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TMI Blog2018 (5) TMI 957X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee for A.Y.2008- 09 are allowed for statistical purposes. Deduction u/s 10A - apportionment of common expenses - Held that:- Business of PBC Software (10A unit) is also carried on in the same business premises where other business are carried on. Hence we hold that the ld. CIT(A) had rightly apportioned the common expenses by identifying certain specific expenses thereon and had apportioned the same to 10A unit which in turn had resulted in corresponding reduction in the claim of deduction u/s 10A of the Act. We find no infirmity in the order of the ld. CIT(A) in this regard. - I.T (SS) A.Nos.94 & 95/Kol/2014 And I.T.A Nos.1090-1092/Kol/2014 - - - Dated:- 15-5-2018 - Shri A.T.Varkey, JM And Shri M.Balaganesh, AM For The Assessee : Shri D.S.Damle, AR For The Department : Shri G.Mallikarjuna, CIT(DR) ORDER Per Shri M . Balaganesh, AM 1. These appeals of the revenue and assessee arise out of the orders of the Learned Commissioner of Income Tax (Appeals) Central-III, Kolkata [ in short the ld CITA] in Appeal Nos. 289-291/CC-XX/CIT(A)C-III/2011-12/Kolkata dated 30.12.2011 against the orders passed by the J.C.I.T (OSD),Central C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther been clarified that the revised monetary limits will apply retrospectively. The relevant para-10 of the Circular reads thus: 10 . This instruction will apply retrospectively to pending appeals and appeals to be filed henceforth in High Courts / Tribunals . Pending appeals below the specified tax limits in para 3 above may be withdrawn / not pressed . Appeals before the Supreme Court will be governed by the instructions on this subject, operative at the time when such appeal was filed . 4. In the present case, the tax effect in these appeals by the revenue is less than ₹ 10,00,000/-. Though this appeal had been filed by the revenue on 30.05.2014 and was within the monetary limit in the form of tax effect for filing appeals before Tribunal, in view of para-10 of the Circular of CBDT, even such appeals will be governed by the new monetary limits laid down in the CBDT Circular No.21/2015 referred to above. At the time of hearing the ld. Counsel for the assessee has submitted a table in respect of tax effect for both A.Yrs.2008-09 and 2009-10 which is reproduced below : 5. It is a settled law that the Circulars issued by CBDT are bindin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it of the assessee and hence any disallowance made thereon would only go to increase the claim of deduction u/s 10A of the Act. In view of this, the assessee stated that no disallowance was made by it in the return of income. Before the ld. CIT(A) the assessee identified six specific items under the head administrative expenses as under :- ( 1 ) Salary for Personnel incharge of investment activities : Rs.2,11,932/- ( 2 ) Printing and stationery : Rs.5,58,542/- ( 3 ) Rent : ₹ 59,808/- ( 4 ) Office expenses : Rs.8,82,325/- ( 5 ) Rates and taxes : Rs.8,91,912/- ( 6 ) Audit Fees : ₹ 73,000/- Rs.26,77,519/- The assessee computed the proportionate disallowance to be made u./s 14A of the Act towards expenses incurred for the purpose of earning exempt dividend income a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of imagination the said specified items cannot be construed as direct expenses incurred for earning dividend income as stated by the ld. CIT(A). Hence we direct the ld. AO to delete the disallowance u/s 14A of the Act to the tune of ₹ 65,537/- made in the first limb of Rule 8D(2) of the rules. 11.1. With regard to the disallowance made under the third limb of Rule 8D, we direct the ld. AO to consider only those investments that had yielded dividend income in consonance with the decision rendered by this Tribunal in the case of REI Agro Ltd reported in 144 ITD 141. Accordingly the grounds raised by the assessee for A.Y.2008- 09 are allowed for statistical purposes. Deduction u / s 10A of the Act Grounds No . 4 to 7 of A . Y . 2008 - 09 12. Brief facts of this issue is that the assessee during the year under appeal commenced computer software development and online recruitment service business in addition to its regular business of mainly running of business centre, tours and travels etc. The assessee had treated the computer software development and online recruitment services as a separate undertaki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeded to identify certain specific expenses which in his opinion were common expenses and observed that the same requires apportionment between taxable unit and 10A unit as under : A)Up keep and service cost (schedule 16 of profit and loss account) ₹ 1,53,57,583/- B) Administrative selling and other expenses Subscription 9,75,915 Rates Taxes 8,91,912 Office Expenses 8,82,325 Gardening Expenses 2,78,732 Security Service Charges 36,20,494 Flower Expenses 1,86,558 Pantry Purchases 55,87,037 House Keeping Expenses 10,05,603 TOTAL 1,34,28,576 C) Depreciation as per Income Tax Act ₹ 28,18,519/- The ld. CIT(A) observed that revenue from business centre and tours and travels was ₹ 17,54,88,015/- and revenue from software development and on line recruitment services was ₹ 1,18,55,867/-. Thus the softw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... STPI. It is not in dispute that the assessee is entitled to get deduction u/s 10A of the Act in respect of its software unit. The only dispute is with regard to apportionment of common expenses between taxable unit and 10A unit which has a bearing on the quantum of deduction eligible u/s 10A of the Act. We find that the assessee had maintained separate balance sheet and separate profit and loss account for its software unit and online recruitment service in the name and style of PBC Software. We find from profit and loss account for the year ending on 31.03.2008 of PBC Software, the total income was ₹ 1,19,73,467/- comprising of recruitment service (Rs.25,58,417) software development charges (Rs.92,97,450/-) , foreign exchange fluctuation income (Rs.1,17,100/-) and miscellaneous income ₹ 500/-. The assessee has debited the following expenses in the books of PBC Software : i ) Electricity expenses : ₹ 83,160/- ii ) Goods : ₹ 3,30,247/- iii ) HRD expenses (under salaries) : ₹ 2,28,067/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sal of the said order we find that the plants were located in different locations in the case of Graphite India Limited. Hence it was possible for the assessee as well as by the revenue to identify specific expenses which are relatable to the eligible unit thereon. But in the instant case business of PBC Software (10A unit) is also carried on in the same business premises where other business are carried on. Hence the decision relied on Kolkata Tribunal relied upon by the ld AR vehemently is factually distinguishable and does not come to the rescue of the assessee. In these circumstances, we hold that the ld. CIT(A) had rightly apportioned the common expenses by identifying certain specific expenses thereon and had apportioned the same to 10A unit which in turn had resulted in corresponding reduction in the claim of deduction u/s 10A of the Act. We find no infirmity in the order of the ld. CIT(A) in this regard. Accordingly the grounds raised by the assessee for A.Y.2008-09 in this regard are dismissed. 15. The decision rendered for A.Y.2008-09 for grounds in respect of disallowance u/s 14A of the Act and deduction u/s 10A of the Act would apply with equal force for A.Y.2009-10 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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