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TMI Blog2013 (10) TMI 1541X X X X Extracts X X X X X X X X Extracts X X X X ..... icer in assessment year 200304 has not been upheld by ITAT whereas in fact in that year, ITAT has upheld 15% of the disallowance on this issue. 2. (a) Whether on the facts and in the circumstances of the case and in law, CIT(A) had erred in holding that for computing amount of deduction under section 80IC of the income tax act for Baddi unit, common expenses of head office of assessee do not require reallocation by following the decisions of ITAT in A.Y. 2003-04 an by following the decision of the predecessor CIT(A) in A.Y. 2007-08 when assessee itself admitted the fact that these expenses are not properly allocated and assessee has further admitted that these expenses cannot be related with reasonable accuracy to any special activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l the material facts relevant thereto are similar to assessment years 2001-02 to 2004-05, we respectfully follow the order of the Tribunal for the said years and hold that the expenses incurred by the assessee on gifts to Doctors cannot be disallowed by invoking Explanation to section 37(1) of the Act. We therefore direct the A.O. to consider the allowability of the said expenses under the provisions of section 37 of the Act after necessary verification. Ground No. 1 of Revenue s appeal is accordingly dismissed . 5. Since the issue has been restored to the file of the AO in assessment years 2001-02, 2002-03 2008-09, respectfully following the order, we set aside the order of the CIT(A) on this issue and restore the issue to the file of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on the basis of percentage of sales would have been the proper alternative It is seen from the details of sales for the year that as against total sales of ₹ 350.63 crore, the sale of Baddi Unit is ₹ 139.43 crore i.e. it constitutes 40% of the total sales. Accordingly the common expenses have to be apportioned to the Baddi unit at 40% of the expenses. The allocation of various expenses is accordingly worked out as under:- Expenses % applied Total expenses Allocation to Baddi Unit Expenses Shown Excess (Shortage) Packing delivery charges 40% 12,59,34,679 5,03,73,872 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore us, the DR pointed out that in the year under consideration, the assessee had not allocated R D expenses and the AO was correct to allocate the expenses in proportion to turnover, of Baddi unit, which was 40% of the total turnover. The DR also submitted that the ITAT order in 2003-04 and subsequently the High Court order pertained to facts which did not pertain to Baddi unit. DR pointed out that the AO was correct to allocate the expenses to Baddi unit. 13. The AR on the other hand contested the arguments of the DR and submitted that the issue for allocation has attained finality at CIT(A) stage, as held by the Hon ble Bombay High Court decisions, wherein, the Hon ble High Court had discussed the appeal filed by the department. Moreo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he business as such, like wise depreciation would also have some element of commonality of the HO and R D unit and eligible unit at Baddi. We are also aware, consistently the coordinate Benches have been allowing the claim of the assessee, but to iron out the doubts in the mind of the AO, it is necessary that the AO must factually get satisfied that the assessee has allocated expenses wherever necessary and not allocated wherever it was not found to be not necessary. Both the parties have no objection if the matter is restored to the AO for verification. We, therefore, restore the issue to the file of the AO, who shall examine the allocability of expenses of R D and depreciation if at all, relying on the books as maintained by the various u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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