TMI Blog2021 (3) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... ried out for impugned assessment year. On perusal of expenses claimed at Head Office level, we find that except director remuneration all other expenses are related to business activity of the assessee. As claim of assessee before the AO that director salary is related to agricultural operations because director personally takes care of estate activity. We are of the considered view that if at all allocation of expenses is required between agricultural income and non-agricultural income, then only director s remuneration can be apportioned to agricultural operations and non-agricultural operations. Since assessee himself has admitted that agricultural operations were taken care of by the director, we are of the considered view that remun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceding year, we are of the considered view that only director remuneration can be apportioned to agricultural operations because director is personally taking care of estate activity. Hence, we direct the Assessing Officer to consider director remuneration to agricultural operations. Interest income - Assessing Officer in the immediately preceding year has accepted interest income offered by assessee under the head income from business has suddenly changed head of income to income from other sources without there being any change in facts and circumstances for impugned assessment year. Therefore, we direct the Assessing Officer to consider interest income under the head income from business as claimed by assessee and further direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome without assigning proper reasons and justification. 3. The CIT (Appeals) failed to appreciate that having not disputed the fact of the maintenance of separate books of accounts, the apportionment of expenses for making disallowance of apportioned expenses notionally relatable to the earning of the agricultural income was wholly unjustified. 4. The CIT (Appeals) failed to appreciate that the mechanism of the apportionment of expenses for making disallowance of such expenses on the presumption of live link with the earning of exempted agricultural income was wrong, incorrect, invalid, erroneous and not sustainable in law. 5. The CIT(Appeals) went wrong in recording findings in para 5 of the impugned order in this regard whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricultural income. Accordingly, by taking ratio of agricultural income and non-agricultural income, total expenses of ₹ 9,49, 555/- has been apportioned to agricultural income to the extent of ₹ 3,95,650/- and consequently, recomputed income returned from non-agricultural activity at ₹ 6,60,790/-. Similarly, the Assessing Officer has reduced agricultural income declared by assessee on account of apportionment of Head Office expenses to the tune of ₹ 3,95,650/-. 4. The assessee carried the matter in appeal before first appellate authority, but could not succeed. The learned CIT(A) for the detailed reasons recorded in appellate order sustained addition made by Assessing Officer towards apportionment of expenses t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness activity of agricultural operations and hence, Assessing Officer was right in allocating expenses to agricultural income and non-agricultural income. 7. We have heard both parties, perused materials available on record and gone through orders of the authorities below Admittedly, the assessee has maintained separate books of accounts for agricultural activity and for Head Office operations. Further, at Head Office level except interest income, no other business activity was carried out for impugned assessment year . Further, on perusal of expenses claimed at Head Office level, we find that except director remuneration all other expenses are related to business activity of the assessee. Further, it was claim of assessee before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income and for current financial year, he has disallowed total expenses incurred at Head Office level on the ground that they are related to agricultural operations. It is well settled principle of law that although res judicata is not applicable to Income-tax proceedings but principle of consistency needs to be followed. The Assessing Officer having accepted fact that Head Office expenses needs to be apportioned between agricultural income and non-agricultural income, has erred in disallowing total expenses for impugned assessment year without there being any change in facts. Therefore, we are of the considered view that Assessing Officer has erred in disallowing total expenditure incurred at Head Office and considered as expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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