TaxTMI 
TaxTMI 
2015 (9) TMI 61
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....nerated by this plant was exclusively used by the assessee on paper unit in Punjab. The assessee has claimed deduction under sec. 80IA for this power unit at Punjab and also claimed deduction under sec. 80IC for paper unit at Kala Amb. In the assessment year 2007-08, the return of income was filed at a total income of Rs. 15,86,54,540 and the assessment was completed under sec. 143(3) after disallowing Rs. 85,76,544 under sec. 80IA and Rs. 18,36,000 under sec. 80IC of the Act. Learned CIT(Appeals) had confirmed the disallowance made by the Assessing Officer. However, the ITAT vide its order dated 07.1.2011 had set aside both the disallowances to the file of the Assessing Officer for fresh consideration based on the additional evidence filed before the ITAT. In the assessment framed under sec. 143(3)/254 of the Income-tax Act, 1961 dated 30.11.2011, the Assessing Officer had restored the same disallowances of Rs. 85,76,544 (consisting of Rs. 71,27,544 on account of valuation of power @ Rs. 4.68 per unit + Rs. 14,49,000 on account of allocation of expenditure relatable to power unit) under sec. 80IA and Rs. 18,36,000 under sec. 80IC of the Income-tax Act, 1961. The Learned CIT(Appeal....
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.... services of directors are identifiable qua respective unit and that remuneration, travelling expenses were debited in the books of account of respective unit, there is no justification to allocate directors' remuneration, travelling expenses of manufacturing unit in Punjab to the other units on presumption. He submitted that the managing directors' remuneration is booked at head office because he is not directly managing the units and persons employed there are managing the affairs. Therefore, this expense is not required to be allocated to the units. 6. Regarding the audit fee, the Learned AR submitted that it is debited in the head office as per accounting principles and practice. The assessee maintained unit-wise books of account and the accounts of each of three units were duly audited and authenticated. No specific defect or discrepancy was pointed out by the Assessing Officer in the audit report. Thus, the deduction of the claim under sec. 80IA of the Act for the power unit in Punjab and under sec. 80IC for the paper unit in Kala Amb made by the Assessing Officer in the claim of eligible profit of the power unit in Punjab and the paper unit in Kala Amb. should be held to be....
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....this alternative plea is allowed then directors' remuneration, travelling expenses, etc. between the two units, namely, the Power Unit and Punjab Paper Unit will be reallocated as under: "If your honour does not allow our Ground No.2 in full as prayed in the grounds of appeal but accepts our above submissions then your honour will have to allocate the Directors' remuneration, travelling expenses, etc. between the two units, namely the Power Unit and Punjab Paper Unit No. 1. This reallocation will be as under: Punjab Paper Unit Punjab Power Unit Kala Amb Paper Unit Turnover of Unit 12246,36 10922.13 1324.24 Directors' remuneration 136.80 122.00 14.80 Nil Director's travelling expenses 4.97 4.43 4.43 Nil Audit fee 0.82 0.73 0.09 Nil Total 142.49 127.16 15.43 Disallowance in eligible profit as per A.O 13.86 13.68 Difference as a result of allocation to the 2 units only as per Submissions. + 1.57 -13.68 Relief allowable = Rs. 13.68 Lac (-) Rs. 1.57 Lac = Net Rs. 12.11 Lac 9. The Learned Senior DR on the other hand tried to justify the orders of the authorities below with the submi....
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....r discussing the case of the assessee has restored the similar amount of disallowances made under sec. 80IA and 80IC of the Act as made in the original assessment. Before the Learned CIT(Appeals), the assessee questioned the action of the Assessing Officer and the Learned CIT(Appeals) allowed relief of Rs. 71,27,544 in assessment year 2007-08 on the issue of adoption of value of power per unit @ Rs. 4.92 per unit for computation of deduction under sec. 80IA of the Act on power unit. The Learned CIT(Appeals) has however, upheld the action of the Assessing Officer regarding the disallowance of Rs. 14,49,000/- under sec. 80IA in relation to power plant in Punjab and Rs. 18,36,000 under sec. 80IC with regard to paper unit at Kala Amb. The Assessing Officer has dealt with the issue in para No.3.2.2 to 3.2.3 of the assessment order reproduced hereunder: "3.2.2 In the course of present proceedings the assessee reiterated its earlier reply and also drew attention to para 3 of ITAT's order wherein the claim of having separate directors for power unit, paper unit at Kala Amb (HP) and head office (read paper unit in Punjab) was made. 3.2.2 The contention of the assessee that every unit had ....
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....t to as under: Allocation of expenditure common to all units. Nomenclature of expenditure Total amount (in Lakhs) Turnover of Punjab Paper Unit (In lakhs) Turnover of Punjab Power Unit (In Lakhs) Turnover of HP (Kala) Paper Unit (In Lakhs) Rs.14920.57 Rs.11614.76 Rs.1461.15 Rs.1844.66 Director's remuneration Rs. 136.80 Rs. 106.49 Rs. 13.34 Rs.16.91 Directors' Travelling Rs. 11.03 Rs. 8.58 Rs. 1.08 Rs. 1.36 Audit Fee Rs. 0.75 Rs. 0.58 Rs. 0.07 Rs. 0.09 Additional Expenditure to be allowed Rs. 14.49 Rs. 18.36 Eligible units 11. Similar orders on the issue of allocation of expenses in eligible units under sec. 80IA and 80IC have been passed by the authorities below in the remaining assessment years 2008-09 and 2009-10. We do not find reason to interfere with the orders of the authorities below regarding the making of reduction in the disallowances under sections 80IA and 80IC of the Act on account of reallocation of directors' remuneration, travelling expenses etc. on proportionate basis by the Assessing Officer in absence of the evidence furnished by the assessee that all the expenses were separately maintained in the eligible units. We, how....