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2015 (11) TMI 5 - ITAT CHENNAI

2015 (11) TMI 5 - ITAT CHENNAI - TMI - Reallocation of expenditure between 80IB and non 80IB units - CIT(Appeals) has not found any merit in such reallocation of expenditure between 80IB and non 80IB units on mere conjecture and rejected the reworking of the eligible 80IB deduction by the Assessing Officer - Held that:- The Commissioner of Income Tax (Appeals) deleted the addition made by the Assessing Officer without any basis. The facts brought on record by the Assessing Officer suggest that t .....

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iving due credit to the inflow of funds, if any in both units. The Assessing Officer shall independently examine the issue after proper enquiry. With these observations, we are remitting the issue back to the file of the Assessing Officer for fresh consideration. - Decided in favour of revenue for statistical purposes - I.T.A. No.2187/Mds/2014 & C.O.No.12/Mds/2015 - Dated:- 28-8-2015 - SHRI CHANDRA POOJARI AND SHRI CHALLA NAGENDRA PRASAD, JJ. For The Appellant : Shri. Pathlavata Peerya, IRS, CIT .....

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ection 80IB(10) of the I. T. Act which was disallowed by the Assessing Officer on the ground that certain expenditure debited in 80IB units were less and the expenditure debited in non 80IB units were more, so as to gain more deduction from 80IB and reduce the taxable profits from the non 80IB units. 2.2 The learned Commissioner of Income Tax (Appeals) ought to have appreciated the reworking of expenditure made by the Assessing Officer between 80IB and non 80IB units . 3. The assessee in Cross O .....

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t the Commissioner may, if he objects to any order passed by the Commissioner (Appeals) direct the ITO to file an appeal to the Tribunal against the order. But, this does not mean that every order of the Commissioner of Income Tax (Appeals) which interferes with the assessment made by the ITO can be objected to. The objection must be reasonable and rational cannot be made without regard to the correctness of the order appealed against. The power itself is a discretionary power and is coupled wit .....

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t has acted in good faith, but usually they will persue their inquiry further and will consider whether the repository of a discretion although acting in good faith has abused its power by exercising it for an inadmissible purpose or an irrelevant grounds or without regard to relevant consideration or with gross unreasonable . We find the following statement of law on this point: The emphasis that the court have recently placed on an implied duty to exercise discretionary powers fairly must norm .....

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maintained seperate books (ii) That the books were not rejected bythe appellant. (iii) Method of accounting was not rejected in terms of section 145 of the Act. (iv) That the appellant faield to appreciate that the project ws nearing completetion and hence no outflow of funds required. (v) That the respondent has reservoir of funds in its hand in the light of realiationof sale price and opening balance of reserves. (vi) The 80IB project was not mingled with regular projects in the light of sepa .....

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Ors 1992 SCR (2) 155, 1992 SCC (2) 598 and also placed reliance on the judgment of Ram Nath Sahu & Ors. Vs. Gobardhan Sao & Ors. 2002(3) SCC 195. We have gone through the petition. The assessee has not explained the exact reason for delay in filing the Cross Objection. The reason advanced by the assessee is general in nature. The assessee justified the delay only with reference to the affidavit filed by the Director and it cannot be said that there is any good and sufficient reason to co .....

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f the Revenue , the facts of the case are that the Assessing Officer has found that certain expenditure debited in accounts of unit entitled for deduction u/s.80IB is less, where as such expenditure debited in accounts of unit not entitled for deduction u/s.80IB was more, so as to gain more deduction u/s 80IB and reduce the taxable profits from the non-80IB unit. Accordingly, the Assessing Officer reworked the profits of unit entitled for deduction u/s.80IB and non-80IB units on pro-rata basis w .....

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sessee has objected for such reallocation of expenditure on the basis of incremental inventory ratio, stating that the company was maintaining separate accounts for 80lB and non 80lB units which were audited by the qualified chartered accountants and the allocation of expenditure was on actuarial basis. The ld. Authorised Representative for assessee has further argued that the reworking of the expenditure by the Assessing Officer without rejecting the books of account of the assessee was not per .....

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missioner of Income Tax (Appeals) further observed that in the assessment order that the Assessing Officer has hand-picked some of the heads of expenditure for reworking out of several heads of expenditure debited to the P&L account. The Assessing Officer has picked up those heads which were found to have been debited at a lower amount in 80IB units and more in non 80lB units to justify such theory that the assessee has deliberately hiked up the expenditure in non 80IB units so as to reduce .....

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ed with the accounts, he should have rejected the books first and estimated the entire expenditure between the 80IB unit and non 80IB units on some scientific basis. Reallocating the expenditure on certain presumption and choosing only a few head where the expenditure debited in 80IB units is more, was not warranted. The Assessing Officer should have refrained from such reallocation when separate set of account s were maintained and subjected to audit which fact was not disputed by him. The Comm .....

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