TMI Blog2021 (9) TMI 1090X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of the assessee for determination of allowable deductions u/s 80IC on the basis of net profit, hence we reverse the findings returned by Ld. CIT(A) and uphold the findings returned by AO that for determination of the deductions u/s 80IC allocation of common expenses is to be done on the basis of turnover. Addition u/s 14A r.w.r. 8D - exempt income earned by the assessee - CIT-A deleted addition - HELD THAT:- Perusal of the assessment order passed by the AO shows that complete facts have not brought on record as to how much was the exempt income earned by the assessee during the year under assessment; as to whether any interest bearing funds have been used for the purpose of investment so as to apply the provisions contained u/s 14A r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO u/s 14A of the I.T.Act, 1961 read with Rule 8D of the I.T.Rules, 1961in spite of the fact the decision on this issue is pending in Hon ble Supreme Court in the case of Maxopp Investment Ltd. and in view of the facts that the financial expenses and administrative expenses debited in the P L a/c are also relatable to the investments in shares purchased. 3. The appellant craves to amend modify, alter, add or forego any ground of appeal at any time before or during the hearing of this appeal. 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : assessee is into the business of Manufacturing of Machinery and Equipment used in Oil well Drilling and Production activities. Assessee has cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... common administrative office expenses for the purpose of claim made u/s 80IC on the basis of net profit by accepting the contention of the assessee that the profit ratio is distorted if allocation of common expenses is done on the basis of turnover. 8. We have perused the assessment order passed by Ld. CIT(A). Ld. CIT(A) relied upon the order passed by Tribunal in case of Corning SAS-India vs. Dy. Director of Income Tax. Ld. CIT(A) has not given any citation of the case relied upon and has also returned cryptic findings. 9. Assessing Officer allocated the common administrative expenses on the basis of turnover of unit 1, 2 3 as under :- Particular Unit-1 Unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e observe that AO has specifically pointed out the heads of expenses for which the total expenditure has been incurred by the assessee. The AO has stated the amount of expenditure, which has been allocated by the assessee to its Daman Unit, and assessee has not given any basis for allocating such expenses, details given hereinabove, to Daman Unit. Therefore, The AO has adopted the expenditure for each of the unit on the basis of turnover and after deducting the actual expenditure allocated by the assessee; he arrived at aggregate amount of ₹ 73,45,083, details given hereinabove, and has stated that assessee has under allocated the expenditure to inflate profits and gains of eligible unit. During the course of hearing, ld A.R. could no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.7141/MUM/2008 Assessment Year: 2005 -06 to phrases i.e. 'the profits and gains of an eligible business to which provisions of SUB-SECTION(l) apply.. shall be computed as if such eligible business was the only source of income of the assessee , one should interpret and understand them by the meaning that the standalone unit has to be given to such eligible business. In other words, as if such eligible business was the only source of income shall mean that the alleged indirect expenditure or common or head office expenses were incurred for such eligible business, the only source of income of the assessee. Consequently, all the indirect expenses or common expenses have to be considered for the said computation. Thus, the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in preceding para 9 hence ground no.1 is decided in favour of the revenue. GROUND NO. 2 : 13. Assessing officer noticed that the assessee has made investment in equities to the tune of ₹ 29,86,720/- and by invoking the provisions contained u/s 14A read with Rule 8D made disallowance of ₹ 54,432/- on the ground that expenses relatable to the earning of exempt income by the assessee are required to be disallowed. 14. Perusal of the assessment order passed by the AO shows that complete facts have not brought on record as to how much was the exempt income earned by the assessee during the year under assessment; as to whether any interest bearing funds have been used for the purpose of investment so as to apply ..... X X X X Extracts X X X X X X X X Extracts X X X X
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