2016 (12) TMI 545

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..... SEZ unit could have also been benefitted by the those expenses. A.R submission that the Block insurance policy was taken only for Head office and not for SEZ unit requires examination. Accordingly we restore the issue relating to “Block insurance policy” to the file of the AO with the direction to examine the relevant policy documents and if it is found that the same has been paid in respect of Head office only, then the AO should exclude the same from common expenses. In respect of remaining expenses confirmed by Ld CIT(A), in our view, the order of Ld CIT(A) does not call for any interference, since the allocation of those expenses in the sales ratio appears to be reasonable. Accordingly we confirm the order passed by Ld CIT(A) in .....

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..... certain common expenses need to be allocated to SEZ unit. Accordingly he identified certain common expenses and apportioned the same in the ratio of turnover between head office and SEZ unit. Accordingly the AO allocated a sum of ₹ 24,09,095/- to SEZ unit out of expenses booked in the Head office. The AO also allocated a further sum of ₹ 5.00 lakhs to SEZ unit out of finance and other common expenses, which could not be specifically identified. Thus, a sum of ₹ 29,09,905/- in aggregate was allocated to SEZ unit. 5. The Ld CIT(A) did not agree with the nature of expenses selected by the AO. Accordingly he excluded certain expenses and directed the AO to apportion an aggregate amount of ₹ 1,59,14,575/- between Head .....

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..... ith the obvious purpose of boosting up the profit of SEZ unit. Since there is common management and interlacing of funds between the Head office and SEZ unit, the Ld CIT(A) was justified in partially confirming the addition. 8. Having heard rival submissions, we are of the view that there is merit in the contentions of the Ld D.R. It is not in dispute that both Head office and SEZ unit are under common management. Further there is interlacing of funds also. The books of accounts of both the units were maintained by the assessee only. Hence it cannot be altogether ruled out that the benefit of various expenses booked in the Head officer did not go to the SEZ unit. The expenses listed out by the AO and confirmed by Ld CIT(A) such as Foreig .....

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