TMI Blog2018 (2) TMI 1768X X X X Extracts X X X X X X X X Extracts X X X X ..... s making supplies to M/s Hero Honda and its ancillary company which was located at Haridwar, Uttarakhand - the assessee did not transfer any old machinery from the existing unit at Noida to Kotdwar-III unit and the transactions of purchase of raw material from the Noida unit were at arm’s length price, we are of the considered opinion that the ld. CIT(A) was fully justified in holding that there was no splitting up or reconstruction of the business already in existence at Noida Unit and thereby allowing deduction u/s 80IC of the Act. Apportionment of head office expenses, we find that the same have been allocated in the ratio of turnover. It cannot be said that the Kotdwar units – II and III unit were running without any support and assi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issues raised in these appeals are common, we are, therefore, disposing of these appeals by this consolidated order for the sake of convenience. Assessment Year 2012-13 2. The first issue raised in the Departmental appeal is against the deletion of disallowance of deduction of ₹ 1,35,93,691/- u/s 80IC of the Income tax Act, 1961 (hereinafter also called `the Act ). The assessee is in appeal against the confirmation of disallowance of certain expenses by way of allocation out of common Head office expenses to the eligible Kotdwar Units - II and III. 3. Briefly stated, the facts of the case are that the assessee claimed deduction amounting to ₹ 1,35,93,691/- u/s 80IC of the Act in respect of Unit-III Kotdwar. The Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of their respective stands. 4. We have heard both the sides and perused the relevant material on record. It is observed that the Assessing Officer disallowed deduction u/s 80IC on the ground that Unit-III Kotdwar was set up by splitting up and reconstruction of a business already in existence at the Noida unit. In this regard, it is observed that there is no splitting up of the existing unit inasmuch as there is no finding by the Assessing Officer that any machinery earlier used in Noida unit was transferred to Kotdwar-III unit. The fact of the matter is that the assessee started supplying its products to Hero Honda and other customers from the new undertaking at Kotdwar-III unit which were earlier manufactured at Noida unit. Except fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed. 6. The only other ground in the appeal of the Revenue is against deletion of disallowance of ₹ 31,16,268/- u/s 14A of the Act. 7. The facts apropos this ground are that the assessee earned exempt dividend income of ₹ 1,79,68,892/- and a sum of ₹ 2,42,047/- was offered for disallowance u/s 14A towards management fees, custody fees, audit fees and portfolio management fees. The Assessing Officer invoked the provisions of section 14A and computed disallowance in terms of Rule 8D at ₹ 31,66,268/-. The ld. CIT(A) observed that apart from offering disallowance of ₹ 2,66,688/- (noted by the AO as ₹ 2,42,047), the assessee had also offered additional disallowance of ₹ 3,79,432/- which escaped ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere recorded any satisfaction about the incorrect claim having been lodged by the assessee with reference to its accounts. There is no discussion whatsoever about the examination of the assessee s claim about the actual incurring of expenses in relation to the exempt income. It can be seen from the impugned order that the Assessing Officer even did not consider the correct amount offered by the assessee for disallowance at ₹ 6.46 lac. In view of the fact that no proper satisfaction was recorded, in our considered opinion, the Assessing Officer did not acquire any valid jurisdiction for computing disallowance u/s 14A. Since the ld. CIT(A) has sustained the amount disallowable u/s 14A at ₹ 6,42,120/-, being the amount voluntarily ..... X X X X Extracts X X X X X X X X Extracts X X X X
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