TaxTMI 
TaxTMI 
2017 (12) TMI 1771
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....nits are located at Hosur, Pune, Bangalore and Himachal Pradesh. In respect of Himachal Pradesh unit, the assessee arrived the income at Rs. 53,12,694/ and claimed a deduction of Rs. 15,93,808/-u/s. 80IC. From the income of other units, the assessee claimed a deduction of Rs. 7,78,74,366/- towards Research and Development expenditure u/s. 35(2AB). Since, all the units of the assessee are engaged in the manufacture of the same product viz., seating systems and the benefit of research and development also accruing to all the units, the AO obtained unit wise profitable statement, found that the turnover of the 80IC unit was at 10.01%, based onsuch turnover he apportioned the research and development expenses related to Himachal Pradesh unit at....
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....in the basic philosophy of apportionment of R&D expenditure to 4.4 However, it is seen that the AO has allocated weighted deduction claimed at 200 percent amounting to Rs. 7,78,74,366/- under Section 35(2AB) of the Act. In my opinion, the enhanced weighted deduction at 200 percent is for the specific purpose of claim under Section 35(2AB) of the Act. Apportionment of the expenditure must be made of the real expenditure, i.e. 100 percent of the actual expenditure, and not the notional enhanced one taken for a specific deduction or claim. Hence, the apportionment of expenditure is to be taken at 100 percent of the actual expenditure incurred by the appellant on Research & Development. The actual expenditure as reproduced by the AO on page 4....
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....The CIT (A) ought to have appreciated that while computing the profits of the undertaking eligible for 80IC deduction, only the profits "derived" by the undertaking is to be considered as against profits "attributable" to that undertaking. Hence, expenses incurred by the R&D centre cannot be notionally allocated for arriving the profits derived by the eligible 80IC undertaking. The AR further submitted that the adjustment of proportionate R&D expenditure certified by DSIR in Form 3CL by the AO is unwarranted as these R&D expenditures does not relate to HP unit. R&D expenditure certified by DSIR is location specific and recognition of R&D unit by DSIR is given only for R&D unit in Hosur. The relevant section refers the profits derived from t....
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....tion on the R&D expenditure u/s. 35(2AB) against the income from the units of Hosur, Pune & Bangalore only. Now, the issue here is whether the income computed by the assessee for the unit of Himachal Pradesh without deducting or debiting proportionate R& D expenses is correct or not?. The assessee pleads that the adjustment of proportionate R&D expenditure certified by DSIR in Form 3CL by the AO is unwarranted as these R&D expenditures does not relate to HP unit. R&D expenditure certified by DSIR is location specific and recognition of R&D unit by DSIR is given only for R&D unit in Hosur. On the other hand, the Revenue pleads that the assessee is carrying out research & development activities relating to automotive seating applications. The....