without brining on record any material to show that the entries in this register were not correct, no disallowance is permissible Bifurcation of Administrative, Selling and Financial expenses on the basis of turnover - assessee has no objection on the manufacturing expenses being apportioned on the basis of goods manufactured. The learned CIT(A) directed to apportion these three types of expenses on the basis of turnover of both the Units – Held that:- Selling expenses have direct relation with the turnover, apportionment of selling expenses on the basis of the amount of turnover in both the Units is appropriate. The financial expenses represent the cost of money borrowed for use in business. Raw material for a product in Unit-I may cost Rs.100 while in the other unit may cost Rs.1000. Bifurcation of the expenses on the basis of quantity produced would obviously lead to absurd situation because the number of units manufactured with different values cannot be the basis of apportioning the expenses, apportionment of Financial expenses needs to be done on the basis of value of goods manufactured in both the Units. Administrative expenses which included rent, travelling and telephone expenses etc. contention of the ld AR is not acceptable for apportioning such expenses on the basis of number of units manufactured. There is no connection of such expenses with the quantity of goods manufactured. such expenses need to be apportioned on the basis of value of turnover in both the Units. order accordingly.
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