9911796707
TMI Blog2016 (11) TMI 1711X X X X Extracts X X X X X X X X Extracts X X X X ..... in the business of manufacture and sale of paints, enamels and varnishes etc. and resin for captive consumption. During the relevant previous year the company had manufacturing units at Howrah, Podicherry, Goa, Sikanderabad and Jammu. The company has also its products processed outside. The assessee company is claiming deduction u/s 80IB of the Act and in respect of five units which are located at Pondicherry, Goa and Jammu water based, Jammu-solvent based and Jammu-rajdoot. All these units became operational during different periods. In the computation of profits derived from respective units the assessee had reduced common selling and administrative overheads and common administrative expenses for arriving at the profits and gains derived from the respective units which are eligible for deduction u/s 80-IB of the Act. The assessee reduced selling and administrative expenses and common administrative expenses from the profit derived from the respective units as explained above. During the assessment proceedings the assessee furnished a note on the basis of apportionment of the common expenses. The assessee claimed deduction u/s 80-IB of the Act at Rs. 33,81,19, 725/- whereas the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for allocation of common expenses. The submission made by the assessee before the ld.CIT(A) are given below: "It is submitted that in the earlier years, the basis for allocation of common selling & head office expenses adopted by the appellant has been accepted by the Hon'ble Kolkata Tribunal (A.Ys.2000-01, A.Ys.2001-02 and A.Ys.2002-03). The Hon'ble Kolkata Tribunal in its consolidated order dated 17th October, 2006 passed for the A.Ys.2000-01 and 2001-02 has held the following : " ... On going through the basis of allocation of the said common head office and selling expenses adopted by the assessee for allocation of common expenses is a reasonable and scientific basis and does not call for any modification ... " [Reference is drawn to Annexure - VIII, Page - 127 to 136 of the Paper Book, relevant page - 133, para - 5.5]. Further, the Hon'ble Kolkata Tribunal in A.Y 2002-03 has held the following- "Respectfully following the decision of the ITAT dated 17th October, 2006 (supra) in the case of the assessee, we are of considered opinion that the Department should have accepted the allocation made by the assessee .... ". [Reference is drawn to Annexure - IV, Page - 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) to decide the issue in favour of the appellant following the decision of the Hon'ble ITAT in appellant's own case for the Assessment Years 2000-01 and 2001-02 as per its order dated 17th October, 2006. [Reference is drawn to Annexure - IV, Page - 100 to 117, relevant page - 114 of the Paper Book, para - 12]. 6. It is submitted that the then Ld. CIT (A), following the aforesaid order of the Hon'ble Tribunal, vide his order dated 28th April. 2008 (enclosed herewith in Annexure - V, Page-118 to 119, relevant page - 119) directed the Assessing Officer to consider the basis of allocation adopted by the appellant in earlier years for allocation of various expenses which had been upheld by the orders of the Hon'ble ITAT. The Ld. CIT (A) further directed the Assessing Officer to re-compute the deduction under section 80IB of the Act in light of the direction issued by the Hon'ble ITAT vide its order dated 13th August, 2007. Moreover, the Ld. CIT (A), following the aforesaid order of the Hon'ble Tribunal, vide his order dated 29th April, 2008 (enclosed herewith in Annexure - VI, Page - 120 to 122, relevant page - 121) quashed the revision order passed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble Kolkata Tribunal for A.Y.2000-01, 2001-02 and A.Y.2002-03. The Hon'ble Kolkata Tribunal in its consolidated order dated 17.05.2006 passed for A.Ys.2000-01 and 2001-02 has held the following: "On going through the basis of allocation of the said common head office and selling expenses adopted by the assessee for allocation of common expenses is a reasonable and scientific basis and does not call for any modification..." The deduction claimed by the assessee was computed with reference to the profits of the undertaking as certified by the auditors of the assessee which was further reduced by the amounts of common selling and head office expenses arrived at by the assessee by following a consistent basis adopted by it since the previous year relevant to A.Y.1998-99 during which the undertaking located at Pondicherry became operational and deduction u/s 80IA was claimed with respect to the profits derived from for the first time. The assessee has been following the consistent basis for allocation of common selling and head office expenses which were accepted by the ld. CIT(A). The ld. AR for the assessee has also pointed out that the Hon'ble Tribunal passed a consolidated order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on a particular issue by not challenging the same in the earlier years, it was not open to the department to contest the same in the later years and since the department in this case had accepted the basis of allocation of common .head office and selling expenses in the A.Yr. 1998-99 and there was no dispute as to the effect that the same basis was adopted in the assessment for the A.yr. 2000-01 and the department should have accepted the allocation made by the assessee on the basis of the audited accounts and certificate of the auditors. 9.1. The relevant portion of the order of dated 17th October, 2006 (supra) of the ITAT is reproduced below : "We have given a careful consideration to the facts of the case the position in law. We have also considered the method/basis of estimation of common HO and selling expenses. We note that the assessee has filed an audited certificate with the return to substantiate its claim u/s 80-IB, The profit and loss account of Pondicherry unit has been certified by the auditors to be true and 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 consideri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the said common head office and selling expenses adopted by the assessee consistently from the A. Y. 1998-99, we are of the considered view that the said basis adopted by the assessee for allocation of common expenses is a reasonable and scientific basis and does not call for any modification. The basis accepted by the AO is arbitrary as he has not stated the reason for rejection of the assessee's method, he has not stated how he arrived at 20% for allocating common HO expenditure which shows he has taken an adhoc figure and 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 and which again is certified by the auditors. The same should be accepted. We are in agreement with the contention of the Id. AR which is supported by the decisions of the Hon'ble Supreme Court as stated above that once the Department has accepted a decision on a particular issue by not challenging the same before any higher forum it is not open for it to contend in the contrary on the same issue in a later year. We would reiterat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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