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2022 (8) TMI 245 - Income Tax
Deduction u/s 80IB - profits derived from its industrial undertakings located at Jammu - apportionment of common head office and selling expenses for the purpose of computation of profit of units eligible for deduction u/s. 80IB - Whether the CIT(A) was correct in rejecting the methodology of deduction u/s.80-IB computed by the A.O particularly when the actual expenses are determinable on actual accounts maintained in previous year in question was not the methodology to attribute expenses on the basis of inflation incorrect? - HELD THAT:- As there is no change in the fact pattern and applicable law in respect of the claim of deduction made by the assessee u/s 80IB in the year under consideration before us vis-à-vis the years for which appellate orders of Co-ordinate of ITAT Kolkata [2017 (4) TMI 106 - ITAT KOLKATA] or that of Hon’ble jurisdictional High Court of Calcutta in assessee’s own case [2021 (12) TMI 728 - CALCUTTA HIGH COURT] have been referred and relied upon. The methodology adopted by the assessee for apportionment of common head office expenses and selling expenses has consistently been followed year-on-year basis which has been held to be reasonable and scientific. It is thus noted that the issue in hand before us is no longer res integra considering the decisions in assessee’s own case.
Admittedly, it is a fact that this is a recurring issue from preceding assessment years. By adopting judicial consistency in the given facts and circumstances, we affirm the order of ld. CIT(A) and direct to delete the addition made by the ld. AO. Thus, ground no. 1 is dismissed.
Disallowance u/s 14A read with rule 8D - CIT-A deleted the addition - HELD THAT:- As hon’ble Supreme Court in the case of South Indian Bank Ltd. [2021 (9) TMI 566 - SUPREME COURT] wherein it was held that where interest free own funds available with assessee-banks exceeded their investments in tax-free securities; investments would be presumed to be made out of assessee's own funds and proportionate disallowance was not warranted under section 14A on ground that separate accounts were not maintained by assessee for investments and other expenditure incurred for earning tax-free income.
As in respect of deletion of disallowance by the CIT(A), we note from the details of disallowance furnished by the assessee that this includes expenses towards electricity, lease rent, corporate tax, printing and stationery, upkeep/administration, telephone, books & periodicals, in-house computer, depreciation and salary. These were considered by the assessee on the basis of facility/time utilized by the persons managing the investments.
Thus, admittedly, it’s a fact on record that assessee has incurred expenses which pertain to managing the investments yielding exempt income and the same have been suo motto disallowed by the assessee in its computation of total income reported in the return for the year. On a specific query by the bench on this factual position, ld. Counsel candidly admitted for its correctness of the suo motto treatment given by the assessee in the return. We thus, direct the ld. AO to restore and restrict the disallowance u/s 14A which has been suo motto disallowed by the assessee in its return of income. Accordingly, ground no. 3 is partly allowed.
Deduction u/s 80IB on income from sale of scrap - income from sale of scrap whether income from sale of scrap generated in the manufacturing process employed in the eligible unit can be taken into consideration for deduction under section 80IB - HELD THAT:- As decided in own case [2021 (12) TMI 728 - CALCUTTA HIGH COURT] we direct to delete the addition made by the ld. AO which is eligible for claiming deduction u/s 80IB of the Act. Accordingly, this ground of appeal is dismissed.