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TMI Blog2017 (4) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, ld. CIT(A) erred in allowing deduction u/s.80IB in respect of 'interest income' of Rs. 57,93,000/- on sale of scrap. 4. Ground no.1 is relating to disallowance of deduction u/s. 80IB on account of common expenses to an extent of Rs. 10,21,06,200/-. 5. Brief facts are that the assessee is a company and engaged in the business of manufacturing and trading of paints, enamels and resins. The assessee is having four units i.e factories located in the State of Jammu & Kashmir as Jammu (Powder), Jammu (Water), Jammu (Solvent) and Jammu (Rajdoot). It has also factories located in Goa & Pondicheery. The assessee initially filed its return declaring total income at Rs. 74,72,61,720/- and claiming Rs. 2,50,58,494/- as refund. Under scrutiny, notices u/s. 143(1) and 143(2) of the Act were issued. In response to which, the assessee filed its various details. 6. Thereafter, the assessee filed its revised return of income on 31-03-11 declaring at Rs. 74,73,92,690/- and claiming refund of Rs. 25,34,998/-. During course of proceedings the assessee claimed its income eligible for deduction under chapter VIA of the Act. According to AO, the assessee prepared a separate Profit & Loss acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvative basis, the Company had apportioned to the Jammu (Water based) unit expenses incurred at the sales offices/depots through which the goods manufactured at the Jammu (Water Based) unit were sold. In this case also, the expenditure incurred in the financial year 2002-03 was taken as the base figure to which was applied the inflation rate of 4.62% to arrive at the real expenditure for the financial year 2007-08 on the preceding year's basis. (This expenditure would in any case have been incurred whether or not there was a new unit. Hence this expenditure cannot be said to have any connection with the new Jammu (Water Based) unit.) Thereafter, the incremental expenditure was determined by deducting the real expenditure as above from the total expenditure incurred in the financial year 2007-08. This incremental expenditure was allocated to the Jammu (Water Based) unit by apportionment in the ratio of branch turnover to total turnover." The above basis has been adopted for arriving at the profit derived from the industrial undertaking Jammu (Water Based) and identical basis for allocation of common head office and selling expense has been adopted with respect to the Jammu (So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nos. 290/Kol/2oo6 & 1166/Kol/2006 dated 13th August, 2007: Annexure - II. 2. Your kindself will note that the same basis of apportionment of common head office and selling expenses has been followed by the company in the year under consideration. The computation of common head office and selling expenses by applying the said basis forms part of Form No. 10CCB already filed with your kindself and the same for Berger Division is also enclosed herewith for ready reference in Annexure - III. 3. On perusal of the aforesaid documents and submission made above including the detailed orders passed by the Hon'ble Tribunal of jurisdiction, in the case of the company itself, your kindself will no doubt appreciate that the basis of apportion of common head office and selling expenses adopted consistently by the company is a scientific and reasonable and does not call for any modification. In other words, the basis of apportionment of common Head Office and selling expenses adopted consistently by the company for arriving at the amount deductable under Section 80IB of the Act has been accepted by the Hon'ble Tribunal of jurisdiction which is the last fact finding authority....." 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to reproduce the relevant finding of the ITAT, C Bench, Kolkata in assessee's own case in ITA Nos. 1889/Kol/04 & 268/Kol/05 for the AYs 2000-01 and 2001-02 the order dated 17/20-10- 2006 is reproduced herein below: "5.5 We have given a careful consideration to the facts of the case and the position in law. We have also considered the method/basis of estimation of common HO & selling expenses. We noted that the assessee has filed an audited certificate with the return to substantiate its claim u/s. 80IB. The profit & loss account of Pondicherry unit has been certified by the auditors' to be true & fair subject to the aforesaid note. From the audit report it is clear that the auditors' arrived at the profit of the Pondicherry unit after considering & apportioning all expenses related to the unit except for common HO & selling expenses. Therefore the auditors' clearly stated that the profit & loss account of the Pondicherry unit gives a true & fair view as regard income & expenditures derived by the unit except for common HO & selling expenses . It was only relating to the common HO & selling expenses the Auditors' gave the said note, The company as a whole has an audi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 20% for allocating common HO exp. Which shows he has taken an adhoc figure & we accept that profit ratio cannot be applied consistently in all years. Moreover, in addition to the audited accounts of the company, the assessee maintains separate accounts for the Pondicherry unit to ascertain its profit & which again is certified by the auditors. The same should be accepted. We are in agreement with the contention of the Ld. A/R which is supported by the decision of the Hon'ble Supreme Court as stated above that once the Department has accepted a decision on a particular issued by not challenging the same before any higher forum it is not open for it to contend in the contrary on the sme issue in a later year. We would reiterate that in the present case the Department has accepted the basis of allocation of common head office and selling expenses in the AY 98-99 and there is no dispute as to the fact that the same basis has been adopted by the assessee in AY 2000-01 which are before us. Following the ratio laid down in the decisions rendered by the Hon'ble Supreme Court, we uphold the decision of the CIT(A) on this issue and thus dismiss Ground Nos. (iii) & (iv) raised by the Depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there in the order passed u/s. 263 by the Ld. CIT-IV, Kolkata for A.Y 2000-01 but his order was later on quashed by the Hon'ble ITAT, Kolkata. Accordingly, assessee's appeal on ground 2(a), (b) and ( c) are allowed." 15. Before us the ld.DR relied on the order of the AO. On the contrary, the ld.AR submits the issue in hand is covered by the orders of various Hon'ble High Courts and referred to page no's.175 and 176 of the paper book. 16. Heard rival submissions and perused the material available on record. We find that the issue in hand is covered by various Hon'ble High Courts in the cases of DClT vs Harjivandas Juthabhai Zaveri reported in 2581TR 785 (GUj), ClT vs Sundaram Clayton Ltd reported in 1331TR 34 (Mad), CIT vs Wheels India Ltd reported in 141 ITR 745 (Med) and Arati Industries Ltd Vs DCIT reported in 95 TTJ 14 (Ahm) as rightly pointed out by the ld.AR of the assessee before us. We find that the AO following the same allowed the deduction and relevant finding of which is reproduced herein below: "With respect to the second issue the assessee submitted that ".....other income' of Rs. 15,86,OOOI- as appearing in the Profit & Loss A/c of the Unit at Pondicherry c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the assessment proceedings the AO found that the assessee has earned dividend income of Rs. 20,53,923/- and offered Rs. 21 ,921/- as expenditure incurred towards earning such exempt income. According to AO, the assessee invested Rs. 29 .52 crores against total loan fund of Rs. 78 . 05 crores and observed that investment is made only 37.82 %. The AO not satisfied with the correctness of claim of assessee in respect of determined expenditure as incurred in relation to exempt income and applying Rule 8D disallowed Rs. 38 ,07,778 /- for the purpose of computation of expenditure u/ s. 14 A of the Act. 20. Before the CIT- A the assessee contended that all the details relating to said expenditure were filed before the AO and without satisfying the precondition as required to be followed before application of Rule 8D, disallowed the impugned addition arbitrarily. The CIT- A observed that the AO rightly applied the Rule 8 D as he was not satisfied with the expenditure as offered by the Assessee on its own and confirmed the impugned addition made by the AO . 21. Before us the ld.AR submits that the assessee on its own disallowed to an extent of Rs. 21 ,921/- which involves electricit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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