TMI Blog2017 (8) TMI 1255X X X X Extracts X X X X X X X X Extracts X X X X ..... with the R & D expenses so incurred by the assessee, accordingly he directed that the apportionment of R & D expenditure should be made after excluding the sales. However, in the course of original assessment which was subject matter of appeal before the CIT(A) only apportionment was declined by AO, whereas in the re-assessment proceedings, AO has precisely excluded the trading sales before apportionment of R & D expenditure. However, in the instant appeal before us, the CIT(A) has not decided the issue on merit. Moreover, the judgment relied on by learned AR in case of ICICI Bank Ltd. [2012 (7) TMI 521 - BOMBAY HIGH COURT] are distinguishable on facts in so far as Bombay High Court was dealing with the 2nd proviso to Section 147 whereas a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the asssessment. The Ld. CIT(A) failed to appreciate that since R D expenses are allowed weighted deduction of 150% u/s. 35(2AB), the profit of the unit eligible for deduction u/s. 80IC was required to be reduced by 150%. AO had not noticed his failure to do so and consequent underassessment could only be remedial through reassessment . 4. The appellant prays that the order of the Id. CIT(A) on the above ground be set aside and that of the Assessing Officer restored. 3. In the cross objection, assessee is aggrieved for reopening. However, the CO so filed was not pressed by learned AR, the same is therefore dismissed as not pressed. 4. Rival contentions have been heard and record perused. Facts in brief are that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld as under: Receiving of gifts by doctors was prohibited by MCI guidelines, giving of the same by manufacturer are not prohibited under any law for the time being in force. Giving small gifts bearing company logo to doctors does not tantamount to giving gifts ro doctors but it is regarded as advertising expenses. As regards sponsoring doctors for conferences and extending hospitality, pharmaceuticals companies have been sponsoring practicing doctors to attend prestigious conferences so that then gather contemporary knowledge about management of certain illness/disease and learn about newer therapies. We found that the disallowance was made by the AO by relying on the CBDT Circular dated ^01.08.2012 onwards. However, the Circular wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e s claim, against which revenue is in further appeal before us. 8. Rival contentions have been heard and record perused. The Assessing Officer has dealt with this issue from Pg Nos 16 to 20 of his order. The assessee has 5 manufacturing units i.e. Baddi, Solan Baddi III and 2 units in Nashik and Goa. Out of the 5 manufacturing units, the assessee is claiming deduction u/s 80IC of the Act with respect to its 3 units at Baddi, Solan Baddi III unit. The R D activity of the assessee is being carried out from their 2 independent R D units which are located at Mahape and Sinnar. In view of the same, the assessee did not allocate R D expenditure towards other units since no R D expenditure was carried out from those units. During the cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made by excluding trading sales and re-compute the disallowance. 9. The AO has noted that assessee has 5 manufacturing units, i.e. Baddi, Solan Baddi III (3 units are exempted) and 2 units, i.e Nasik Goa which are not exempt). At none of the 5 manufacturing units, R D Activities is being carried out. In Fact, all the R D activities are carried out at from their 2 independently located R D Units, which are located at Mahape, Navi Mumbai and other at Sinnar, Nasik, Maharashtra. In the original assessment the AO has allocated the expenses in the ratio of turnover (including trading sales). The said allocation has been deleted by the CIT (A) in entirety. However, in the reopening the AO again allocated the R D expense in the ratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered rival contentions and found that during the course of re-assessment proceedings, AO found that trading sales has no connection with the R D expenses so incurred by the assessee, accordingly he directed that the apportionment of R D expenditure should be made after excluding the sales. However, in the course of original assessment which was subject matter of appeal before the CIT(A) only apportionment was declined by AO, whereas in the re-assessment proceedings, AO has precisely excluded the trading sales before apportionment of R D expenditure. However, in the instant appeal before us, the CIT(A) has not decided the issue on merit. Moreover, the judgment relied on by learned AR in case of ICICI Bank Ltd., are distinguishable on ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
