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TMI Blog2011 (5) TMI 536X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal (hereinafter referred to as the "Tribunal") and the ITA No.1037/2010 is against the impugned order dated 14th May, 2009 of the Tribunal. In both these appeals, there is one common question regarding the correctness of the order of the Tribunal in deleting the addition made by the Assessing Officer on proportionate basis out of total indirect expenses related to PSS operations of the assessee. 2. In addition to this, there were raised two other questions in ITA No.839/2009 - one related to the order of the Tribunal deleting the addition made by the Assessing Officer on account of disallowance of prior period expenses and the second regarding the direction given by the Tribunal to the Assessing Officer to allow deduction to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmation, the Tribunal followed the decision of its Co-ordinate Bench in the assessee‟s own case for the assessment year 1984-85 in ITA No.2296/D/88 dated 12.8.1991. Faced with this situation, learned counsel for the Revenue did not press this ground. In view of this, nothing survives for us to dwell on this issue. 5. With regard to the second issue that arises for consideration in ITA No.839/2009 regarding the direction of the Tribunal to the Assessing Officer to allow deductions under Section 80P(2)(d) of the Act to the assessee, it may be noted that the assessee had claimed deductions under this Section in respect of the dividend received from other co-operative societies as per details as mentioned in Annexure 9 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A), the Tribunal recorded a finding in this regard as under: "15.2 .... A perusal of para 10.5 of the order of the learned CIT(Appeals) clearly shows that even though the learned CIT(Appeals) has held that the assessee is entitled to the deduction in respect of the dividend received from other co-operative societies as rightly provided in section 80P(2)(d), he has given liberty to Assessing Officer to verify the exact amount of the claim in this regard from annexure 9 of the tax audit report and to allow the same as per law. This being so, it is noticed that the issue has been restored to the file of Assessing Officer and consequently no interference to the findings of learned CIT(Appeals) is called for and consequently ground No.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government of India (GOI) according to which profits of PSS were to be given to GOI and losses were to be recovered from GOI. In the absence of any details, the assessee allocated indirect expenses on proportionate basis in the ratio of turnover of PSS operations to turn over of other activities, which came to Rs.20,34,42,180/-. The Assessing Officer did not allow deduction on this account of indirect expenses stating that it had not furnished any computation as regard to the proportionate allocation of indirect expenses for the PSS operations. 10. It may be stated that the assessee was carrying out PSS operations on the part of the GOI. As per this scheme, assessee was responsible for procuring and marketing a particular agricultu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge of PSS sales to the total sales at 5.87% and, therefore, reduced the quantum of addition to an amount of Rs.1,78,11,260/-. 12. The assessee preferred appeal against the order of the AO before CIT(A). The CIT(A) relying upon the order of the CIT(A) of the same very assessee of the assessment year 2003-04 in appeal No.226/06-07 dated 15th March, 2007 allowed the appeal of the assessee on this account and proceeded to order the deletion of the additions. The CIT(A) while disagreeing with the proportionate disallowance of the indirect expenses of PSS operations recorded as under: "It has been held that there is no case for any proportionate disallowance of the administrative overheads being attributed by the AO to PSS operations in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cular transaction it does not mean that there can be any proportionate disallowance of expenditure. The expenditure incurred by the assessee are in the course of its normal business activities and the genuineness of the same having not been doubted, no disallowance is called for. In this circumstance, the findings of the learned CIT(Appeal) on this issue stands confirmed." 14. In both the cases before us, AO had worked out the percentage of 68.19% (later reduced to 5.87%) for assessment year 2004-05 and 65.73% for assessment year 2003-04 on account of PSS sales. We may note that Section 37 of the Act deals with deletion of all expenses allowed wholly or exclusively for the purpose of business or profession not being expenditure of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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