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TMI Blog2015 (4) TMI 754X X X X Extracts X X X X X X X X Extracts X X X X ..... ther or not the impugned allocation of software development expenditure in export and domestic sales division is justified. The Assessing Officer has based his findings on the sales quantities of the software to observe that the very software has been sold in domestic and export market. The assessee’s books treating the impugned expenditure only for domestic division have nowhere been rejected. Therefore, we deem it appropriate that the Assessing Officer needs to re-examine the entire issue afresh as per law. The assessee shall be at liberty to produce all its relevant details within three effective opportunities of hearing. We find that a lot of water has flown downstream since the end of the relevant assessment year 2001-02. It would be appreciated if the learned Assessing Officer passes his consequential order within a period of four months from getting copy of this order. - Matter remanded back. - ITA No.3094/Mds/2014 - - - Dated:- 5-3-2015 - Shri A. Mohan Alankamony And shri S.S. Godara JJ For the Appellant : Shri S. Raghunathan, Advocate Shri S. Sankara Narayanan, Advocate For the Respondent : Shri P. Radhakrishnan, JCIT ORDER Per S.S. Godara, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision, it had already allocated 80.03% of the salaries to the export division. Hence, further allocation of software development cost written off of ₹ 2,47,420/- at 50-50 ratio is not required. The relevant portion of the assessee's submissions dated 12.08.2014 are as under: The Appellant, Eco Tech Software Pvt Ltd Eco Tech or the Appellant') during AY 200.1-02 in its return of income declared gross total income of ` 4,80,856/ after claiming deduction of lOB unit at ₹ 237,134/- and thereby determined the taxable income at ₹ 243,722/. The assessment was re-opened under 147 for the relevant year and during the assessment proceeding, AO taken one line item expenditure towards Software Development written off of ₹ 247,420/- considered in Export Division, and reallocated 50/50 basic to domestic division and export division. Thereby sought to disallow software development expenses of Rs: 123.710/ - allocated to domestic unit by the Appellant. The Appellant submits that the cost allocation was carried out based on the time clocked by the technical team in respect of each project -Domestic Division! Export Division. The Assessing Officer cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttention that AO durinq the Assessment proceeding sought to disallow expenditure towards software development written off of ₹ 123,710/ allocated to domestic unit. While working out the revised assessed income, AO instead of reducing ₹ 123, 71 0/-, erroneously added back the said amount which has resulted in double adjustment. The actual assessed income and the assessed income worked out by Assessing Officer is given below:- Description Actual income to be assessed, rectifying the above Assessed income worked by AO Domestic income 1,39,534 1,39,534 Export Division income 288,180 535,600 Total 427,714 675,134 Add:Inadmissible as per return 499,589 499,589 Total 9,27,303 1,174,723 Less: Depreciation as per IT 446,447 446,447 Total 480,856 728,276 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,11,890 Less: Apportioned expenses as above: 1,23,710 Net income of the export division : 2,88,180 Less: Deduction u/s 10B: Turnover of export unit : 55,54,030 Export turnover realized : 31,97,578 Revised net income as above: 2,88,180 Deduction u/s.10B Profit of the EOU x Export Turnover Total Turnover i.e. 2,88,180 x 31,97,578 = 1,65,911/- 55,54,030 Net income from export unit after 10B deduction: ₹ 1,22,268/- Therefore, the Assessing Officer is directed to determine the net income from the export division (before allowing deduction u/s.l0B) at ₹ 2,88,180/- as against ₹ 5,33,600/- determined by him in his order. Similarly, the allowable deduction u/s.l0B is t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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