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2016 (4) TMI 1116 - ITAT MUMBAIAllocation of Head Office expenses to units eligible for deduction u/s 80IB and 10B - only reasoning given by the Ld. Counsel of the assessee is that the head office has its own stream of income and therefore, only 50% of the expenses should be allocated - Held that:- It is an accepted factual position that head office has its own stream of income. Thus, under these circumstances, it cannot be said that the entire expenses incurred by the Head Office/Corporate Office were incurred as common expenses. Therefore, under these circumstances the total expenses of the head office cannot be said to be available for allocation in other units. The Ld. Counsel has tried to justify that 50% of the total expenses of Head Office/Corporate Office, on an ad-hoc basis, should be taken as the expenses pertaining to the income earned by the head office, and balance 50% can be made available for allocation to all the units. But we find that Ld. Counsel has not given any transparent, scientific or concrete basis of bifurcation, nor has he given any reasoning as to why these expenses should be bifurcated on fifty-fifty basis. It is also noted by us that even lower authorities had not examined this aspect from this angle. This issue is likely to have far reaching implications and may create history in assessee’s hands in other years as well. Therefore, principally accepting the stand of the assessee that total expenses incurred by HO/CO are not available for allocation, but for determining that how much portion of these expenses is available for allocation to all the units, we send this issue back to the AO for reexamining this issue and finding out some fair, rational, transparent and scientific basis of bifurcation of these expenses and their allocation among all the units. The AO shall decided this issue afresh after considering all the facts and submissions and evidences as may be brought on record by the assessee in support of its contentions for which the AO shall give adequate opportunity of hearing. The assessee is free to raise all the legal and factual issues in this regard. Thus, with these directions we send this issue back to the file of the AO. - Decided in favour of assessee for statistical purposes.
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