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TMI Blog2016 (5) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... ating the profits of all units by applying the net profit rate of 4.57% to all units. Such net profit rate of 4.57% was percentage of profits of business as a whole and not of individual division/unit. By applying this percentage of profit of 4.57% the AO has reworked profits of the eligible units u/ s 80-IB of the Actbby application of fixed net profit rate of 4.57% to all units by AO was on assumption basis only without pointing out any defect, error in the books of accounts of all units maintained separately. Without quoting any example, on assumption basis, the AO held that the transactions were not at arm's length between the associate enterprises. The AO has not explained as to how he was not satisfied about the correctness or complet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, dated 24/08/2012 for Assessment Years 2009-10 2010-11 respectively. 2. Since grounds of both the appeals are identical in both the assessment years hence we reproduce as lead grounds of appeal for A.Y. 2010-11 bearing ITA No. 5433/Mum/2013 as under: (i) The Learned CIT(A) has erred in law and on facts in deleting the reduction of deduction u/s 80IB as worked out by the Assessing officer without properly appreciating the factual and legal matrix as clearly brought out by the Assessing Officer in the Assessment Order. (ii) The Learned CIT(A) has erred in law and on facts in not appreciating the fact that net profit from 80IB units were much higher than non 80IB units despite of the fact that the business was the same. (iii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The AO passed order of assessment and made disallowances in quantum of 80IB deduction and also made certain disallowances out of the claim of expenses and depreciation and made addition on account of difference between opening stock and closing stock. 4. Aggrieved by the order of the AO, assessee filed an appeal before the CIT(A) and the CIT(A) partly allowed the appeal. 5. Aggrieved by the order of the CIT(A) the revenue filed the present appeal before us on the grounds mentioned herein above. Ground No. i,ii,iii:- Since all the grounds raised by the revenue are inter-connected and interrelated therefore we thought it fit to dispose off the same through present common order. 6. We have noticed that the ld. CIT(A) has de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r years. On appeal filed by appellant for AY 2007-08,2008-09 2009-10, my predecessors i.e. CIT (A) have not approved AO's action of (i) applying fixed percentage of profit to all eligible/non-eligible units (ii) allocation of expenses made by AO to all units (iii) recalculation of profits of all units. In appeal orders of earlier years, the CIT (A) have not confirmed the AO's action of reducing the appellant's claim of deduction u/ s 80-IB of the Act. Thus, this issue of reduction of appellant's claim of deduction ix] s 80- IB of the Act was also there in earlier years. I have perused the appeal orders of earlier years. In appeal order of A Y 2009-10, my predecessor has made a detailed discussion in respect of appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, AO's stand in consolidating the profits of whole company was therefore, incorrect and was based on conjectures, surmises and assumptions. My predecessor further held that without any material on record applying consolidating/average profit @ 1.83% of the gross receipts to all the units i.e. eligible 80-IB units/non-eligible 80-IB units is not maintainable. The reduction of deduction /l s 80-IB claimed by appellant at ₹ 5.56 crores to ₹ 1.39 crores by the AO was therefore, deleted by my predecessor in appeal order for A Y 2009-10. The facts of the year under consideration are identical to those of earlier years. By following findings of earlier years' assessment order, in the year under consideration also the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the above facts and circumstances and also considering that the facts of the year under consideration are identical to those of earlier years, by following the appeal orders of earlier years, it is held that the AO was not justified in applying the net profit ratio of 4.57% to determine the profits of units eligible for deduction u ] s 80-IB of the Act. The AO's action of reducing the appellant's claim of deduction u /s 80-18 at ₹ 6,26,68,195 j- to ₹ 1 ,32,12,000/ - is therefore, disapproved. Consequently, the disallowance made by AO on account of reducing the appellant's claim of 80-IB of the Act is deleted. In the result, this ground of appeal is allowed. 4. We have heard the counsels for both the part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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