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TMI Blog2017 (2) TMI 1552X X X X Extracts X X X X X X X X Extracts X X X X ..... ny direct nexus brought on record by the revenue authorities for the impugned allocation of expenses, we do not find any merit in the said allocation. We, accordingly, direct the AO to delete the allocations re-drawn by him. Also assessee has already included the managerial commission and remuneration while allocating common expenses to the Silvassa unit. The A.O. has once again included these expenses while computing the reallocation. We, accordingly, direct the A.O. to verify the computation once again and decide the issue afresh in the light of our findings given for ground no. 1. Ground no. 1 is allowed and ground no. 2 is treated as allowed for statistical purpose. - Shri N.K. Billaiya, Accountant Member And Shri Mahavir Prasad, Judicial Member For the Appellant : Shri Sanket Bakshi, AR. For the Respondent : Shri Ashish Pophare, Sr. D.R. ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. With this appeal, the Assessee has challenged the correctness of the order of the Ld. CIT(A)-III, Baroda dated 18.10.2013 pertaining to A.Y. 2010-11. 2. The substantive grievance of the assessee reads as under:- 1. The learned CIT (A) erred in fact and in law in confirming the action of the AO i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apportioned to the various units on the basis of their respective turnover for the purpose of calculation of deduction under Section 10B, 80I and 80HH? 20. And the Hon ble High Court held as under:- 3. A perusal of the order of the Tribunal shows that it followed the orders relating to assessment years 1981-82 to 1991-92 dated 28.5.2002 deciding the issue in favour of the assessee. 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 proport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the best of his judgment. In confirming the view of the Karnataka High Court, the Supreme Court also affirmed the similar view rendered by this Court in the decision reported in 130 ITR 908 CIT v. MANJUSHREE PLANTATIONS LIMITED. 6. As far as the above stated 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eto can be deducted. In other words, the expenses must be incurred, for and on behalf of the concerned undertaking. The expenses attributable to any other unit 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 take into consideration the facts of the case at all. In the instant case, the said R D activities were in relation to 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 be 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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