9911796707
TMI Blog2012 (8) TMI 487X X X X Extracts X X X X X X X X Extracts X X X X ..... es incurred in the head office have therefore, been correctly attributed on the basis of turnover - against assessee. Disallowance of expenses under section 14A r.w.r. 8D - Held that:- Rule 8D is applicable only from assessment year 2008-09 and, in respect of prior years, expenses relating to exempt income both direct and indirect have to be computed on a reasonable basis after allowing opportunity of hearing to the assessee - as in this case, CIT (A) has directed the AO to compute the disallowance after allowing opportunity of hearing to the assessee no infirmity in the order of CIT(A) of disallowance - against assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ore CIT(A) that the assessee had maintained books of account which had been audited as per which there was profit of Rs.17,02,749/-. It was also submitted that the 10A unit had been set up in the financial year 2001-02 and deduction was available for 10 consecutive years and, therefore, there being profit in this year, claim of deduction should be allowed. CIT(A) however did not accept the contentions raised. It was observed by him that the profit of a unit has to be computed after deducting all expenses whether direct or indirect. The assessee had allocated only direct expenses and indirect expenses relating to head office had not been deducted, which was not correct. He agreed with the AO that allocation of expenses relating to head offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was loss of Rs.16,80,950/- The AO has therefore disallowed claim of deduction which has been upheld by the CIT(A). The ld. AR has argued that attribution of expenses of the head office on turnover basis is not correct. We are however unable to accept the arguments advanced. The head office caters to the needs of all the units and therefore the head office expenses are required to be attributed to the various units and, in our view, attribution of expenses based on turnover is quite appropriate. While working out the profit of the unit, the indirect expenses incurred in the head office have therefore, been correctly attributed on the basis of turnover. We see no infirmity in the order of CIT(A) confirming the order of AO and the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s.6,13,339/-. The AO however computed the disallowance as per rule 8D which came to Rs.10,95,820/-. The AO thus made an addition of Rs.4,82,481/-. In view of the judgment of Hon'ble High Court of Bombay in the case of Godrej and Boyce Mfg. Co. vs. DCIT (supra), Rule 8D is applicable only from assessment year 2008-09 and, in respect of prior years, expenses relating to exempt income both direct and indirect have to be computed on a reasonable basis after allowing opportunity of hearing to the assessee. In this case, CIT(A) has directed the AO to compute the disallowance in the light of the decision of the Hon'ble High Court of Bombay (supra), and after allowing opportunity of hearing to the assessee. We, therefore, see no infirmity in the or ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
