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TMI Blog2017 (11) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... following the decision of Hon'ble ITAT "I" bench in assessee's own case for A.Y. 1997-98 & 1998-99, without appreciating the fact that the decision of the Hon'ble ITAT for these years was not accepted by the department and an appeal to Hon'ble Bombay High Court is filed. 3. On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in directing the AO to allow higher deduction u/s 80IA of the I.T. Act, without appreciating the fact that the assessee has not properly allocated the expenses attributable to Silvassa Unit. 4. The appellant prays that the order of CIT(A) on the above ground be set aside and that of the Assessing Officer be restored. 5. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary." 2. Briefly stated, the facts of the case are that the assessee company which is engaged in the business of manufacturing of switched capacitors and automatic load monitoring systems had filed its return of income on 30.12.1999 showing total income of Rs. 20,52,640/-. The return of income was revised by the assessee at the same income. The case of the assessee was thereafter taken up for scrutiny assessment u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sa unit amounting to Rs. 23,00,48,370/-, but had restricted the same to the extent of profit of Rs. 5,97,49,227/-. The A.O however restricted the aforesaid entitlement of deduction of the assessee to Rs. 18,25,79,005/-. The A.O while restricting the claim of the assessee towards deduction u/s 80IA calculated the deemed royalty @ 5% i.e. Rs. 1,42,63,365/- on the turnover of ALMS and switch capacitors at Silvassa, as per the last year. The A.O further reduced the profit of Silvassa unit by an amount of Rs. 3,32,06,000/- on the ground that the expenses were not correctly allocated to the Silvassa unit. The A.O after deliberating on certain other issues assessed the income of the assessee at Rs. 22,52,639/- vide his order passed u/s 143(3), dated 26.03.2002. 5. Aggrieved, the assessee carried the matter in appeal before the CIT(A). The assessee assailing the disallowance of lease rent of Rs. 9,18,23,408/- submitted that though on the basis of matching principle the lease rental expenditure was not debited in the profit and loss account as no income by way of sub leasing of the assets had accrued, the claim of the aforesaid amount of Rs. 9,18,23,408/- as an expenditure incurred by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llocation of expenses. It was further observed by the CIT(A) that his predecessor had further held that 5% royalty which was reduced from the turnover of the Silvassa unit would not apply to the turnover pertaining to ALMS. Thus, the CIT(A) finding himself as being in agreement with the view taken by his predecessor adopted the said observations and partly allowed the claim of the assessee towards deduction under Sec. 80IA in terms of his aforesaid observations. 7. The revenue being aggrieved with the order of the CIT(A) had carried the matter in appeal before us. We find that despite the assessee respondent having been intimated about the date of hearing of the appeal had neither appeared on the date of hearing, nor any application seeking an adjournment had been filed. We thus in light of the aforesaid circumstances thus dispose of this appeal in terms of Rule 25 of Appellate Tribunal Rules, 1963, after hearing the appellant revenue and perusing the orders of the lower authorities. 8. The Learned Departmental Representative (for short 'D.R') relied on the order of the A.O and submitted that the disallowance of deduction of Rs. 9,18,23,408/- claimed by the assessee in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see for A.Y. 1997-98 and A.Y. 1998-99. We are of the considered view that no infirmity emerges from the order of the CIT(A), who we find had followed the aforesaid order of the Tribunal. We are of the considered view that as the aforesaid order of the Tribunal had neither been set aside or stayed by the Hon'ble High Court, therefore, we are not persuaded to be in agreement with the Ld. D.R. that the CIT(A) had erred in following the order of the Tribunal and deleting the addition in the hands of the assessee. We thus uphold the order of the CIT(A) in respect of the deletion of the disallowance of lease expenses of Rs. 9,18,23,408/- by him. The Ground of appeal No. 1 & 2 are dismissed in terms of our aforesaid observations. 10. That as regards the relief granted by the CIT(A) in respect of the deduction claimed by the assessee u/s 80IA, we find that the CIT(A) had followed the order of his predecessor for A.Y. 1998-99 and in terms of the observations recorded by him had modified the claim of deduction raised by the assessee u/s 80IA. We find that the CIT(A) while deliberating on the issue under consideration had observed as under : "53 I have considered the facts of the case. On ..... X X X X Extracts X X X X X X X X Extracts X X X X
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