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TMI Blog2021 (4) TMI 639X X X X Extracts X X X X X X X X Extracts X X X X ..... not find any reason to interfere in the decision of ld. CIT(A), therefore, this ground of appeal of the revenue is dismissed. Disallowance u/s. 14A - HELD THAT:- Respectfully following the decision of Co-ordinate Bench of the ITAT in the case of the assessee itself for A.Y. 2009-10 and A.Y. 2010-11 [ 2016 (4) TMI 904 - ITAT AHMEDABAD ] the appeal of the Revenue is dismissed. Regarding the appeal of the assessee, we direct the Assessing Officer to decide the issue afresh after examination/verification of the details filed by the assessee as per the direction laid down in the decision of the Co-ordinate Bench of the ITAT in the case of the assessee itself [ 2016 (4) TMI 904 - ITAT AHMEDABAD ] and decision of Hon ble Gujarat High Court [ 2017 (5) TMI 1160 - GUJARAT HIGH COURT ] Addition on account of foreign exchange fluctuation gain - HELD THAT:- We have gone through the decision of ITAT on the similar issue and identical facts and noticed [ 2016 (4) TMI 904 - ITAT AHMEDABAD ] the issue was decided in favour of the assessee Addition for late contribution to ESIC - HELD THAT:- In view of the decision of Hon ble Gujarat High Court in the case of Gujarat State Road Transport Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 118.11 lacs in the accounts of the Baddi Unit. However, on perusal of the detail, the Assessing Officer observed that the assessee company was having common pools of funds as well as common bank accounts for its entire business being carried out from the head office. Therefore, the Assessing Officer was of the view that the interest expenditure required to be allocated proportionately in the ratio of sales for deduction u/s. 80IC of the Act for the industrial undertaking of the assessee. Accordingly, the Assessing Officer has allocated expenses of ₹ 891.99 lacs in the case of Baddi unit. The Assessing Officer also noticed that assessee company has debited common head expenses incurred by the company under various heads. The detail is given as under:- S. No. Particulars Amount (Rs. in lakhs) 1 Audit Fees 52-00 2 Computer maintenance expenses 11.98 3 Security charges 3.99 4 Director Fees 5.00 5 Provision for doubtful debts etc. 76.00 6 Charity Donation 14.00 Total 162.97 The Assessing Officer further noticed that in respect of Baddi unit, the assessee has allocated expenses of ₹ 9.2 lacs and on the basis of turn over the Assessing Officer has made allocation of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench of the ITAT vide ITA No. 1548/Ahd/2012 in the case of the assessee itself on identical facts/similar issue and noticed that allocation of common interest financial charges, common head expenses and allocation of plastic and corporate division expenses were adjudicated in favour of the assessee vide order of the ITAT for assessment year 2010-11 vide ITA No. 1548/Ahd/2012. The relevant part of the decision of the ITAT is discussed as under:- In respect of allocation of common interest and financial charges:- 17. We have duly considered rival contentions and gone through the record carefully. The case of the assessee is that financial charges cannot be allocated in the ratio of sales, because, the sales have no direct influence on the interest expenditure. The financial charges are relevant to the investment made by an assessee. In other words, suppose an assessee has made investment after borrowing funds due to some reason or market conditions he could not effect the sales, then, if we go by the logic of the AO, there would be a lesser allocation. The assessee has allocated the expenditure on account of financial charges, keeping in view the investment in Bhaddi units. In other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, and accordingly, the orders of the-CIT(A) in both the years are upheld on this issue. The Id.CIT(A) has rightly deleted the disallowance made by the AO, out of common head expenses of corporate division. In respect of plastic and corporate division:- 28. We have examined the details with the assistance of the representatives. In our reasoning given while upholding the deletion ut of certain common head expenses, we do not find any error in deleting the disallowance under these head. The basic reason is that the assessee has debited expenditure which has direct nexus with 80IC units. Such expenditure cannot be amplified by considering the sales ratio. The AO has nowhere highlighted, as to which particular facility was used by the assessee, generated out of common head expenses. He simply adopted the figure of sales and then proceeded to disallow the expenditure. In our opinion, the Id.AO ought to have examined this aspect, and find out that a particular item of expenditure incurred by e assessee at head office, which has given benefit to 80IC unit, only out of that expenditure, if he made an allocation, then his stand could be justified. Therefore, following our finding in earli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue against the order of Hon ble Gujarat High Court. The ld. counsel is fair enough not to controvert these undisputed facts that assesse s is covered by the decision of Co-ordinate Bench of the ITAT for assessment year 2010- 11 as cited above. 11. With the assistance of ld. representatives, we have gone through the decision of Co-ordinate Bench of the ITAT for assessment year 2010-11 and noticed that at para 36 and 37 of the order the issue has been adjudicated in favour of the assessee. The relevant part of the decision of the Co-ordinate Bench is reproduced as under:- 36. We have duly considered rival contentions. As far as the proposition of the ld.CIT-DR that even in the absence of any mechanism for disallowance, the expenditure, which is attributable to earning of exempt income can be worked out on estimate basis or reasonableness basis after looking into the facts and circumstances of a particular case is concerned, we do not have any dispute. The amounts can be disallowed on estimate basis. In the present appeals, the assesses itself has made disallowance of ₹ 5.10 lakhs in the Asstt.Year 2009-10 and ₹ 52,000/- in the Asstt.Year 2010-11. In the Asstt.Year 