TMI Blog2012 (11) TMI 660X X X X Extracts X X X X X X X X Extracts X X X X ..... ommon bank accounts for its entire business being carried out from headquarters - A.O. therefore allocated interest proportionately to this unit on the basis of ratio of sales of the undertaking – Held that:- Appellant has claimed that since no other specific loans were taken for establishment of the said unit, no interest cost should be allocated to the said unit - total investment in Baddi Unit and Daman Unit is very low inasmuch as 0.28% and 0.09% respectively, as compared to investment in other unit - It is perfectly justified in making the interest allocation at Rs.3.60 lakhs in case of Daman Unit and at Rs.1.16 lakhs in case of Baddi Unit on the basis of ratio of investment in fixed assets and in directing the AO to modify the calculation accordingly - in favour of the assessee Grant of relief to the extent of allocation of the salary already made by the assessee - allocation of salary expenses on the basis of the sales ratio on the Daman unit u/s. 80IB and Baddi unit u/s. 80IC of the Act – Held that:- To the extent of allocation of salary already made by the appellant, the same should be reduced to avoid double disallowance - direct the A.O. to grant relief accordingly - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee company has claimed deduction u/s.80IB on the income derived from Daman Unit of SINTEX INDUSTRIAL LIMITED and deduction u/s 80IC on the income derived from Baddi Unit of SINTEX INDUSTRIAL LIMITED. In addition to the above, assessee company has claimed deduction u/s. 80IA of the I. T. Act on independent captive power plants (CPPs.) which are installed at its main manufacturing site, located at Kalol. 6. As per its return of income for the A Y. 2007-08 the assessee company has claimed deduction u/s.80IA of the Act amounting to Rs.15,47,18,850/- on account of income derived from CPP unit. The assessee company had set up three independent power generating plants i.e. CPP-I, CPP-II CPPIII, which were commissioned during the F.Y. 1997-98, 1998-99 2004-05 i.e. corresponding to the AY 1998-99,1999-2000 2005-06. The assessee company was allowed this deduction in the assessments for AYs 2003-04, 2004-05, 2005-06 and 2006- 07. This being the fifth year of this claim the deduction claimed was allowed on merits, subject to the following adjustments. 7. The assessee company filed detailed working of its income out of captive power plant (CPP). It also filed a separate P L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s claim of total deduction of Rs.15,47,18,850/- on account of the reasons, as mentioned above. 8. Aggrieved by this order, the assessee went in appeal before the learned CIT(A). The learned CIT(A) has granted relief in respect of the general charges of the corporate office and miscellaneous expenses amounting to Rs.16.52 lakhs (i.e. 3.70% of 446.36 lacs) by considering that the expenses are not directly related to the CPP unit. 9. Aggrieved by this order, the assessee and Revenue are now in appeals before us. Both the parties agreed that this issue is covered by the decision of the Tribunal in the assessee s own case for AY 2004-05 in ITA no.691/Ahd/2007 C.O. no.99/Ahd/2007, order dated 30-06-2011, copy of which is available at pages 162 to 176 of the paper book. The learned DR made the same submissions. 10. We have heard both the parties and perused the records. We have also gone through the orders of the authorities below and the decision of the Tribunal in the assessee s own case for AY 2004-05 in ITA no.691/Ahd/2007 C.O. no.99/Ahd/2007, order dated 30-06-2011. We find that as per para 16 of its order, this issue has been decided by the Tribunal against the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 007 C.O. no.99/Ahd/2007, order dated 30-06-2011. We find that as per para 21 of its order, this issue has been decided by the Tribunal against the assessee. For the sake of convenience, we reproduce para 21 from the Tribunal s order in assessee s own case for AY 2004-05, which reads as under:- 21. We have considered the rival submissions and perused the material on record and gone through the orders of the authorities below. We find that we have to decide only regarding allocation of salary expenses and administrative/general expenses to two units i.e. Daman and Baddi units for the purpose of computation of deduction u/s 80IB. The submission of the assessee is this that since direct expenses has been directly allocated to these two units, no part of common expenses should be further allocated. We do not find any merit in this contention because actual direct expenses are to be allocated directly and the common expenses, has to be apportioned on a reasonable basis, which has been done by the AO in the present case and hence, no interference is called for. Respectfully following the decision of the Tribunal in the assessee s own case for AY 2004-05 (supra), we hold that in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me. Further, it was held in the case of Rhythm Exports (Pvt.) Ltd., Vs. ITO, 2 SOT 429 (Mum), that the expenditure incurred in relation to earning income which is exempt should be taken out and in case the appellant fails to do so, the A.O. has no option then to take the same on proportionate basis. As held in A.Y. 2005-06 and A.Y. 2006-07 travelling expenses, miscellaneous expenses and general expenses are in the nature of indirect expenses and the same should not be apportioned. Hence, the A.O. is directed to recalculate the disallowance, after allocating only the directors' remuneration and by excluding the other indirect expenses. 17. The assessee and Revenue have come in appeals before us against the aforesaid findings of the learned CIT(A). The learned counsel of the assessee contended that no such disallowance needs to be made prior to AY 2008-09. The learned counsel relied on the decision of the Hon ble Kerala High Court in the case of Catholic Syrian Bank 237 CTR 164. 18. The learned DR, on the other hand, supported the order of the lower authorities and also relied on the decision of the Hon be Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd. vs. DCIT re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e A.O. The appellant has claimed that since no other specific loans were taken for establishment of the said unit, no interest cost should be allocated to the said unit. Alternatively, even if it has to be apportioned, it should be apportioned on the basis of investment made in these units. I have considered the facts of the case and the submissions of the appellant. I find that similar issue arose in A.Ys. 2003-04, 2004-05, 2005-06 2006-67, wherein it was decided that interest expenses should be allocated to these units. However, it should be allocated on the basis of investments made in these units. 23. The Revenue has come in appeal against the aforesaid findings of the learned CIT(A). 24. At the time of hearing, both the parties agreed that the issue is covered in favour of the assessee by the decision of the Tribunal in assessee s own case for AY 2003-04 in ITA no.1173/Ahd/2006, order dated 17-07-2009 and for AY 2006-07 in ITA no.4091/Ahd/08, dated 25-11-2011, wherein the Tribunal has decided the issue in favour of the assessee. 25. We have heard both the parties and perused the records. We have also gone through the order of the Tribunal in the assessee s own case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that salaries of employees working with other units are identifiable expenditure of the other units and therefore in no event the same can be allocated to either Daman or Baddi units. The appellant has alternatively submitted that only salary of plastic division of Rs.23.83 crores should be allocated in the ratio of sales of Daman and Baddi units. 27 The learned CIT(A) has granted relief to the assessee in the following manner:- 6.2 I find that similar issue was involved in earlier years and the stand of the A.O. was confirmed. Following the stand taken in earlier years, I confirm the allocation made by the A.O. However, as regards alternative contention that to the extent of allocation of salary already made by the appellant, the same should be reduced to avoid double disallowance, I agree with the appellant and direct the A.O. to grant relief accordingly. The other alternative contention that only salary of plastic division should be allocated among Daman and Baddi units in the ratio of sales of these units is found to be reasonable and the same is accepted ,the A.O, is directed to grant relief accordingly. 28 Before us, both the parties agreed that the issu ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
