TMI Blog2015 (7) TMI 842X X X X Extracts X X X X X X X X Extracts X X X X ..... i Neil Philip For the Respondent : Shir V.Mohan ORDER Per Sanjay Garg, Judicial Member These appeals have been filed by the revenue against the order of the CIT(A), Mumbai relating to assessment years 2007-08 2008-09, respectively. 2. Since the issues in both the appeals of the revenue are same, therefore, both the appeals are being heard and disposed of by this common order. For the sake of convenience, the facts and circumstances in ITA No.4664/Mum/2013 (AY 2007-08) have been taken into consideration. ITA No.4664/Mum/2013(AY 2007-08) 2. In this case, the assessee claimed deduction u/s. 10B of ₹ 1,30,10,207/- being 90% of profit of EOU (Export oriented Unit) unit at Roha, District Raigadh which has been engaged in manufacturing BTCA, a chemical used in Textile industry. The AO noted that this unit has been functioning since F.Y.1999-2000. However it was converted into EOU w.e.f. July 2005. As per the Audit report the date of commencement of production was mentioned as 07.07.2005. However, as per the letter dated 21-12-09, it has been functioning since FY 99-00.The AO further noted that another non- EOU unit has also been functioning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w would not be possible. The assessee has also been issued a separate notice to submit the relevant data for determining the exact effect of the above observations and a further report in this respect shall be filed in due course. Alternatively, the issue may be decided on the basis of merits of the case as per the basis mentioned above and this office may be suitably intimated for not making any further enquiries. 5. The AO sent his further remand report by letter dated 15-09-2010 analysing the amount of different types of expenditure incurred. In this remand report, the AO requested that the disallowance made by him was required to be sustained. 6. The ld.CIT(A) however as per further directions given vide letter dated 25-05-2011, again directed the AO to submit another remand report. The remand report so given by the AO was forwarded to the assessee. The assessee furnished its counter comments on A.O's remand report in respect of allocation of expenses under the different heads. 7. The Ld. CIT(A) after considering the over all facts and circumstances of the case held that as per the Board Circular No.1/2005 dated 6th January 2005 the unit of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee has explained that 10B unit and non 10B unit were manufacturing different products and the raw material for both the units were totally different. The Raw material of 10B unit could not have been used/consumed for production in non 10B unit. The assessee has explained that the actualexpenses incurred for 10B unit have been claimed to arrive at the profit of 10B unit. In the comparison of expenses, the total raw material consumption was 41.03 crore. The consumption of raw material in 10B units was 1.82 crore whereas, consumption in non 10B units was 39.21 crores. The total power 86 fuel expenses were at ₹ 8.16 crores. The allocation to 10B unit was at ₹ 20,66,114/- whereas allocation of power fuel expenses to non 10B Units was at ₹ 7,96,17,866/-. On this basis, the AO concluded that expenses of 10B units have been shifted to non 10B Units. In this respect, the assessee has explained that its manufacturing activity of BTCA Product (10B Unit Product) was under constant supervision and check of the Excise Department since this unit was getting various types of concession in Govt. duty. cess etc. For this purpose, the assessee had to file monthly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure Basis Raw Material consumed Actual Power Fuel Electricity Charges Fuel Diesel Consumption Water Actual Tonnage Actuals Operations Maintenance Stores Spares Machinery Repairs Maintenance Building Repairs Maintenance Other Repair Maintenance Affluent Expenses R D Actuals Actuals Actuals Ratio of assets in EOU as a percentage to total assets. Actuals Tonnage Salary Wages Benefits Actuals Administrative Expenditure Turnover Basis except insurance on the ratio of Fixed Assets in the EOU as compared to total assets. Selling Distribution Actual Misc. Expenditure (Including Interest) Term Loan Bank Interest Turnover Basis Actual Deprecation Actuals Payment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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