2014 (6) TMI 502

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.... the disallowance of expenses of Rs.28,69,439/- from domestic segment being common expenses in the nature of rent, power, telephone, depreciation proportionately allocated to the export segment on the basis of sales ratio, without appreciating that the assessee itself had allocated other common expenses i.e. insurance, miscellaneous expenses repairs etc accordingly; 2. On the facts and in the circumstances of the case and in law, the ld CIT(A) erred in deleting the further adjustment of 15% mark up on the expenses of Rs.28,69,439/- being common expenses in the nature of rent, power, telephone, depreciation proportionately allocated to the export segment on the basis of sales ratio, without appreciating that such adjustment was made by th....

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....up 15%, the details of these expenses are as under :- 5. According to the AO an amount of Rs.28,69,439/- was required to be allocated to export business. Accordingly, the AO has held that sum of Rs.28,69,439/- represent excess claim made by the assessee in respect of domestic segment and accordingly the said amount was added to the total income of the assessee. The allocation made by the AO in respect of these expenses is depicted in the following chart:- 6. It may also be mentioned here that similar addition has also been made by AO as adjustment in international transaction whereby assessee's receipts on the same issue amounting to Rs.49,98,154/- has been enhanced to 82,98,010/- as the transfer price adjustment. Therefore, the addit....

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....o expense to be allocated for the export of these services and expenditure on rent, power, telephone, communication and depreciation were exactly used by the assessee for domestic business. Based on these submissions, the ld. CIT(A) has provided relief to the assessee. The department is aggrieved, hence has filed aforementioned grounds of appeal. 8. We have heard both the parties and their submissions have carefully been considered. The ld. CIT(A) has recorded the finding that export segment services rendered by the assessee were outsourced and the expenses which have not been allocated by the assessee were not incurred for the purpose of export business. These findings recorded by the ld. CIT(A) have not been controverted by the revenue....