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2018 (1) TMI 781 - AT - Income TaxMethod of working out of profits eligible for deduction u/s 80IVA(4)(iv) - Allocation of indirect expenditure to the unit of power generation for the purpose of computing deduction u/s 80IA(4)(iv) - Held that:- As decided in the case of Tide Water Oil Co.(India) Ltd. [2011 (11) TMI 451 - CALCUTTA HIGH COURT] expenses which are directly related to units should be allocated to that particular unit.In the present case, the AO has applied the turnover key for allocation of common expenditure. We do not find any fallacy in application of turnover key for apportionment of common expenditure as turnover key is held to be good key for allocation of common expenditure. Hence, the ground of appeal is dismissed. Addition on account of prior period expenditure - CIT(A) has deducted prior period income From prior period expenditure - Held that:- the approach of the CIT(A) is against the basic Principles governing allowbility of prior period expenditure. It is trite law that expenditure which is crystallized during the previous years relevent to assessment year under consideration should be allowed as deduction, different principle govern taxing prior income. Therefore, deducting prior period income From prior period expenditure is against well settled principles of law. Therefore, we remand this issue back to the file of the AO with a direction that after examining evidence filed before the CIT(A) to allow prior period expenditure, if liability of expenditure had occurred/crystallised during the previous year relevant to year under consideration and also to tax prior period income. Keeping in view the salutary principle of law income of the year alone should be taxed.
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