TMI Blog2019 (3) TMI 224X X X X Extracts X X X X X X X X Extracts X X X X ..... red was, according to the Assessing Officer, to be directly allocated to the manufacturing units, as warranty was a part of their sale transaction. In the absence of any material before us to indicate that the methodology for allocation of expenditure followed by the CIT (A) and confirmed by the Tribunal was incorrect or perverse, we find no reason to interfere with the factual findings of the Tribunal and the first substantial question of law is answered in the affirmative, against the revenue and in favour of the assessee. Quantum of deduction granted stands enhanced consequent upon the re-working of the claim by the CIT(A), to an amount in excess of that claimed by the assessee - HELD THAT:- Mr.Ranganathan does not raise any factual dispute regarding the details set out above. Certain limitations are placed by statute on the quantum of relief allowable in relation to deductions under Chapter VI A of the Act, in terms of Sections 80A(2) and (4), 80AB, 80AC and 80B. These include a mandate that the relief granted shall not exceed the gross total income as defined u/s 80B(5). The relief granted, as seen above, has been restricted to the gross total income computed only. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nai and Pondicherry, and the service centres. 5. In Appeal before Income Tax Appellate Tribunal, the Revenue challenged the following two directions of the CIT(A): (i) Allocation of 50% of the financial expenses on turnover basis and the balance 50% in the ratio of 1:3 between the manufacturing units and trading units and (ii) Allocation of 20% of service centre expenses including the employees cost to manufacturing and trading units as against the allocation of the entire amount on turnover basis. 6. The Tribunal after consideration of the detailed order of the CIT(A), concurred with his conclusions, thereby rejecting the appeals of the revenue, as against which the present appeals have been filed. 7. The following substantial questions of law have been admitted by this Court for our resolution: (1) Whether on the facts and circumstances of the case, the Tribunal was right in holding that method of allocation of common expenditure adopted by the CIT (A) is correct when there is no legal sanction for the same, nor any data or details on the basis of which it could have been framed? (2) Whether on the facts and circumstances of the case, the Tribunal was rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erry Unit. As the assessee provides two years warranty for the sale of UPS, the Assessing Officer took the turnover of manufacturing units for the latest two years and the turnover of all the units for the preceding five years and the apportioned total expenditure incurred by the service centres including the employees cost in the proportion of such turnover. 10. As against the aforesaid methodology adopted by the Assessing Officer, the CIT(A) after detailed analysis, modified the basis for the allotment of expenditure. Though modifications were effected in respect of all the categories of expenditure, the assessee had accepted the changes effected by the CIT(A) and the revenue challenged only the two relating to financial overheads and service centre. We restrict our discussion to the aforesaid two categories of expenditure alone. 11. As regards the financial overheads, the methodology followed by the CIT(A) was that 50% of the expenditure be apportioned directly on the basis of turnover of three (3) units and the balance of 50% be apportioned in the ratio of 1:3 between the two manufacturing units and the trading unit. As against the service centre expenses, the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has relied upon the following cases, to state that the re-allocation of expenses claimed over different items of income would not amount to a substantial question of law, but is only a question of fact: (i) Commissioner of Income Tax Vs. EHPT India (P) Ltd ( 16 taxmann.com 305). (ii) Commissioner of Income Tax Vs. Hindustan Lever Ltd., Chennai [(2014) 42 taxmann.com 132(Mad)]. (iii) Commissioner of Income Tax Vs. Manjushree Plantations Ltd., [(1981) 130 ITR 908 (Mad).] (iv) Commissioner of Income Tax Vs NIT Cris Ltd., [(2009) 2 taxmann.com 12 (Del)]. (v) Principal Commissioner of Income Tax-2 Vs Mono Steel (India) Ltd. ,[Tax Appeal No.1339 of 2018 dated 10.12.2018]. 15. The proposition advanced by the assessee is indeed settled by the above decisions, the exception being perversity in such apportionment and allocation. The learned counsel for the Revenue has not brought to our notice any perversity in the method of allocation of the expenditure as followed by the CIT(A) and confirmed by the Tribunal. 16. He relies upon a decision of the Allahabad High Court in Ema India Ltd., Vs., Deputy Commissioner of Income-tax [(2017) 81 taxmann.com 221 (Allahabad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apportionment of expenditure was essentially one of fact depending upon the circumstances of the case and in the absence of any statutory fixed formula, any finding on such question would necessarily have to involve an element of guess work. The Bench, at page 552 of the report, states the endevour (of apportionment) can only be said to be approximate and there cannot, in the very nature of things, be great precision and exactness in the matter . 20. In the absence of any material before us to indicate that the methodology for allocation of expenditure followed by the CIT (A) and confirmed by the Tribunal was incorrect or perverse, we find no reason to interfere with the factual findings of the Tribunal and the first substantial question of law is answered in the affirmative, against the revenue and in favour of the assessee. 21. As far as the second question is concerned, we note that the quantum of deduction granted stands enhanced consequent upon the re-working of the claim by the CIT(A), to an amount in excess of that claimed by the assessee. The assessee has produced before us a chart in respect of the claim for the six assessment years in question, which is ext ..... X X X X Extracts X X X X X X X X Extracts X X X X
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