TMI Blog2019 (5) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... after by best judgment assessment u/s 144 . Here in this case, the AO has not passed any order u/s 144 of the Act. AO thus without rejecting the books of account of the assessee has gone for estimation on suspicion and conjectures and made estimated disallowance of ₹ 3,00,000/-, which is not tenable and therefore, we delete the addition of ₹ 3,00,000/- Allowability of commission - HELD THAT:- The assessee has raised ground relating commission paid of ₹ 5 lakhs, which has been disallowed.However, the said sum was disallowed in A.Y. 2009-10 also. Therefore, the A.O. is directed to verify the TDS payment and allow the claim of the assessee in accordance with law. - ITA No.2317/Kol /2016 - - - Dated:- 26-4-2019 - Shri A.T. Varkey, JM And Dr. A.L. Saini, AM For the Assessee : Shri S. Jhajharia, FCA For the Respondent : Shri Shankar Halder, JCIT Sr. DR ORDER PER DR. A. L. SAINI: The captioned appeal filed by the Assessee, pertaining to assessment year 2010-11, is directed against an order passed by the learned Commissioner of Income Tax (Appeals)-16, Kolkata, (in short ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fund transfer UCO-Bank, Defence colony Brach, New Delhi of Faridabad Unit. The balance as at 31.03.2010 in the said account bearing no. 00021000025 amounting to ₹ 13,774/- is reflected in the schedule 7 of Tax Audit Report under the head balance with schedule banks in current account under the unit of Faridabad. Hence, AO noted that in no circumstances, when the bank account was maintained under Faridabad unit, the interest on FD can not be shown under Rudrapur Unit. Hence, AO was of the opinion that at the time of calculation of total income, the amount ₹ 62,91,275/- should be kept outside the purview of deduction claim under section 80IC of the Act. During scrutiny proceedings ld AO observed that the assessee company has claimed deduction of ₹ 19,64,57,382/- u/s 80IC of the Act, in respect of profit from Rudrapur Unit. The assessee company has three units viz. Kolkata Unit, Faridabad Unit and Rudrapur Unit. Before the AO the assessee submitted consolidated account for the whole year and also three balance sheets and profit loss account for three branches. On perusal of all the accounts, it is found that the assessee has not debited any finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.690/= and (iii) Allocation of H.O. office expenses relating to Rudrapur Unit ₹ 3,00,000/= totaling ₹ 1,26.21.965, deduction under the head 80IC was allowed of ₹ 18,38,35,416 [19,64,57,382 1,26,21,965]. 5.Regarding the assessee`s claim of deduction of ₹ 5.00.000/- in computation of income under the head Gross amount of late Deposit of TDS in earlier year, the AO noticed that the said deduction is not treated as allowable expenditure under the head business income,since the above expenditure was not passed through profit and loss account.The said expenditure is not treated as wholly exclusively and necessarily business expenditure. Hence, the deduction of ₹ 5,00,000/-was not allowed by AO against business income. 6. Aggrieved by the order by the Assessing Officer, the assessee carried the matter in appeal before the ld CIT(A) who has partly deleted the addition made by AO. 7.We have heard both the parties and perused the material available on record. During the course of hearing the ld Counsel submitted before us written submission, which is reproduced below for ready referenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The appellant prays that although even interest has been offered by assesse itself however the net interest only ₹ 62,91,275 - ₹ 51,058/- = ₹ 62,40,277/- be only considered [even though mater has been set aside to AO by CIT(A)]. As regards the allocation of ₹ 60,30,690/-, the A.O has allocated such expenses on the premise that the Rudrapur unit ( eligible unit ) has made transaction with Faridabad unit ( non-eligible unit ) and hence the interest so debited at the non-eligible unit needs to be apportioned to eligible unit to the tune of ₹ 60,80,690/- and hence reduction of claim of deduction of 80IC by AO. However, such observation and conclusion of the A.O. is incorrect on following premise: a) Financials of the Faridabad unit (Non-eligible unit) for the year ended 31.3.2010 31.3.2009 are as follows. [P/b - Pg 109] Year Profit for the year (in Rs) Loan at the end of the year (in Rs.) Interest debited (in Rs.) Interest received(in Rs.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iv) Even otherwise, the interest at Faridabad unit (Non-eligible unit) after netting of the interest received is net receipt figure [31,59,501 - 1,82,69,565 = (-) 1,51,10,064 ] and as such the question of allocation of interest cannot arise. In such respect, reliance is placed on the following judgments: - a) Metrochem Industries Ltd. 389 ITR 181(Guj) b) ACG Associated Capsules Ltd. 18 taxmann.com 137 (SC) c) B.M.W. Industries Ltd. (ITA No.2115/K/2007) III. As regards the allocation of expenses of further ₹ 3,00,000/- to eligible unit by the AO, the AO has made such disallowance to determine the correct profit of the eligible unit. It has to be appreciated that the AO has done it on arbitrary basis and without any verification. The fact is that, expenses of other units with which eligible unit had transaction has duly transferred the expenses and the same has been debited at the eligible unit and as such the AO's action in such respect is bad and CIT(A) wrongly affirmed it. For the perusal of the Hon'ble Bench the expense so debited is as follows: Expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... howing the fixed deposit in the name of Rudrapur unit, the assessee is claiming higher deduction under section 80IC of the Act by inflating profit, which is not acceptable. Whereas, ld Counsel for the assessee submitted before us written submission as mentioned above, wherein he has stated that: As regards the interest of ₹ 62,91,275/- at Faridabad Bank Account of eligible unit, the same has already been reduced in the computation of deduction u/s 80IC by assessee [Paper Book - Page 76] and as such the reduction of the said amount again by the A.O has amounted to double reduction. After hearing both the parties, we are of the view that this issue needs to be examined by the assessing officer therefore the A.O. is directed to verify whether the assessee has reduced ₹ 62,91,275/- from deduction u/s 80IC and then give deduction on this amount. Regarding the finance charges of Rudrapur unit of ₹ 60,30,690/-, we note that the A.O. allocated ₹ 60,30,690/- as finance charges of Rudrapur unit without taking into account facts submitted by the assessee. The ld Counsel submitted before us explanation which has not been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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