2012 (1) TMI 253 - AT - Income Tax

2013 (10) TMI 224 - HC

Issues Involved:
1. Allocation of expenses for calculating profit eligible for deduction u/s 80-IA.
2. Allocation of interest expenses for calculating profit eligible for deduction u/s 80-IB.
3. Allocation of salary expenses for calculating profit eligible for deduction u/s 80-IB.
4. Allocation of administrative and general expenses for calculating profit eligible for deduction u/s 80-IB.
5. Apportionment of loss of one unit to other units for calculating profit eligible for deduction u/s 80-IA & 80-IB.
6. Disallowance u/s 14A in respect of apportionment of director's remuneration.

Summary:

1. Allocation of Expenses for Calculating Profit Eligible for Deduction u/s 80-IA:
The assessee contested the allocation of director's remuneration, directors' traveling expenses, audit fees, computer expense, and security charges for calculating profit eligible for deduction u/s 80-IA. The tribunal noted that this issue was covered against the assessee by its own previous orders for the assessment years 2004-05 and 2006-07. Consequently, the tribunal upheld the decision of the lower authorities, rejecting the assessee's ground.

2. Allocation of Interest Expenses for Calculating Profit Eligible for Deduction u/s 80-IB:
The assessee argued against the allocation of interest expenses to Daman and Baddi units in the ratio of investment for calculating profit eligible for deduction u/s 80-IB. The tribunal found that the lower authorities had already provided relief by following the tribunal's earlier orders, which required interest expenditure to be allocated based on investment in the respective units. Thus, the tribunal found no merit in the assessee's ground and rejected it.

3. Allocation of Salary Expenses for Calculating Profit Eligible for Deduction u/s 80-IB:
The assessee challenged the allocation of salary expenses amounting to Rs. 132.42 Lacs and Rs. 49.49 Lacs for Daman and Baddi units respectively. The tribunal noted that this issue was also covered against the assessee by its previous order for the assessment year 2004-05. Therefore, the tribunal upheld the lower authorities' decision and rejected the assessee's grounds.

4. Allocation of Administrative and General Expenses for Calculating Profit Eligible for Deduction u/s 80-IB:
The assessee contested the allocation of administrative and general expenses amounting to Rs. 57.93 Lacs and Rs. 21.33 Lacs for Daman and Baddi units respectively. The tribunal observed that this issue was covered against the assessee by its previous order for the assessment year 2006-07. Consequently, the tribunal upheld the lower authorities' decision and rejected the assessee's grounds.

5. Apportionment of Loss of One Unit to Other Units for Calculating Profit Eligible for Deduction u/s 80-IA & 80-IB:
The assessee argued against the apportionment of the loss of the Daman unit to other units for calculating profit eligible for deduction u/s 80-IA & 80-IB. The tribunal noted that this issue was covered against the assessee by its previous order for the assessment year 2006-07. Therefore, the tribunal upheld the lower authorities' decision and rejected the assessee's ground.

6. Disallowance u/s 14A in Respect of Apportionment of Director's Remuneration:
The assessee contested the disallowance u/s 14A in respect of apportionment of director's remuneration. The tribunal referred to its previous decision in the case of ACIT Vs Vepar Pvt. Ltd., which held that no disallowance can be made prior to the assessment year 2007-08. Consequently, the tribunal deleted the disallowance made by the A.O. and allowed the assessee's ground.

Revenue's Appeal:
The tribunal addressed the revenue's appeal, which included issues related to the allocation of expenses, interest expenses, and disallowance u/s 14A. The tribunal upheld the lower authorities' decisions on some grounds and reversed them on others, in line with its previous orders and relevant case laws.

Conclusion:
Both the assessee's and the revenue's appeals were partly allowed, with the tribunal's decisions largely based on its previous orders and established precedents. The order was pronounced in the open court.

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