TMI Blog2017 (1) TMI 1203X X X X Extracts X X X X X X X X Extracts X X X X ..... We, accordingly, direct the A.O. to delete the allocations re-drawn by him. This grievance is accordingly allowed. Double allocation of Managerial Commission - Held that:- We find force in the contention of the ld. Counsel. We find that the assessee has already included the managerial commission and remuneration while allocating common expenses to the Silvassa unit. The A.O. has once again included these expenses while computing the reallocation. We, accordingly, direct the A.O. to verify the computation once again and decide the issue afresh in the light of our findings given for ground no. 1. Ground no. 2 is treated as allowed for statistical purpose. - ITA. Nos: 1073 & 1074/AHD/2013, ITA. Nos: 1086 & 1087/AHD/2013 - - - Dated:- 17-1-2017 - SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER For The Appellant : Shri Pravin Kumar, Sr. D.R. For The Respondent : Shri Milin Mehta, A.R. PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. ITA Nos. 1073 1074/Ahd/2013 are appeals of the Revenue preferred against two separate orders of the Ld. CIT(A)-III, Baroda dated 17.01.2013 pertaining to A.Y. 2008-09 and ITA Nos. 1086 1087/Ahd/2013 are cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Silvassa depends upon their other units. The A.O. concluded by holding that the profit of the two units at Silvassa are not correctly drawn for claiming deduction u/s. 80IB and accordingly re-computed the profits of two units at Silvassa by allocating the following expenses. Managerial commission ₹ 21,32,862/- Foreign Travel ₹ 29,33,613 Vehicle ₹ 6,49,502 Broad Bank Usage ₹ 10,83,929 Subscritption ₹ 2,50,890 Rest House Exp. ₹ 52,566 Party Exp. ₹ 2,26,977 Hotel/Restaruant ₹ 66,833 Local expenses ₹ 34,35,933 Selling expenses ₹ 1,02,928 ECGC Premium ₹ 16,43,268 Total 1,25,99,291 12. Since the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court in the case of CIT vs. Hindustan Lever Ltd. in Tax Case (Appeal) No. 219 of 2006 and 267, 269, 270,273 274 of 2008 had the occasion to consider the following question of law:- Whether in the facts and circumstances of the case the Tribunal was right in holding that the common head office expenses cannot be apportioned to the various units on the basis of their respective turnover for the purpose of calculation of deduction under Section 10B, 80I and 80HH? 20. And the Hon ble High Court held as under:- 3. A perusal of the order of the Tribunal shows that it followed the orders relating to assessment years 1981-82 to 1991-92 dated 28.5.2002 deciding the issue in favour of the assessee. Thus, the assessee's appeals were allowed. Learned counsel for the assessee placed before this Court the Tribunal's order passed in the assessee's own case on the identical claim dealt with under paragraph 28 of the order relating to assessment year 1984-85, paragraph 53 of the order relating to assessment year 1987-88 and paragraph 77 of the order relating to assessment year 1990-91. The Tribunal pointed out that the Head office monitored the requirement of finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court pointed out that the crucial words in the said rule are that the deductions admissible under the Act shall be the actual amount relating to the income derived from agricultural operations and proved by accounts or other conclusive evidence. Where no such accounts or evidence available, the Assessing Officer can proceed to assess the income to the best of his judgment. In confirming the view of the Karnataka High Court, the Supreme Court also affirmed the similar view rendered by this Court in the decision reported in 130 ITR 908 CIT v. MANJUSHREE PLANTATIONS LIMITED. 6. As far as the above stated decision is concerned, the deduction is based on Rule 5. In the absence of any specific provision in the Income Tax Act, and more so in the absence of any such provision, there being no material to show that the expenditure though common were with reference to individual units relatable to the income earned, we do not find any justifiable ground to accept the plea of the Revenue. The assessee had taken the contention that the expenses incurred was for the overall management of the units as well as for providing finance. In the circumstances, the decision of the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presumptions, it is not even the respondent's case that the existing activities of any of the units in fact benefited from or could benefit from the said R D activities. It is also important to note that each of the units manufactures different items and, therefore, also carries out independent R D work. [Para 8] While computing the profits and gains of the concerned undertaking, only expenses relating thereto can be deducted. In other words, the expenses must be incurred, for and on behalf of the concerned undertaking. The expenses attributable to any other unit or the head office expenses which have no relevance to the industrial undertaking, cannot be deducted in respect of the said undertaking while computing the profits and gains of the undertaking. [Para 10] Revenue submitted that any research and development activity carried out by the head office would automatically ensure to the benefit of the units/industrial undertakings. The submission proceeds on an erroneous basis and does not take into consideration the facts of the case at all. In the instant case, the said R D activities were in relation to the new drugs. There is nothing to indicate tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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