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2022 (6) TMI 955 - AT - Income TaxExemption u/s 10B - allocation of all expenses of non-EOU unit to EOU unit, whereby the exemption claim under section 10B of the Act was reduced - HELD THAT:- In the present case, it is not in dispute that assessee is having manufacturing units in respect of agrochemicals as well as Pharma products, which are EOU as well as non-EOU units. As is evident from the copy of assessment order for assessment year 2002 – 03, forming part of the paper book, the incinerator plant at Dombivali was set up in financial year 2001–02. Further, from the statement of profit and loss account for the year ending 31/03/2002, it is also evident that services were availed by Non-EOU Mahad unit and EOU Taloja unit from the Dombivali unit in respect of which internal unit transfers were made and income was earned by the Dombivali unit. There is no examination by the Assessing Officer whether the EOUs were utilising the services of the other units or of Maharashtra Pollution Control Board for incineration process during the period Dombivali unit was non-operational. Further, if that be the case then allocation of expenditure of Dombivali unit to EOU, without availing any service, will result in additional allocation of expenditure to the EOU of the assessee. We are of the considered view that all the aspects in respect of this issue have not been examined by any of the lower authorities and in such a scenario, the impugned allocation of expenditure of Dombivali unit only to the Taloja EOU of the assessee, while computing deduction under section 10B of the Act, is set aside. We, further, deem it appropriate to remand this issue to the file of Assessing Officer for de novo adjudication after examination of all the aspects as mentioned above. Allocation of R and D expenditure to EOU units - As relying on own case [2021 (3) TMI 1371 - ITAT MUMBAI] we hold that there is no need to allocate expenses to EOU units and that assessee would be eligible for deduction u/s 35(1)(iv)and the same need not be allocated to EOU units. Setting off of loss of non-EOU against income from EOU - As relying on own business losses of a non-eligible unit, whose income is not eligible for deduction u/s 10A of the Act, cannot be set off against the profits of the undertaking eligible for deduction u/s 10A for the purpose of determining the allowable deduction u/s 10A
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