TaxTMI 
TaxTMI 
2018 (5) TMI 1273
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....nses for the purpose of calculation of deduction u/s. 80-I of the Income Tax Act, 1961?" 2. Additional following question of law arises in Tax Appeals No. 950/2006, 954/2006 and 955/2006: "Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that even though the contributions towards Provident Fund are made beyond the due date specified in section 36(1)(va) of the Act, no disallowance u/s. 43B of the Act can be made if the same is made before due date of filing of return?" 3. The second of the two questions noted above is possible of a summary disposal. We may presently do so, without entering into detail facts. The respondent-assessee is a publication house and publishes one of the leading vernacular daily circulated across the State. The Assessing Officer, after putting the assessee to notice, disallowed certain expenditure for the assessee's contribution towards Provident Fund, ESIC etc. on the ground that the contributions were made after the due date. The CIT(A) and the Tribunal deleted such disallowance inter alia on the grounds that the period of delay was extremely small running into barely few days and also....
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....-90, the assessee filed the return of income which came-up for scrutiny assessment under section 143(3) read with section 147 of the Act at the hands of the Assessing Officer. During such scrutiny assessment, the Assessing Officer noticed that the assessee had claimed deduction under section 80-I of the Act of Rs. 57,26,032/- for the Nilgiri Unit by claiming equal revenue allocation though the proportion of copies of news papers printed at both places was unequal. The Assessing Officer was not convinced about such allocation and therefore, after putting the assessee to notice, examined this question in further detail. The assessee when called upon to explain the position, pointed out that Ahmedabad edition of the news papers represented 66.9% of the total number of copies of the news papers sold. It also represented 67.8% of the total sale amount generated through such sale. It further pointed out that the Ahmedabad edition received 89.97% of the advertisement income. The assessee also pointed out that between Ahemdabad edition, proportion of Khanpur Unit and Nilgiri Unit was 60.35% and 39.65% respectively. 5. The Assessing Officer did not approve the higher allocation of advertis....
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....e purely on the basis of proportion of the number of copies printed and sold by the two units. He devised the formula which can be expressed as under: Weighted average of advertisement revenue to be allocated to Nilgiri Unit = 100 x X Y X= X=Percentage of news papers printed and circulated from Nilgiri Unit out of total number of copies of Ahmedabad edition. Y= Percentage of news papers sold in the city of Ahmedabad and printed at Nilgiri Unit Percentage of news papers printed and circulated from Nilgiri Unit out of total number of copies of Ahmedabad edition. Y=Percentage of news papers sold in the city of Ahmedabad and printed at Nilgiri Unit 8. The CIT (A) also cross-checked the result of such a formula. He on random basis selected three news papers and came to the conclusion that the local adds i.e. advertisements relatable to the property and other events in Ahmedabad City such as besna and classified advertisements had contributed to 70.81%, 63.37% 59.33% in the news papers published on 03.06.1990, 18.11.1990 and 15.06.1990 respectively. By such comparison, he was satisfied that his formula did not give any distorted result. 9. The Reve....
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....ment of the primary fact as well as on application of the formula for allocation of advertisement income, the counsel raised serious objections. He submitted that the assessee had not maintained separate accounts for both units. In absence of any other evidence, the relative proportion of the publication of the Ahmedabad city edition between the two units would be the only safe yardstick for making allocation of advertisement income. Counsel relied on the judgement of Kerala High Court in case of Malayala Manorama Co. Ltd vs. Commissioner of Income Tax reported in 257 ITR 633. 13. On the other hand, learned counsel Mr. Soparkar for the assessee supported the view of the CIT(A) as approved by the Tribunal. His contentions were that the CIT(A) has evolved a scientific formula which even otherwise provides just result. This could be seen from the proportion of the advertisements representing Ahmedabad events from the three news papers randomly picked and checked by the CIT(A). The fact, that Ahmedabad edition earns greater revenue in the form of advertisement income, is not in dispute. A weighted deduction therefore had to be given for publication of such news paper. Even Assessing O....
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....sessee had shown the proportion of Ahmedabad edition at 45% of the total publication by the news paper as compared to 67% of the current year. Since in the previous year he had worked out the advertisement revenue generation for Ahmedabad edition at 71%, he adopted a figure of 80% for the current year. Going simply by proportion of 45:71, the 67% publication of Ahmedabad edition would justify advertisement income allocation of over 100%. Under the circumstances, we would not permit the Assessing Officer to tamper with the assessee's projection of advertisement revenue of Ahmedabad edition at 89.87% of the total advertisement revenue. With varying figures, same scenario would prevail in all assessment years. 16. This would bring us to the central issue where the CIT(A) had substituted the formula adopted by the Assessing Officer for income division between Nilgiri and Khanpur units. Firstly, if we recall, the Assessing Officer having divided the income between the said two printing units in the proportion of their publication inter se, the CIT (A) provided for a complex formula as under: Weighted average of advertisement revenue to be allocated to Nilgiri Unit = 100 x X &nb....