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TMI Blog2013 (6) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... 937/- was incurred by the assessee was not brought on record before us by both the parties & no material to show the purpose for which loan in question was taken by the assessee and how the loan amount for which the interest expenditure was utilized during the period under consideration. The year-wise breakup of investment made in the Rudrapur unit was also not filed by both the parties. Thus in absence of complete details restore this part of the ground of appeal back to the file of the AO for proper verification of the utilization of the loan amount in respect of the interest expenditure - appeal of the assessee is partly allowed for statistical purposes as stated above. - ITA No.247/Kol/2012 - - - Dated:- 18-6-2013 - Sri N. S. Saini AM And Sri Mahavir Singh, JM,JJ. For the Appellant : Shri S. Jhajharia For the Respondent: Shri K. N. Jana,Sr. DR ORDER Per Shri N.S.Saini, AM This is an appeal filed by the assesee against the order of ld. CIT(A)-VI, Kolkata dated 30.12.2011. 2. The sole issue involved in this appeal is that the ld. CIT(A) erred in confirming the action of the AO in restricting the deduction u/s 80IC to only at Rs.90,62,385/- in place of Rs.1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rive at the correct profit of this unit. The AO then observed that the assessee company has claimed deduction of Rs.1,14,96,983/- u/s 80IC in respect of profit from Rudrapur Unit. As above finance charge of Rs.21,34,598/- was allocated to Rudrapur unit. Head office expenses of Rs.3 lakhs was allocated to Rudrapur Unit. After reducing the financial charge and head office expenses, the deduction of Rs.90,62,385/- (11496983 - 2134598 - 300000) is allowed u/s 80IC in respect of Rudrapur unit. 4. Being aggrieved against such order the assessee filed an appeal before the ld. CIT(A). Before the ld. CIT(A) the assessee submitted that copy of the audited account of the head office expenses is enclosed. From a perusal of the same it will be seen that no loan had at all been borrowed by the head office and as will further appear from the Balance sheet of the Head office, it had neither borrowed any loan nor advanced any loan to either Faridabad or Rudrapur and the amount due from these two units only represented the profits accruing in these two units and which have been transferred to Head Office for accounting purposes. It was submitted that therefore the action of the AO in allocating pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited any Head Office expenses to Rudrapur Unit for which there is no reasonable explanation given by the appellant. The assessee is having total assets for Rudrapur Unit amounting to 1.Rs. 11.60 crores and Rs. 5.43 crores as on 31.3.08 and 31.3.07 respectively. 7. The assessee had taken secured and unsecured loans throughout the period before and after establishing Rudrapur Unit. The Head Office expenses amounts to Rs.30,29,642/-. The Assessing Officer has allocated head office expenses on the basis of turnover while the expenses for finance charges have been allocated on the basis of average value of fixed and current assets including loans and advances. The plea of the assessee cannot be accepted that no funds have been taken on loan for establishing Rudrapur Unit. The assessee had taken loans before setting up of Rudrapur Unit. It cannot be accepted that all the funds of the assessee in the form of share capital has gone into the setting up of Rudrapur Unit while there was a negative reserve and surplus of Rs. 4.4 crores at the time when the Rudrapur Unit was being established. The assessee did not have sufficient spare funds to establish Rudrapur Unit without taking extra loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and no part of the expenses was allocated towards income of Rudrapur unit. According to the AO the Head Office expense was incurred for all the three units and therefore should have been allocated to all the three units. The AO accordingly allocated Rs.3,00,000/- towards Rudrapur unit on the basis of sale relating to the three units. Further the AO observed that the assessee has incurred interest expenditure of Rs.1,53,25,937/- and the entire expenses was claimed from income of Kolkata and Faridabad units. According to the AO as the loan amount was also utilized for Rudrapur unit therefore he apportioned the interest expenditure of Rs.24,34,598./- for Rudrapur unit on the basis of total assets of the three units. Thereby the AO reduced the income of the Rudrapur unit by Rs.24,34,598/- net and increased the income of the other two units with the same amount. As a consequence to this deduction u/s 80IC of the Act was reduced by Rs.24,34,598/-. On appeal the ld. CIT(A) confirmed the action of the AO. 7.1. Before us the ld. AR of the assessee submitted that no expenses in the Head Office was incurred for the Rudrapur unit. We find that no details of the Head Office expenditure was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... generated by the company during the period 31.03.2006 and 31.03.2007 could not have been invested for the purpose of investment in Rudrapur unit. However, at the same time, we also find that merely because the loan amount has gradually reduced from 31.03.06 to 31.03.2008 and as because there was profit earned by the company during the years ended 31.03.2006 to 31.03.2008 it cannot be concluded that the investment in the Rudrapur unit was made from the profits so generated only. We find that the party wise details of the loan on which the interest expenditure of Rs.1,53,25,937/- was incurred by the assessee was not brought on record before us by both the parties. Both the parties before us has brought no material to show the purpose for which loan in question was taken by the assessee and how the loan amount for which the interest expenditure was utilized during the period under consideration. The year-wise breakup of investment made in the Rudrapur unit was also not filed before us by both the parties. In absence of complete details before us we are not in a position to adjudicate this part of the ground of appeal completely. In the above circumstances, in our considered opinion, i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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