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2013 (7) TMI 409 - ITAT MUMBAIDeduction u/s 10A - assessee has claimed deduction from its STP unit admitting its inability to bifurcate and provide the P/L Account of the units - as per AO assessee has booked all the expenses which should have been allocated to all units in the non-STP units only thereby increasing the profits of the Unit which claimed exemption - Since loss deduction u/s 10A was not allowed similar adjustment was also made u/s 115JB - Held that:- As seen from the 10A report submitted, the profits are arrived at notional basis having regard to the information and explanation given by the company and also relied on companies representation that approximately 24.2 sq.mtr. of area of the second floor was occupied by the STP unit. The report also qualifies that they relied upon the data submitted by the assessee to STP Bangalore and some of the other costs were also taken on the basis of the exertions made by the company. Even the current year's addition to fixed assets have been allocated to STP/non-STP units on the basis of area for which these are procured. Further, in note No. 9 it was also qualified that the Auditors are relied upon assessee's representations that Bangalore unit is self-sufficient unit and therefore no portion of common expenses are need to be attributed thereto in computing profits of the unit. These notes to the audit report do indicate that the claim of the assessee was not based on any reliable data while claiming the deduction. Even before the CIT(A) alternative submission was made that the profit that could be said to be derived would be at Rs.4,21,21,410/- as against Rs.5,25,96,228/- shown in the return of income. These indicate that the basis for arriving at the profit by the assessee is not correct and cannot be accepted at face value. Therefore allocation of expenses on the basis of the turnover made by the CIT(A) is reasonable and has to be upheld. Even though assessee tried to explain allocation of expenses made by the company including the past losses in other units, in the absence of any direct allocation of expenditure and preparation of separate P& L account of the unit reject assessee's ground.
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