TaxTMI 
TaxTMI 
2016 (1) TMI 741
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....red in allowing the excess deduction u/s 80IC of Rs. 63,62,909/- which was reduced by the AO in the assessment order passed u/s 143(3) of the Act. 2. On the facts and in the circumstances of the case the CIT(A) erred in analysing the facts of the case that the assessee has claimed less expenses against 80IC units, thereby manipulating the accounts." 3. Briefly stated, the facts giving rise to this appeal are that the case was selected for compulsory scrutiny and notice u/s 143(2) was issued to the assessee on 12-05-2009 and served upon the assessee on 18.8.2009. Subsequently, a fresh notice u/s 143(2) and 142(1) alongwith detailed questionnaire was issued on 23.8.2010 and served upon the assessee through speed post. In response to this....
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....e assessee u/s 80IC of the Act. 4. Aggrieved by the above assessment order, the assessee preferred appeal before the ld. CIT(A) which was allowed by passing the impugned order and the AO was directed to delete the entire impugned addition. Now the aggrieved revenue is before this Tribunal in this second appeal with the grounds as reproduced hereinabove. 5. We have heard the arguments of both the sides and have carefully perused the relevant material on record. The ld. D.R supporting the action of the AO submitted that in the consolidated profit and loss A/c of all the units, the assessee company had claimed expenses on account of director's remuneration, tender fee expenses and commission and there was no reason or basis for the said allo....
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....its from which tender bidding was made and commission was made on sales made by non 80IC units and therefore, such commission expenses were booked in non 80IC units. The ld. A.R also explained that the audit fees of Rs. 65, 211/- being small expenses was booked at head office because the audit was conducted at head office and director's remuneration was allocated to 80IC units based on time devoted to 80IC units. 7. The ld. A.R vehemently contended that the assessee company is maintaining separate books of accounts for 80IC units and non 80IC units which were examined and audited by the auditors and correctness of the claim of deduction u/s 80IC of the Act has been duly certified and verified by the auditors. The ld. A.R further submitted ....
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....ngs of the first appellate authority at para 4.2 at page 6 of the impugned order and submitted that the assessee has submitted separate audited balance-sheet and profit and loss account of 80IC units alongwith audited report and the auditors have certified the correctness of books of account and the claim of deduction u/s 80IC of the Act, therefore, the action of the AO reducing the claim of deduction on notional basis taking proportion of sales cannot be held as justified and the same was rightly demolished by the ld. CIT(A). 9. In rejoinder, the ld. D.R submitted that the allocation of the legal and professional fees, audited fees and director's remuneration cannot be held as justified without any basis as these expenses have been claime....
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....ld. CIT(A) which are reproduced at para 4.1 of the ld. CIT(A)'s order. 12. We further note that the ld. CIT(A) granted relief to the assessee with the his findings and observations which are given at para 4.2 of his order. In view of the above, when we analyse and evaluate the assessment order, we find that the AO in para 5 of the assessment order has noted that separate profit and loss account and balance sheet in respect of two units i.e, one at Haridwar and the other at Dehradun had been furnished. Perhaps the doubt was raised in the mind of the AO while comparing the profit and loss account of these two units with the consolidated profit and loss account of the assessee company wherein he noted that certain expenses have been allowed t....
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.... travelling, legal and professional fees, tender fees, commission etc are in the nature of direct expenses which can be linked to the sales of respective units. At the cost of repetition, we may point out that while the assessee is maintaining separate books of account supported by bills and vouchers and all relevant details which were audited by the competent auditors and the claim of the assessee u/s 80IC of the Act was also verified and certified, then while the AO has not pointed out any defect in the financial statement and separately maintained books of accounts of the assessee and the AO has not raised any doubt in regard to the correctness, completeness of the financial statement and results of the assessee, then the notional disall....