2009-10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as the case may be, cannot embark upon a determination of the amount of expenditure in accordance with any prescribed method, as mentioned in subsection (2) of Section 14A of the said Act. It is only if the Assessing Officer is not satisfied with the correctness of the claim of the assessee, in both cases, that the Assessing Officer gets jurisdiction to determine the amount of expenditure incurred in relation to such income which does not form part of the total income under the said Act in accordance with the prescribed method. The prescribed method being the method stipulated in Rule 8D of the said Rules. While rejecting the claim of the assessee with regard to the expenditure or no expenditure, as the case may be, in relation to exempt income, the Assessing Officer would have to indicate cogent reasons for the same. 37. According to the Hon'ble Delhi High Court, when an assessee demonstrate actual incurrence of the expenditure, then Rule 8D would not be automatically applied without looking into the explanations. In other words, when an assessee has worked out the expenditure relatable to earning of exempt income on actual, basis and demonstrated to the AO the incurrence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee are not commensurate with the administrative expenses which might be attributable to earning exempt income. Because, on interest expenses account, there cannot be any disallowance as the assessee has far more interest free fund than investment. We are of the view that the Id.CIT(A) has looked into all these aspects in the Asstt.Year 2009-10 before deleting the disallowance. We do not find any error in the order of the Id.CIT(A) on this issue in Asstt.Year 2009-10. Consequently, we allow the ground of appeal raised by the assessee in the Asstt.Year 2010-11 and delete the disallowance made by the AO. Respectfully following the decision of Co-ordinate Bench of the ITAT in the case of the assessee itself for A.Y. 2009-10 and A.Y. 2010-11 the appeal of the Revenue is dismissed. Regarding the appeal of the assessee, we direct the Assessing Officer to decide the issue afresh after examination/verification of the details filed by the assessee as per the direction laid down in the decision of the Co-ordinate Bench of the ITAT in the case of the assessee itself as supra vide ITA No. 1598/Ahd/2012 and decision of Hon ble Gujarat High Court vide IT Appeal No. 268 of 2017. Therefore, ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue has been adjudicated by the Co-ordinate Bench of the ITAT in the case of the assessee for assessment year 2010-11 vide ITA No. 1548/Ahd/2012. The ld. counsel also submitted that Hon ble Gujarat High Court has also confirmed the order of the ITAT for assessment year 2010-11. The ld. Departmental Representative is fair enough not to controvert these undisputed facts that issue is covered by the decision of the ITAT as referred above. 15. With the assistance of ld. representatives, we have gone through the decision of ITAT on the similar issue and identical facts and noticed that vide ITA No. 1548/Ahd/2012 the issue was decided in favour of the assessee. The relevant part of the decision is given at para no. 51 52 of the ITAT is reproduced as under: - 51. We have considered rival contentions and gone through the record carefully, In the case of ACIT Vs. Elecon Engineering (supra), the Hon'ble Supreme Court has considered the scope of section 43A and observed that where the assessee has acquired asset outside India for the purpose of his business, and that asset was acquired by borrowed funds, the amount by which the liability stood increased or reduced on account of foreign exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the asset subsequently increased on account of devaluation, the written down value of the asset has to be taken on the basis of the increased cost minus the depreciation earlier allowed on the basis of the old cost. One more aspect needs to be highlighted. Under section 43A, as it stood at the relevant time, it was inter alia provided that where an assessee had acquired an asset from a country outside India for the purposes of his business, and in consequence of a change in the rate of exchange at any time after such acquisition, there is an increase or reduction in the liability of the assessee as expressed in Indian currency for making payment towards the whole or part of the cost of the asset or for repayment of the whole or part of the moneys borrowed by him for the purpose of acquiring the asset, the amount by which the liability stood increased or reduced during the previous year shall be added to or deducted from the actual cost of the asset as defined in section 43(1). 52. The issue in dispute before us squarely covered by the above preposition. In view of the above decision, we do not find any merit in this ground of appeal. It is rejected. We have also gone through the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the cases of the assessee itself as supra on the identical issue on same facts we do not find any merit in the appeal of the Revenue therefore same stands dismissed. ITA No. 2702/Ahd/2014 A.Y. 2011-12 filed by assessee 16. The ground nos. 1 to 3 are not pressed, therefore, the same stands dismissed as not pressed. Ground No. 5 (Addition of ₹ 4,29,414/- for late contribution to ESIC) 17. During the course of assessment , the Assessing Officer noticed that assessee has made delay in depositing employees contribution towards PF and ESIC, therefore, an amount of ₹ 5,79,319/- was disallowed in view of the provisions of section 36(i)(va) and section 2(22)(x) of the act. 18. The ld. CIT(A) has sustained the addition after following the decision Hon ble Jurisdictional Gujarat High Court in the case of Gujarat State Road Transport Corporation. 19. Heard both the sides. In view of the decision of Hon ble Gujarat High Court in the case of Gujarat State Road Transport Corporation (2014) 41 taxman.com 100, we do not find any merit in the appeal of the assessee and the same stands dismissed. ITA No. 1416/Ahd/2018 A.Y. 2013-14 filed by revenue Ground No. 1 (Allowing the dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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