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TMI Blog2018 (11) TMI 1965X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the AO. Tribunal affirmed the view of the CIT(A). It also came to the view that the AO has not found any defect or mistake in the books of accounts so as to justify invocation of sec 145. That, in fact, the AO having accepted the books profit as shown in respect of MEL (EOU), P L a/c. as well as that of MEL (Non-EOU) could not have interfered with the same. That in the absence of any defect in the books of accounts, there was no justification for determination of profits of MEL (EOU) undertaking in the ratio of turnover by aggregating the profit shown in respect of two undertakings. That activity of MEL (Non-EOU) is largely trading, whereas in the case of MEL (EOU), it is manufacturing and production. Therefore, the comparison of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earch proceedings, several books of accounts and incriminating documents were seized. Consequent to the search, a notice under s. 153A of the Act was issued to the assessee. In response to the same, the company filed its return of income, declaring the income as originally returned. Subsequently, a notice under s. 143(2) of the Act was issued to the assessee. The AO computed the profits of both the units on the basis of allocation of proportionate expenditures, in the ratio of their respective turnover to the combined turnover. Aggrieved by the same, an appeal was filed before the CIT(A). The CIT(A) partly allowed the appeal and confirmed the additions. Questioning the same, the Revenue filed ITA Nos. 645 493/Bang/2009 for the asst. yr. 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant years. Therefore, in order to show a higher rate of profit, the expenses have wrongly shown in MEL (Non-EOU). Consequently, the net profit, as shown for MEL (EOU), is an inflated and unnatural amount. The authorities have failed to consider the same. Therefore, he pleads that the substantial questions of law be answered in his favour. 5. The same is disputed by Sri A. Shankar, the learned senior counsel appearing for the respondent's counsel. His submission is that both the units are maintaining separate books of accounts. The CIT(A) has considered each one of the expenditures. The reason assigned by the Tribunal, as to why the plea of the assessee has to be accepted, is that the nature of the expenses involved by MEL (EOU) and MEL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,48,618/- 4 Turn over of (Non-EOU) Rs. 2,75,36,68,863/- 5 Net Profit attributable to MEL (EOU) Rs. 9,26,83,821/- 6 Net Profit attributable to MEL (Non- EOU) Rs. 41,60,42,264/- 9. The CIT(A) considered each one of the grounds, which was considered by the assessing order. So far as the Keyman Insurance is concerned, he came to the conclusion that the insurance premium paid is based on the profits of the company. That MEL (EOU) was not in existence prior to the year under consideration. Therefore, MEL (EOU) could not have incurred such expenditure. So far as the business promotion expenses are concerned, it was of the view that there was no reason assigned by the AO as to why the expenses have to be allocated disproportionately. There should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as that of MEL (Non-EOU) could not have interfered with the same. That in the absence of any defect in the books of accounts, there was no justification for determination of profits of MEL (EOU) undertaking in the ratio of turnover by aggregating the profit shown in respect of two undertakings. That activity of MEL (Non-EOU) is largely trading, whereas in the case of MEL (EOU), it is manufacturing and production. Therefore, the comparison of the financial result has to be considered likewise. 11. On considering the contentions and reasons, we do not find any ground to interfere in the impugned orders. The orders passed by both the authorities are just and proper. Each of the expenses allocated by the assessee has been rightly refle ..... X X X X Extracts X X X X X X X X Extracts X X X X
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