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TMI Blog2014 (8) TMI 950X X X X Extracts X X X X X X X X Extracts X X X X ..... llocating additional amount of expenses and reducing the amount of deduction allowable u/s 80IA in the earlier years also, i.e., in AY 1995-96, 1998-99 and 1999-2000, but did not initiat any penalty proceeding in respect of the above said adjustment. Though the principle of res judicata is not applicable to income tax matters, yet the fact that the AO did not levy penalty in the earlier years in respect of similar kind of adjustments would definitely needs to be taken into account. - CIT(A) was not justified in confirming the penalty levied u/s 271(1)(c) of the Act. Accordingly, we set aside the order of ld. CIT(A) and direct the AO to delete the penalty levied u/s 271(1)(c) - Decided in favour of assessee. - I.T.A. No.337/Mum/2011 - - - D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perly allocate certain expenses like Common management expenses, computer charges, vehicle expenses, travelling expenses and other expenses to Atenolol division, even though they were incurred in common for both the units. The AO by considering the nature of expenses allocated a sum of ₹ 11.60 lakhs to Atenolol division. Accordingly, the AO re-worked the profit derived from Atenolol division which resulted in a loss of ₹ 13.20 lakhs. Since there was loss in the Atenolol division, the AO rejected the claim for deduction u/s 80IA of the Act. In the appellate proceedings, the ld. CIT(A) directed the AO to adopt the job work charges ₹ 140/- per kg and thus reversed the decision of the assessing officer. However, with regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the profit from that division got reduced by the corresponding amount. The assessee had claimed deduction u/s 80IA @ 30% of the profit and due to reduction of the profit, the deduction under the above said section came to be reduced by 30% of ₹ 11.60 lakhs, which resulted in enhancement of Total income by an equal amount. The ld. AR submitted that the AO has allocated the expenses by estimating the amount to be allocated on an adhoc basis of 10% and he did not bring any material to find fault with the allocation made by the assessee. Accordingly, the Ld A.R submitted that the AO has only acted upon presumptions and surmises in this regard. The ld. AR further submitted that the AO had made such kind of variations in earlier years al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income. It is also submitted that the AO has carried out similar exercise of allocating additional amount of expenses and reducing the amount of deduction allowable u/s 80IA in the earlier years also, i.e., in AY 1995-96, 1998-99 and 1999-2000, but did not initiat any penalty proceeding in respect of the above said adjustment. Though the principle of res judicata is not applicable to income tax matters, yet the fact that the AO did not levy penalty in the earlier years in respect of similar kind of adjustments would definitely needs to be taken into account. Considering the facts and circumstances prevailing in the instant case and also in view of the foregoing discussions, We are of the view that the ld. CIT(A) was not justified in con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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