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TMI Blog2016 (2) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... is no need to show such expenditure separately for Dombivali Unit as the assessee has also claimed such expenditure in respect of Dombivali unit under Schedule–11 like Vapi Unit. Therefore, as the assessee has failed to demonstrate with convincing reason that no indirect expenditure on account of salary and bonus was incurred in respect of Vapi Unit, we uphold the view of the Departmental Authorities that salary expenditure has to be allocated to both the units on the basis of turnover. - Decided against assessee Assessment of interest income twice by the Assessing Officer - plea of the assessee that interest income has been assessed twice as part of the business income having shown by the assessee in the Profit & Loss account and again as income from other sources - Held that:- We think it appropriate to direct the Assessing Officer to verify assessee’s claim and decide the issue accordingly. We make it clear that the Assessing Officer while deciding the issue should bear in mind that the same income cannot be taxed twice. - Decided in favour of assessee by way or remand - ITA no.3270/Mum./2014 - - - Dated:- 6-1-2016 - SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI N.K. BILLAI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dication. 5. In grounds no.2 and 2.1, assessee has challenged the action of the Assessing Officer and learned Commissioner (Appeals) in adjusting the brought forward loss and depreciation before allowing exemption under section 10B of the Income Tax Act, 1961 (for short the Act ). 6. Briefly stated the facts are, assessee a company is engaged in the business of manufacturing of chemicals. For the assessment year under consideration, assessee filed its return of income on 26th September 2009, declaring nil income after claiming exemption under section 10B of the Act. During the assessment proceedings, the Assessing Officer, while verifying assessee s claim of exemption under section 10B, noticed that assessee has two manufacturing units i.e., one at Vapi which is an eligible unit under section 10B and another unit at Dombivali, which is a non eligible unit. He further noticed that in respect of the eligible unit at Vapi, assessee had declared net business income of ₹ 8,93,29,055, and in respect of non eligible unit at Dombivali has shown net loss of ₹ 52,689. From the computation of income filed by the assessee, it was noticed by the Assessing Officer that assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material available on record. On a careful reading of the impugned assessment order, we notice that though the Assessing Officer, in the assessment order has, observed that brought forward business loss has to be set off before claim of deduction under section 10B but while computing the deduction under section 10B, the Assessing Officer in fact has not made any such adjustment / set off of unabsorbed depreciation and brought forward business loss. However, on a perusal of the orders of the Tribunal for the assessment year 2005 06 to 2008 09 in assessee s own case which were placed before us by the learned counsel in the course of hearing, we notice that the Tribunal is consistent in its view that unabsorbed depreciation and brought forward business loss of non eligible unit cannot be set off against the current profit of eligible unit while computing deduction under section 10B. Moreover, the High Court has upheld the aforesaid view of the Tribunal while dismissing Department s appeal for the assessment year 2006 07 and 2007 08 in ITA no.2083 of 2012 and 2301 of 2011 respectively. Since the learned Commissioner (Appeals), while deciding ground no.3 raised by the assessee has dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s) observed that when both the units have shown consumption of raw material, packing material as well as sales turnover at a substantially high figure, it is not possible that no expenditure under the head office and administrative expenditure consisting of salary expenditure would have been incurred for the eligible (Vapi) unit. He observed, without administrative staff, it would not be possible for the assessee to maintain the details of various expenditures under different heads. He held, when such huge turnover is reported by both the units, there is need for matching staff to carry out various administration and other related works. Accordingly, he upheld the decision of the Assessing Officer in re allocating the salary expenditure to both the units on the basis of turnover. 14. Learned counsel reiterating the stand taken before the Departmental Authorities submitted, as the assessee has maintained separate books of account for both the units and allocated expenditure on actual basis, there is no reason for re allocating the salary expenditure relating to Dombavili unit. Drawing our attention to Schedules 11 and 12 of the Profit Loss account, learned counsel submitted, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t have been included under the head Personnel Cost as shown in Schedule 11, neither appears to common sense nor logical as in that case, there is no need to show such expenditure separately for Dombivali Unit as the assessee has also claimed such expenditure in respect of Dombivali unit under Schedule 11 like Vapi Unit. Therefore, as the assessee has failed to demonstrate with convincing reason that no indirect expenditure on account of salary and bonus was incurred in respect of Vapi Unit, we uphold the view of the Departmental Authorities that salary expenditure of ₹ 10,88,678, has to be allocated to both the units on the basis of turnover. Thus, grounds no.3.1 and 3.2 are dismissed. 16. Ground no.4, relates to assessment of interest income of ₹ 1,17,254 twice by the Assessing Officer. 17. The learned Counsel for the assessee submitted before us, assessee treating the interest income of ₹ 1,17,254, as business income, has credited it to the Profit Loss account. The Assessing Officer, while completing the assessment has assessed the interest income of ₹ 1,17,254, under the head Income From Other Sources without taking note of the fact that asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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