2021 (12) TMI 765 - AT - Income Tax

Deduction u/s 10B - re-computation of deduction under section 10B on account of re-computation of depreciation - Allocation of depreciation on Komori unit between the Manesar unit and Delhi unit in the ratio of the total sales pertaining to each of the units during the year - A.O. was of the view that this claim of the assessee was a deliberate attempt to shift the claim of depreciation to a non-eligible unit so as to lower the profits in the non-eligible unit and showing higher profit in the eligible unit which was thereby eligible for deduction under section 10B of the I.T. Act, 1961 on a higher amount - HELD THAT - CIT-A correctly held that the allocation was justified and dismissed the appeal of the appellant on this issue. The facts in the appellant s case are identical to the facts in AY 2009-10. Following the decision of the CIT(A) in the appellant s own case for AY 2009-10 the allocation of depreciation made by the AO between Delhi unit and Manesar unit is confirmed. Denial of deduction u/s 10B considering increased profit due to computation of income u/s 40(a)(ia) - It is an admitted fact on record that the computation of deduction u/s 10B for the year under consideration has been done by the AO based on the figures of profit shown by the appellant. This computation of deduction u/s 10B is as per the provisions of the law and requires no interference. The issue of not allowing the deduction u/s 10B on the increased income in view of disallowance u/s 40(a)(ia) pertains to AY 2009-10 and no corrective action, if any, requires to be taken on this account for the AY 2010-11 - no infirmity in the order of the Ld. CIT(A) - Decided against Assessee.

Summary

Issues: Allocation of depreciation between eligible and non-eligible units under section 10B of the I.T. Act, 1961; Denial of deduction under section 10B due to increased profit from disallowed expenses under section 40(a)(ia) for A.Y. 2010-11 and 2011-12.

A.Y. 2010-11:
The Assessee's appeals were against separate orders for A.Y. 2010-11 and 2011-12. The issue involved the allocation of depreciation between the Manesar and Delhi units under section 10B of the I.T. Act, 1961. The Assessee claimed 100% export-oriented unit status for the Manesar unit. The Assessing Officer (A.O.) found that the Assessee claimed depreciation on a printing machine only for the Delhi unit, leading to a deliberate attempt to shift depreciation to a non-eligible unit. The A.O. re-allocated the depreciation between the units based on sales. The Ld. CIT(A) upheld the A.O.'s decision. The Assessee appealed, challenging the allocation of depreciation and the denial of deduction under section 10B due to increased profits from disallowed expenses. The Tribunal upheld the Ld. CIT(A)'s decision, citing consistency with past cases and no need for corrective action.

A.Y. 2011-12:
The Assessee's appeal for A.Y. 2011-12 raised similar grounds as for A.Y. 2010-11 regarding the allocation of depreciation between the Manesar and Delhi units under section 10B. The Tribunal noted that the grounds raised were identical to those for A.Y. 2010-11, which had been dismissed. Consequently, the appeal for A.Y. 2011-12 was also dismissed.

In conclusion, the Tribunal dismissed the Assessee's appeals for both A.Y. 2010-11 and 2011-12, upholding the allocation of depreciation between units under section 10B and the denial of deduction due to increased profits from disallowed expenses under section 40(a)(ia). The decisions were based on past rulings and the absence of contrary material.