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2016 (10) TMI 3 - ITAT MUMBAI

2016 (10) TMI 3 - ITAT MUMBAI - TM - Deduction u/s 80IB - Held that:- The perusal of the order of ld.CIT(A) reveals that the discrepancies as pointed out by the AO and admitted by the assessee during the course of assessment proceedings regarding the finding of facts qua the said discrepancies being explained fully as the assessee has booked all the expenses on the basis of actual and thus there was no difference in allocation and restored the deduction of ₹ 1916.56 as claimed by the asses .....

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nd was liable to be taxed under the income tax Act. The DR argued that the ld CIT(A) has erred in directing the AO to exclude the investments in bonds while calculating the disallowance u/s 14A read with rule 8D whereas the ld AR heavily relied on and supported the order of CIT(A) who rightly directed the AO to exclude the investments in bonds in the calculation of disallowance u/s 14A. We find no merit in the argument of the ld.DR that the CIT(A) was wrong in holding that the investments in bon .....

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KUMAR, AM For The Appellant : Shri Santanu Kumar Saikia For The Respondent : Shri Girish Balekundri ORDER PER RAJESH KUMAR, A. M: These are the appeals filed by the revenue against the order passed by the ld.CIT(A)-4, Mumbai dated 1.1.2010 and 25.6.2010 for the assessment years 2006-07 and 2007-08. Since these appeals pertain to the same assessee, these appeals are being decided by this common order for the sake of convenience. 2. First we shall take the appeal in ITA No. 2468/Mum/2010. 3. The .....

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elding consumables, equipment and project engineering products. The assessee was an associate concern of J B Advani group with the share holding of 49.84% held by M/s J B Advani and Co.Pvt.Ltd Company. The assessee has various manufacturing units located at Chennai, Chinchwad (Pune), Ahmednagar, Bhandup , Raipur and Silvassa. Silvassa Unit being new investment of the operative unit from the assessment year 2004-05 all the four units of the assessee were engaged in manufacturing of consumables of .....

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ssessee was scrutinizes and during the course of scrutiny proceedings, the assessee was required to furnish details of sales and other income, direct expenses, indirect expenses pertaining and allocable to each of these units which were filed by the assessee vide letter dated 24.12.2008. On the basis of such information furnished by the assessee, the AO came to the conclusion that there was mismatch between the profit worked out and the turnover of the unit, certain expenses are disproportionate .....

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₹ 35 lakhs. The AO also worked out some variation under various head as regard allocation of expenses such as depreciation and financial charges which was calculated at ₹ 15 lakhs, and clubbed with the amount as offered by the assessee vide letter dated 24.12.2008 and thus, total deduction u/s 80IB worked out to ₹ 15 lakhs accordingly, the deduction 80IB was reduced to ₹ 1916.56 lakhs. The AO finally passed the order under section 143(3) of the Act vide order dated 29.12. .....

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e ld. CIT(A) after considering he submissions and arguments of the ld.AR allowed the appeal of the assessee on this ground by deleting the addition of ₹ 15 lakhs thereby restored the deduction 80IB by observing and holding as under : 8. According to the A.O. the net variation of ₹ 15.78 lakh under the head as indicated above is different from the heads under which assessee has accepted the variation in allotment of expenses i.e. depreciation and financial charges which are chosen by .....

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e C.A. in Form No. 10CCB. He has also filed a letter justifying the allocation of expenses to Silvassa Unit which refers to financial charges in respect of export bill discounting and interest thereon. The company is a debt free company and did not utilize borrowed funds. 10. The A.R. further submitted that out or total export for which the financial charges and interest is attributable, the assessee company during the previous year has given the following details: total exports for the A.Y. 200 .....

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lakh relating to Silvassa unit for export business whereas the A.0. has computed. the disallowance at ₹ 50 lakh which is not correct, if the method followed by the A.O. is correctly applied then proportionate disallowance would be ₹ 35,000/- only. 12. I have duly considered the submissions of the A.R. and I find that the AO has allocated the expenses on the basis of the turnover of the company whereas the assessee has allocated the expenses on actual basis. Since the Silvassa unit i .....

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rders of authorities below. We find that the assessee has committed mistake in discrepancy in the allocation of expenses to various units including the Silvassa unit on which it has claimed deduction u/s 80IB at ₹ 19,66,56,000/-. However, during the appeal proceedings before the FAA, the assessee explained that there is no discrepancies in the allocation of expenses as he same were booked on actual basis in Silvsssa Unit and therefore the admission as made by the assessee vide letter dated .....

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set aside and that of AO be restored. 6. The perusal of the order of ld.CIT(A) reveals that the discrepancies as pointed out by the AO and admitted by the assessee during the course of assessment proceedings regarding the finding of facts qua the said discrepancies being explained fully as the assessee has booked all the expenses on the basis of actual and thus there was no difference in allocation and restored the deduction of ₹ 1916.56 as claimed by the assessee. Looking into facts and .....

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14A of the IT Act read with rule 8D of the Income Tax Rules, 1962. During the course of assessment proceedings, the AO found that the assessee has earned dividend income of ₹ 67,74,600/- and also incurred ₹ 28.28 lakhs expenditure under the head interest expense. The AO further observed that the assessee has not allocated or attributed any expenses to earning of exempt income in terms of section 14A r.w.rule 8D and calculated the disallowance at ₹ 17,05,460/- comprising ₹ .....

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to be taxed and was not exempt. After considering the submissions of the ld.AR, the FAA partly allowed the appeal of the assessee by observing as under : 5. I have duly considered the submission of the A.R. and I find that the assessee was having interest income from bonds which is not exempt. In any case the assessee was having investment in unquoted shares to the extent of ₹ 225.82 lakh which was sold in this year. Hence, 0.5% of average of opening and closing balance of ₹ 225.82 l .....

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