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TMI Blog2022 (6) TMI 1522X X X X Extracts X X X X X X X X Extracts X X X X ..... es, purchase of store and spares, repairing and maintenance, insurance expenses, legal fees, office miscellaneous expenses, Post and Telephone, printing and stationery, salary and wages, vehicle expenses, which should have been shared between both the units, in the hands of non 80IA units. 2. The Id. CIT (A) has erred in law and on facts in deleting the addition on account of apportionment of expenditure between power plant and sponge and Iron unit even though geographically both the units were located in the same campus and hence all the related expenses were likely to be incurred evenly by both the units. 3. The Ld. CIT (A) has erred in law and on facts in deleting the addition on account of apportionment of expenditure between the power plant and sponge iron unit even though the Assessing Officer has specifically recorded in para 3.4 that the assessee has shown NIL expenses in the P& L account of power plant unit. 4. The Ld.CIT (A) has erred in law and on facts in deleting the addition on account of apportionment of expenditure between Power Plant and Sponge and Iron unit by referring to the similar disallowance having been deleted in the preceding years from A.Y. 2007- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act and having regard to the failure of the assessee to show any comparable instance of power plant operator showing such high profit, the Assessing Officer was of the view that the provision of sub-section (8) of Section 80IA was applicable in the case of the assessee and profit of both the units of the assessee was required to be re-determined as done in the earlier years. In this regard, following explanation was offered by the assessee before the Assessing Officer during the assessment proceedings: "In all prior years the additions were made on ad hoc basis, our contention is that the power plant unit is automatic plant and the expenses which are subject matter to disallowance has no nexus to the operation of the plant However company has till the A.Y. 2015- 2016 CLAIMED expenses on line with the CIT appeal orders, but as such from the A.Y. 2016-2017 the company has due to expansion of business achieved the higher turnover and due to another Solar Plant the quantum of operation etc has been increased many fold and the capacity of power plant remains the same hence looking to the nature of expenses same has not been apportioned towards the power plant, and as such lookin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act in respect of the eligible Power Plant Division vide paragraph No. 3.3 of his impugned order as under: "3.3 I have carefully considered the assessment order and the submission of the appellant. The Assessing Officer has allocated 10% of the total other expenses to the Power Plant division on which deduction u/s 80IA(4) of the Act has been taken and reduced the claim of deduction to Rs. 2,09,87,011/-. The appellant has contended that the Assessing Officer has allocated 10% of manufacturing expenses from Lab & Testing, Production expenses, Purchase of Store and spares and repairing and maintenance to the extent of Rs. 1,64,10,794/-. However, the same was not related to the Power Plant Division at all as these expenses are exclusively for manufacturing expenses. The appellant submitted that in the preceding years also the similar disallowances were made by the Assessing Officer and the same has been deleted by CIT (A) and Hon. ITAT. As regards to allocation of 10% expenses of administrative and other expenses, the appellant has submitted that disallowance has been made on ad hoc basis which is arbitrary as the manufacturing activity of appellant has gone up bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 80IA and non-80A are being managed and controlled under common administration and being operated in common campus then certain expenses are bound to be identified and related to these units. In case it is a difficult to find out direct attribution, then they are to be allocated on the basis of some scientific formula. The assessee is maintaining separate accounts for both plants. It has identified all direct expenses. The AO has narrated more than 32 types of expenditure under three heads viz. manufacturing expenses, administrative expenses, and financial charges. Thereafter, he made adjustments of Rs. 30,70,108/-. The ld. CIT(A) has reappreciated all these details and worked out that adjustments made on account of five types of expenditure is concerned there could not be adjustments. Thus, we have a look on the nature of expenditure excluded by the ld. CIT(A). It is pertinent to observe that the assessee has contended before the ld.AO that power plant was newly purchased and automatic plant which requires minimum workmen. Secondly, plant was under warranty period and all the minor maintenance of on-going expenses incurred by the manufacturers. It was also pointed out that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e i.e. the assessee must have incurred this much expenditure over and above shown by it. The ld. CIT(A) has deleted this adjustment on the ground that when power plant was not in existence then also alleged waste coal was being sold by the sponge iron plant. In the Asstt.Year 2007-08 when power plant was not there, waste coal to the tune of Rs. 171.82 lakhs at an average sale price of Rs. 990.95 per MT was sold to the outside party. In this year, the assessee has sold waste coal to the tune of Rs. 194.45 lakhs to the outside parties. Thus, it was contended that it was not debris or waste. It has useful value and that is why it has marketable value. The ld. CIT(A) has observed that the AO has not pointed out any error in the books of the assessee or any basis to observe that 5% must be taken of is grade-A quality coal for use. On due consideration of the above finding, we are of the view that there is no basis for the AO to harbor a belief that at least 5% coal must be used by the assessee of a premium quality. It is just a guess work on the basis of surmises. The assessee has shown consumption of coal which has been purchased from steel unit and which has been purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been subsequently followed by the Tribunal for deciding the similar issue in favour of the assessee for AY 2009-10 vide its order dated 30.05.2018 passed in ITA Nos. 1779 & 1925/Ahd/2014. 8. At the time of hearing before the Tribunal, learned Counsel for the assessee has filed a statement showing that similar relief was allowed by the learned CIT (A) on the issue under consideration to the assessee even in the subsequent years from AY 2010-11 to AY 2016-17 and the Department has apparently not filed any appeal for the said years because of the low tax effect. It is thus clear that the solitary issue involved in this appeal of the Revenue is squarely covered in favour of the assessee by the decision of Coordinate Bench of this Tribunal rendered in assessee's own case for AYs 2008-09 to 2009-10 and even the learned DR has not disputed this position. We, therefore, respectfully follow the said decisions of the Tribunal rendered in assessee's own case for earlier years on the similar issue and uphold the impugned order of the learned CIT (A) giving relief to the assessee on this issue. 9. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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