2008 (10) TMI 746 - HC - Income Tax

Revenue appeal on Section 80-IB deduction dismissed, expense allocation upheld as factual finding with no substantial question

The HC dismissed the revenue's appeal against the Tribunal's order concerning deduction under Section 80-IB claimed by the assessee-company. The dispute ... - The appeal concerned the assessee's claim for deduction under Section 80-IB, specifically the allocation of expenses between its Parwanoo (eligible) unit and non-Parwanoo unit. The Assessing Officer alleged improper allocation to inflate profits of the Parwanoo unit. Both the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal decided in favour of the assessee. The Tribunal found as a fact that the assessee maintained separate books of account; expenses 'exclusively incurred for the Parwanoo and non-Parwanoo businesses were identifiable and had been directly debited to their respective books.' Common expenses were apportioned on the basis of turnover, a method accepted by the CIT(A) after detailed examination. Importantly, the Tribunal recorded that the Assessing Officer 'had not brought on record any instance of any expenditure being charged in another unit' and the department 'had not pointed out any item' wrongly shifted to increase Parwanoo profits. The High Court held these to be 'pure findings of fact' and concluded that 'no substantial question of law arises,' dismissing the appeal.