TMI Blog2017 (6) TMI 398X X X X Extracts X X X X X X X X Extracts X X X X ..... o be attributed entirely to the non eligible unit at Ludhiana. It is only increase in the remuneration in the impugned year vis-à-vis that in the preceding year, which can be apportioned between the two units. The same amounting to ₹ 9.75 lacs, apportionment of ₹ 6.94 lacs to the eligible unit in Pant Nagar is unjustified considering the fact that while apportioning the increase in remuneration, efforts of the directors of the company in increasing turn over of the non eligible unit should be taken into consideration and also to the contribution of the new director appointed in the company to the activities of the non eligible unit. Considering the same, we are of the view that apportionment of directors remuneration to the extent of ₹ 3 lacs to the eligible unit is just and reasonable, considering the fact that considerable amount of efforts must have been given by the directors for setting up of the new unit in Pant Nagar. We uphold the apportionment to the eligible unit, of auditors remuneration to the extent of ₹ 59,800/- and the directors remuneration to the extent of ₹ 3 lacs. The disallowance of deduction claimed u/s 80IC by the eligible unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- and directors remuneration amounting to ₹ 30 lacs in the Ludhiana unit only. The assessee was asked as to why the said claim may not be apportioned to the eligible unit and deduction under section 80IC of the Act be disallowed proportionately. The assessee submitted its reply. The Assessing Officer was not satisfied with the same and, therefore, apportioned auditors remuneration and directors remuneration amounting to ₹ 7,53,223/-to the eligible unit at Uttrakhand thereby reducing its profits and in turn reducing its claim to deduction under section 80IC to the said extent. The matter was carried in appeal before the CIT (Appeals) where the assessee vehemently contested the disallowance made making detailed submissions reproduced at para 2.1 of CIT (Appeals) s order. 5. Briefly stated, the assessee contended before the learned CIT (Appeals) that it had maintained separate books of account in respect of both the units and had prepared separate balance sheet and Profit and Loss Account for both the units, which has been verified and accepted by the Assessing Officer without raising any doubts about the said records maintained by it. The assessee also contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 15.90 crore and that of exempt unit is ₹ 4.78 crore whereas Auditor numeration and director remuneration are claimed only in the Ludhiana unit. The Assessing Officer has apportioned the directors remuneration and auditor remuneration on the basis of turnover, which is a well established basis. The Assessing Officer has duly noted that the duties of an auditor as per sec 80IC are far more for the exempt unit Similarly, regarding directors remuneration, the Assessing Officer held that the Director has to administer all units of a company and the appellant could not provide any documentary evidence before the Assessing Officer to support its claim. The Assessing Officer gave reasonable justification for apportioning the said expenses. It was held that Director's role is to ensure to progress in profitability of the entire company. The Assessing Officer has rightly held that the director has a multifarious role and cannot be restricted in water tight definitions. The profitability of exempt unit is possible with the efforts of the Director. The appellant could not give any proof to support his contention before the Assessing Officer. The AR has relied on the case of the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel for the assessee contended that a chart detailing the duties of the directors had been filed to the lower authorities which clearly showed that all the duties of the directors were confined to the Ludhiana only. On being questioned at Bar as to how the exempt unit was being run the Ld. counsel for the assessee stated that the assessee had appointed dedicated staff i.e. Plant Head and Production manager for managing the operations being carried out at Pant Nagar and there was negligible need for managing the operation and thus no indulgence of the time or activities of the directors were required at the eligible unit. The Ld. counsel for assessee further raised several contentions before us in a brief synopsis filed before us which included that the detail of tour and traveling expenses debited to the Profit Loss Account clearly showed that no visits were made by the directors to the eligible unit at Pant Nagar, that it had been proved by way of a chart placed before the lower authorities that all necessary administrative expenses had been duly claimed in the eligible unit and no unscrupulous attempt had been made in respect of claiming higher amount of deduction u/s 80IC of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , directors of company are required to administer all units of a company and it is their duty to ensure progress and profitability of the entire company. The argument of the Ld. counsel for the assessee that the duties of the directors were restricted to Ludhiana unit only has not duly been evidenced either before lower authorities or even before us. Therefore, this argument cannot be entertained. For the same reason also, all the arguments and contentions taken up by the Ld. counsel for the assessee to prove that the directors were looking after the activities of the Ludhiana unit only, merits no consideration. The fact that the assessee has appointed dedicated staff as its Plant Head and Production Manager for managing operations carried out at the eligible unit at Pant Nagar does not take away the fact that despite the said appointment of the dedicated staff, its directors are ultimately responsible to the shareholders of the company by whom they had been appointed for the purpose of running the Pant Nagar unit. Therefore, even if there is dedicated staff which is looking after and managing the operation at Pant Nagar unit, the directors are still involved in taking crucial and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn over as compared to the previous year which was on account of the efforts of the directors of the company. Further the Ld. counsel for the assessee pointed out that in the impugned year a new director was appointed who was paid ₹ 3 lacs as remuneration. In view of the same, the Ld. counsel for the assessee pointed out that out of the increase of ₹ 9.75 lacs apportioning ₹ 6.93 lacs to the eligible unit was unfair and unjustified. 10. We are in agreement with this contention of the Ld. counsel for the assessee. The facts as pointed out by the Ld. counsel for the assessee have not been disputed by the learned D.R. Therefore, it is undisputed that the remuneration paid in the preceding year amounting to ₹ 20.25 lacs, when the eligible unit of the assessee was not functioning, was to be attributed entirely to the non eligible unit at Ludhiana. It is only increase in the remuneration in the impugned year vis- -vis that in the preceding year, which can be apportioned between the two units. The same amounting to ₹ 9.75 lacs, apportionment of ₹ 6.94 lacs to the eligible unit in Pant Nagar is unjustified considering the fact that while apportioning ..... X X X X Extracts X X X X X X X X Extracts X X X X
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