TaxTMI 
TaxTMI 
2019 (1) TMI 676
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....lowing questions of law for our consideration:- (1) Whether on the facts and circumstances of the case, the Tribunal was correct in deleting the TP adjustment made by TPO to the extent of 3% of the amount of guarantee given by the assessee on behalf of AE? (2) Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in deleting the enhancement of income made by CIT(A) and holding the claim of the assessee of weighted deduction u/S. 35(2AB) on whole R&D expenditure justifiable and at the same time setting aside the issue of allocation of R&D expenses to Baddi unit for computation of deduction u/S 80-IC to the record of Assessing Officer for finding out whether R&D expenditure incurred has....
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....ion of law. Thus, not entertained. 4. Regarding Question No. (2) & (3):- (a) The respondent - assessee has units at Baddi in Himachal Pradesh and at Mahape and Sinnar in Maharashtra. So far as the unit in Himachal Pradesh is concerned, it was entitled to deduction under Section 80-IC of the Act while the units in Maharashtra were entitled to deduction under Section 35(2AB) of the Act. (b) The respondent assessee while claiming deduction under Section 80-IC of the Act for its Baddi unit, had allocated R&D expenditure to the tune of Rs. 5.64 crores on pro-rata basis of total turnover. Thereafter, on that basis claimed the deduction under Section 80-IC of the Act in its return. (c) However, during the assessment p....
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....at Maharashtra units duly approved by the Department of Scientific and Industrial Research. It held that merely because the respondent had allocated the proportionate expenditure to the Baddi unit situated in Himachal Pradesh cannot lead to the conclusion that expenditure on R&D was incurred at or in respect of Baddi unit in Himachal Pradesh. When admittedly, there is no R&D facility at Baddi unit, then there is no question of incurring R&D expenditure relating to Baddi unit. Thus the impugned order held that the withdrawal of the weighted deduction under Section 35(2AB) of the Act is not justified and the appeal of the respondent was allowed. It also noted that merely because the respondent had allocated R&D expenditure on pro rata basis t....
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....l as expenditure of eligible units are to be taken into account which has direct nexus with the eligible undertaking. The R&D expenditure incurred by the assessee in respect of the R&D facility situated at different undertaking in the State of Maharashtra prima facie has no direct nexus with the Baddi unit. Therefore, even the assessee has allocated the R&D expenditure on pro rata basis of turnover to Baddi unit, the same will not operate as bar or prohibition for raising a claim if otherwise the subsequent claim raised by the assessee is as per the provisions of the Act. The assessing authority has to assess the correct income to tax under the provisions of the Act and cannot take advatage of any excess income offered by the assessee to ta....