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TMI Blog2018 (2) TMI 429X X X X Extracts X X X X X X X X Extracts X X X X ..... l Laboratory. From perusal of Form 3CH (Rule 6(6) of the I.T. Rule) which is an order of approval of scientific research programme placed in Paper Book, we find that the assessee has paid ₹ 2,20,800/- through cheque No.265292 dated 22.11.2010. We therefore accept the assessee’s alternate plea and allow the expenditure of ₹ 2,20,800/- as against ₹ 3,86,400/- claimed by the assessee. - ITA.No. 3180/AHD/2014 - - - Dated:- 28-12-2017 - SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER For The Appellant : Shri Sanket Bakshi, A.R. For The Respondent : Shri V. K. Singh, Sr. DR ORDER PER MANISH BORAD, ACCOUNTANT MEMBER This appeal of the assessee relating to assessment year 2011- 12 is directed against the order of Learned Commissioner of Income Tax (Appeals)-III, Baroda dated 28.09.2014 which is arising out of order u/s.143(3) of the Act dated 30.01.2014 framed by ACIT, Circle-4, Baroda. 2. Briefly stated facts as culled out from the records are that the assessee is a limited company engaged in the manufacturing of industrial chemicals. The assessee company is a joint venture between Silox S. A. Belgium and Tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer by further allocating the common expenses incurred for various units run by the assessee. At the outset, ld. Counsel for the assessee submitted that the issue raised in these three grounds stands squarely covered by the decision of the Tribunal in assessee s own case relating to Asst. Years 2008-09 and 2009-10 vide ITA Nos. 1073, 1074, 1086 and 1087/Ahd/2013 order dated 17.01.2017. 6. On the other hand ld. Departmental Representative supported the order of lower authorities. 7. We have heard the rival contentions and perused the records placed before us and gone through the decision of Tribunal relied by ld. Counsel for the assessee. We find that the assessee which is engaged in the business of manufacturing industrial chemicals runs various manufacturing units named as Silvassa Unit I, Silvassa Unit II and other three units situated at Atladra, Ekalbara and Bhiwandi. Assessee has claimed deduction u/s.80IB of the Act @30% of the profit earned from Silvassa Unit II at ₹ 2,88,01,427/-. During the course of assessment proceedings, ld. AO observed that there were certain expenses relating to Salary, Wages, Bonus and etc., which even though seems to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it followed the orders relating to assessment years 1981-82 to 1991-92 dated 28.5.2002 deciding the issue in favour of the assesses. Thus, the assessee's appeals were allowed. Learned counsel for the assessee placed before this Court the Tribunal's order passed in the assessee's own case on the identical claim dealt with under paragraph 28 of the order relating to assessment year 1984-85, paragraph 53 of the order relating to assessment year 1987-88 and paragraph 77 of the order relating to assessment year 1990- 91. The Tribunal pointed out that the Head office monitored the requirement of finance and other action which were necessary for running all the units. Consequently, the administrative expenses though relatable to the various units, are expenses incurred in general, towards the well being of the business. Thus, the Tribunal granted the relief to the assessee holding that the head office expenses could not be proportionately distributed among the various units or allotted to any particular unit independently. The order passed by the Tribunal had not been canvassed by the Revenue before this Court by way of filing any Tax Case (Appeal) and that the order of the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 6. As far as the above slated decision is concerned, the deduction is based on Rule 5. In the absence of any specific provision in the Income Tax Act and more so in the absence of any such provision, there being no material to show that the expenditure though common were with reference to individual units relatable to the income earned, we do not find any justifiable ground to accept the plea of the Revenue. The assessee had taken the contention that the expenses incurred was for the overall management of the units as well as for providing finance. In the circumstances, the decision of the Apex Court is misplaced. 7. As far as the decision of the Madhya Pradesh High Court reported in (2012)81 CCH 031 PRESTIGE FOODS LIMITED v. CIT, is concerned, the assessee did not furnish the expenses incurred by the units for the purpose of considering the deducibility. The Madhya Pradesh High Court viewed that in the absence of any details being made available by the assessee to establish that the particular expenses were incurred for its particular unit out of its two units, the expenses had to be treated as one for both the units which has to be divided based on the proportionate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or the head office expenses which have no relevance to the industrial undertaking cannot be deducted in respect of the said undertaking while computing the profits and gains of the undertaking. (Para 10) Revenue submitted that any research and development activity carried out by the head office would automatically ensure to the benefit of the units/industrial undertakings. The submission proceeds on an erroneous basis and does not lake into consideration the facts of the case at all in the instant case, the said R D activities were in relation in the new drugs. There is nothing to indicate that in the event of the assessee deciding to commercially exploit the benefits of the R D work, the products would he manufactured by the said units. The fallacy in the submissions proceeds on the hypothetical basis that the said products would be manufactured by each of the units or any one of them. (Paras 16 17) The fallacy also arises on account of an erroneous presumption that the benefit of any R D activity can only be exploited by an enterprise utilizing the same in its manufacturing activities. That is not so. An enterprise can always assign the benefit thereof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue are that the assessee paid an amount of ₹ 2,20,800/- to National Chemical Laboratory, which is a unit approved u/s.35(2AA) of the Act and claimed weighted deduction of 175% i.e. ₹ 3,86,400/-. However, during the course of assessment proceedings, assessee was unable to submit Form 3CI, (which is a receipt of payment) before the Assessing Officer. As a result thereof deduction of ₹ 3,86,400/- was denied. Appeal against this disallowance before ld. CIT(A) did not bring any relief to the assessee. 12. Now the assessee is in appeal before the Tribunal. 13. Ld. Counsel for the assessee submitted that it is true that Form 3CI was not submitted before the assessing authority but the assessee made an application to the National Laboratory in Form 3CG and research programme carried out by the assessee is also approved by the CSIR in Form 3CH. He further contended that as per Section 35(2AA) of the Act, the requirement of claim of weighted deduction is the payment of the amount with the specific direction under an approved programme. Ld. Counsel further made an alternative submission that if in case weighted deduction of 175% is not given for non submission of F ..... X X X X Extracts X X X X X X X X Extracts X X X X
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