TaxTMI 
TaxTMI 
TaxTMI 
2014 (9) TMI 604
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....business of manufacture of rectifiers, transformers, devices, thyristors, etc. for telecommunication, railways and defence departments, operating through different units, of which only the Dehradun unit is an eligible undertaking u/s.80-IC. Besides, the assessee has its head office, corporate office and registered office at Mumbai. While the assessee claimed a meager allocation to the Dehradun (section 80-IC) unit, so that the bulk of the expenditure under the said heads of account stood allocated to non-80-IC units, purportedly on the basis of actual, the Assessing Officer (A.O.) did not find the same acceptable in the absence of proper substantiation of its claims by the assessee and, accordingly, allocated the same on the basis of the turnover of the different units. In appeal, the ld. CIT(A) found in respect of the advertisement expenditure, as indeed had the A.O. prior thereto, that the said expenditure stood incurred for the company's products and, therefore, could not be segregated, and would stand to be allocated among the said units. With regard to the legal and professional expenses, he directed the A.O. to verify the assessee's claim of some expenditure, forming....
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..... In fact, we observe another expense for Rs. 4,83,018/- (to Musycom 2K) toward placement, which includes for two positions at Dehradun and Mumbai units each, so that the expenditure on the said insertion would stand to be divided equally between the Dehradun and Mumbai units, which has not been made. Apart there-from, the advertisement expenditure is in respect of products, in the national media; for fixed deposits; for publishing results; and in commercial publications. We are in agreement with the Revenue authorities that the same cannot be separated. When the company's name and products are being advertised or published, or the expenditure is for the purpose of the company as a whole, as for publishing financial results; in the register of Indian manufacturers, ITEZ, etc., we do not see any rationale for segregating the same unit wise. In fact, as we observe, the company, toward this, apart from making a bald statement that the product/s advertised is not manufactured at the 80-IC unit, has made no specific case on the said lines at any stage, including before us. As such, other than the expenditure on placement, which we have clarified to be unit specific, the balance impu....
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....on is accordingly upheld. The assessee relied on the decision in the case of CIT vs. Hindustan Liver Limited TC(A) No. 219 of 2006 . As a perusal of the said decision shows, the hon'ble court upheld the order by the Tribunal principally on the ground that it had only followed its order for the immediately preceding years (being A.Ys. 1981-82 to 1991-92) and which had not been challenged by the Revenue. The issue before us is primarily factual, which in our view does not give rise to any question of law, much less a substantial question of law. When the assessee operates through different production units, the common expenditure at the entity or the corporate level is necessarily required to be allocated to the different operating units to determine the income attributable thereto, on some reasonable basis. The turnover stands, in fact, regularly followed, across the length and breadth of the country, as a reasonable basis for allocation among different functional units. The decision by the apex court in the case of Consolidated Coffeee Ltd. vs. State of Karnataka [2001] 248 ITR 432 (SC), also referred in the said decision, if anything, only upholds the same as a valid basis fo....
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....ing on the decision in the case of Liberty India vs. CIT [2009] 317 ITR 218 (SC) (refer para 6.3 of the assessment order). Though the assessee we observe did raise a ground in its respect before the ld. CIT(A) (Gd. 5.10), we find he has not adjudicated the same, answering the assessee's ground no. 5 on the basis of the principal objections leading to the difference in the amount of deduction u/s.80-IC, i.e., as claimed and allowed (refer para 6 of the appellate order). The said ground thus does not arise out of the impugned order, so that it is not maintainable before us. The assessee though may take such recourse as is permissible to it under law. We decide accordingly, dismissing the assessee's ground, as raised, as not maintainable. Revenue's Appeal (ITA No. 784/Mum/2013) 6. The first ground of the Revenue's appeal agitates the deletion of the disallowance in the sum of Rs. 2,49,513/- on account of interest attributable to capital work-in-progress (CWIP). The deletion by the ld. CIT(A) was by following the order by the tribunal in the assessee's case for the immediately preceding year, i.e., A.Y. 2008-09 (in ITA No.3364/Mum(H)/2011 dated 29.06.2012/PB....
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....essee's business income u/s.28 of the Act. The basis of the A.O.'s addition is the assessee's tax audit report (TAR/PB pgs.78-87), wherein, in respect of the Question at Sr. No. 12(b) of the report, the assessee's auditors have certified a decrease in the profit by the impugned sum, being in respect of: - Modvat (excise duty) Rs. 16,43,744/- (Annexure 8 of TAR/PB pg.86) - VAT (sales tax) Rs. 9,92,860/- (Annexure 8 of TAR/PB pg. 87) In appeal, it found favour with the ld. CIT(A) on the basis that the assessee had consistently followed a scientific method in valuing its stocks from year to year. Accordingly, it had paid taxes on the enhanced profit due to the valuation of the closing stock till the immediately preceding year. However, for this year, on account of a decrease in the closing stock, there has been a decline in the valuation of the closing stock and, accordingly, a decrease in the profit reckoned with reference to section 145A, and which therefore could not be ignored merely because there was a decrease in profit. The same was, accordingly, deleted. Reference in this regard may be made to paras 5.1 and 5.2 of the impugned order. Aggrieved, the Revenue i....