2019 (1) TMI 676

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....on:- (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 any direct nexus to Baddi unit when both these issues ar....

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....t - 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 proceedings, the respondent claimed that there was no R&D facility at Himachal Pradesh unit, thus expenses incurred o....

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....dent 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 to its Himachal Pradesh unit, it would not operate a bar to raise a claim subsequently, if otherwise it is correct in law. It place....