9911796707
TMI Blog2013 (7) TMI 409X X X X Extracts X X X X X X X X Extracts X X X X ..... tely 24.2 sq.mtr. of area of the second floor was occupied by the STP unit. The report also qualifies that they relied upon the data submitted by the assessee to STP Bangalore and some of the other costs were also taken on the basis of the exertions made by the company. Even the current year's addition to fixed assets have been allocated to STP/non-STP units on the basis of area for which these are procured. Further, in note No. 9 it was also qualified that the Auditors are relied upon assessee's representations that Bangalore unit is self-sufficient unit and therefore no portion of common expenses are need to be attributed thereto in computing profits of the unit. These notes to the audit report do indicate that the claim of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allow deduction for profits computed by the alternate working submitted by the Appellant, without prejudice to the profits computed in the return of income." 3. Briefly stated, assessee has claimed deduction under section 10A from its STP unit to an extent of Rs.3,66,81,655/-. The AO examined the correctness of the claim of exemption/deduction under section 10A relating to the profits of 100% EOU established in Bangalore. The assessee has various units at Mumbai, Pune and Bangalore. Assessee was asked to submit separate P L Account for each of the units and also corporate office indicating the expenses, both, direct and indirect, attributable to such units and the basis of apportionment of indirect expenses for the last three years. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nses should be reallocated on the basis of employees working on the project. The A.O. has pointed out in the assessment order that there is no basis for allocating common expenses on the basis of employees working on the projects. Hence, the reallocation submitted by the authorized representative in the return of income cannot be accepted. The A.O. has also pointed out that the appellant has not filled separate P L Account of two units of Mumbai and Pune and head office expenses which are incurred by the Principal office situated at Mumbai. Therefore the reallocation submitted by the appellant cannot be accepted. 7. I also do not agree with the findings of the A.O. that the employees cost should be reallocated in the ratio of 25% and co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit u/s. 115JB is purely consequential." In view of the above order of CIT(A), assessee is aggrieved and raised the ground. 5. The learned counsel for the assessee reiterated the detailed submissions made before the CIT(A) with reference to allocation of expenditure, direct and indirect, and also why the expenditure allocation made by them are to be accepted. He referred to the submissions made before the learned CIT(A), placed in the paper book at page 64 onwards. (In fact these submissions were also extracted by the CIT(A) in his order in para 5.) After making various submissions, the learned counsel for the assessee reiterated the direct and indirect cost allocated by the assessee. As far as the legal principles are concerned, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... econd floor was occupied by the STP unit. The report also qualifies that they relied upon the data submitted by the assessee to STP Bangalore and some of the other costs were also taken on the basis of the exertions made by the company. Even the current year's addition to fixed assets have been allocated to STP/non-STP units on the basis of area for which these are procured (in the absence of any independent means of verification relied on management representation in this regard). Further, in note No. 9 it was also qualified that the Auditors are relied upon assessee's representations that Bangalore unit is self-sufficient unit and therefore no portion of common expenses are need to be attributed thereto in computing profits of the unit. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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