2018 (12) TMI 1614 - HC - Income Tax

Apportionment of expenses made in the hands of the non-80IA units - adjustments made on account of five types of expenditure - assessee had contended that the power plant was newly purchased and was an automatic plant which required minimum workmen - plant was under warranty period and all the minor maintenance of on-going expenses were incurred by the manufacturers - sponge iron plant undertaking had taken bank loan for installing plant in the year 2005-06 and had direct nexus with the said loan of the said sponge iron plant - HELD THAT - There was no financial charge. No fuel was used in the power plant which is steam based and therefore, there was no allocation from fuel expenditure. Commissioner (Appeals) also examined details of maintenance expenditure, that is, repairs, stores and spares and found that there was no maintenance cost during these years because it was under warranty. After appreciating the material on record, the Commissioner (Appeals) had directed the Assessing Officer not to reduce ₹ 27,95,329/- out of eligible profit on account of allocation of expenditure. The Tribunal after re-appreciating the evidence on record, has concurred with the findings recorded by the Commissioner (Appeals). The conclusion arrived at by the Tribunal is based upon concurrent findings of fact recorded by it after appreciating the material on record, in the absence of any perversity being pointed out in the impugned order, the same does not give rise to a question of law, much less, a substantial question of law.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal regarding apportionment of expenses under section 80I(4) of the Income Tax Act, 1961 for the assessment year 2009-10.

Analysis:
1. The appellant challenged the order of the Income Tax Appellate Tribunal regarding the apportionment of expenses between Power Plant and Sponge Iron Plant for the assessment year 2009-10. The Assessing Officer observed an understatement of expenses in the Power Plant, leading to a reduction in the eligible deduction under section 80I(4) of the Act. The Tribunal upheld the decision of the Commissioner (Appeals) who relied on the assessee's case for the assessment year 2008-09.

2. The Commissioner (Appeals) in the assessee's case for 2008-09 noted that the assessee maintained separate accounts for both plants and identified all direct expenses. Various factors were considered, such as the nature of the plants, financial structure, maintenance costs, and fuel usage. The Commissioner directed the Assessing Officer not to reduce a specific amount from the eligible profit due to allocation of expenditure. The Tribunal, after re-evaluating the evidence, agreed with the Commissioner's findings.

3. The Senior Advocate for the appellant reiterated the grounds of appeal and the reasoning of the Assessing Officer. However, the High Court observed that the Tribunal's decision was based on concurrent findings of fact after assessing the material on record. Since no perversity was identified in the Tribunal's order, the High Court concluded that no question of law, let alone a substantial one, arose for consideration. As a result, the appeal was dismissed summarily.