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TMI Blog2015 (7) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts for the instant year, vis-à-vis the preceding year, respectfully following the precedent [2014 (4) TMI 618 - ITAT DELHI], we direct that no deduction can be made from the eligible profits on account of ‘Brand.’ AO held that profits to the extent of 5% of the turnover of the company were attributed to the past experience, expertise and knowledge, etc., of related and connected persons and not to the eligible unit. That is how, he allowed deduction for a sum of ₹ 32.40 lac on account of salary paid to directors and, apart from that, he also allowed a further deduction of ₹ 23,27,164/-, being the amount in excess of salary paid to directors up to 5% of total turnover. This resulted into reduction in the amount of eligib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , AM: These two cross appeals - one by the assessee and the other by the Revenue - arise out of the order passed by the CIT(A) on 09.11.2012 in relation to the assessment year 2009-10. 2. Ground nos. 2-4 of the assessee s appeal and all the grounds of the Revenue s appeal are against the computation of deduction u/s 80IC of the Income-tax Act, 1961 (hereinafter called the Act ). 3. Briefly stated, the facts of the case are that the assessee is a manufacturer of auto parts and accessories having eligible unit in Haridwar for the purposes of section 80-IC of the Act. Return of income was filed with gross total income at ₹ 2,69,85,125/- on total turnover of ₹ 11.13 crore. An income of ₹ 2,69,25,260/- was claimed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also not approved. That is how cross appeals have been filed on these issues. 4. We have heard the rival submissions and perused the relevant material on record. It is observed that the AO has referred to the proceedings for the preceding year in the assessment order. Both the assessee as well as the Revenue preferred respective appeals against the order of CIT(A) for the AY 2008-09. A copy of the Tribunal order dated 10.01.2014 for the immediately preceding assessment year is available on record. 5. In so far as the question of reduction of the eligible profits on account of brand value is concerned, it is noticed that the AO attributed 20% of profits to the brand , which the ld. CIT(A) restricted to 10%. The Tribunal, on simil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restricting the amount of deduction to 12% of the remaining profits, the ld. DR vehemently argued that the assessee also earned income from its branches and Head office, which was not eligible for any deduction u/s 80IC. The sum and substance of his contention, and rightly so, was that deduction can be allowed only in respect of income from the manufacturing activities carried out at Haridwar unit. It can be seen from the assessment order that the assessee categorically stated before the AO that all the sales were made from manufacturing unit at Haridwar and the branch offices etc. were only engaged in sale promotion and rendering after-sales services for the warranty provided on the products. Even copy of VAT return in support of the clai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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