TaxTMI 
TaxTMI 
2021 (10) TMI 398
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....g/2007 order dated 4.3.2021 decided this issue as under: "11. The next ground (No.2) raised by the assessee reads as follows:- "2. The learned CIT (A) erred in confirming that head office expenses is required to be allocated while arriving at the profit of the industrial undertaking for the purpose of allowing deduction u/s 80-I / 80-IA of the Income Tax Act. Without prejudice, it is further submitted that allocation of expenditure is on a very higher side and it should be reduced substantially." This issue also came up for consideration before the Tribunal ITA No.3240/Bang/2004 for AY 2000-01 wherein the issue was decided against the assessee with the following observations:- "2. The assessee is a company engaged in the business of various engineering fabrication, manufacture and trading of mechanical, electrical and other engineering items. The dispute raised by the assessee in ground No.1 is with regard to deduction u/s. 80IA of the Act. It is not in dispute that the assessee was entitled to deduction u/s. 80IA. The AO while allowing deduction u/s. 80IA allocated Head Office expenses on the basis of turnover of the various undertaking....
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....hey are direct or indirect or fixed, semi-fixed or variable, must be adjusted to determine the profits derived from the industrial undertaking. Of course, any component of Head Office expenses, which has been incurred exclusively for the purposes of the business of any particular unit/ undertaking/division will have to be adjusted against the receipts of that particular unit/undertaking/division only. Similarly, Head Office expenses or expenses which are common to all the units/undertakings/divisions expenses will have to be spread over and charged against the receipts of all the units/ undertakings/divisions. If this course is not followed, then what would stand allowed u/s 80IA would be inflated profits and not the net profits derived from the industrial undertaking in terms of the provisions of sections 29 to 43. In this view of the matter and in the absence of any better alternative, the CIT(A) is justified in holding assessee is entitled to deduction of the eligible amounts in respect of the profits derived from the eligible undertakings after the allocation of head office expenses in the ratio of turnover. We see no valid reason to take a view contrary to the one taken by the....
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....f business, even though certain items are not liable to be excluded. However, we notice some thing else in the order of Ld CIT(A). 56. In assessment year 2002-03, the assessee had claimed deduction u/s 80HHE of the Act at Rs. 3,27,998/- and the A.O. has restricted it to Rs. 2,44,804/-. The Ld. CIT(A) has dealt with this issue in paragraph 14 of his order. According to the Ld. CIT(A), the A.O. has included "excise duty and sales tax" in the total turnover and accordingly computed deduction u/s 80HHE of the Act. The Ld. CIT(A) held that the excise duty and sales tax should not be included in total turnover and accordingly directed the A.O. to recompute deduction u/s 80HHE of the Act. Thus, we notice that there is no discussion about the other income by Ld. CIT(A). Similar is the case with AY 2003-04 also. Accordingly, we are of the view that the impugned ground of the assessee raised in assessment year 2002-03 as well as in 2003-04 does not emanate from the order passed by Ld. CIT(A). Accordingly, we reject the grounds raised by the assessee relating to deduction u/s 80HHE of the Act." 4.2 Respectfully following the aforesaid decision of the Tribunal, we dismiss this grou....
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.... issue it was held as follows:- "The case of the assessee, however, is that the subject matter of deduction u/s. 80IA is the profits derived from the business of industrial undertakings and hence it is only that expenditure which is directly attributable to the earning of the said profits that can be the subject matter of deduction for computing the aforesaid profits and not head office expenses. We are unable to agree with the aforesaid submission for two reasons. First reason is that it is the profit derived by the assessee from the business of industrial undertaking which has been made eligible for deduction u/s. 80IA d not any other profit. Second reason is that the computation of profits eligible for deduction u/s. 80IA has to be done in accordance with the provisions of section 28 to 43. Perusal of the aforesaid provisions reveals that all those expenses, which are incurred for the purposes of the business of the industrial undertaking, are to be allowed while computing the business profit. It cannot be said that Head Office expenses or common expenses are not incurred or are uncommon for the purposes of the business of the industrial undertaking. What is now require....
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....n the case of Zandu Pharmaceuticals Works Ltd. (supra) is with reference to apportionment of R&D expenses and no parity of facts exist with the present case. As far as the decision of the Hon'ble Madras High Court in the case of Hindustan Lever (supra) is concerned, that decision rests on the facts of that case, where it was found that common head office expenses were simple administrative expenses for running the business. In that view of the matter, we uphold the order of CIT(Appeals) and dismiss ground No.1 raised by the assessee." In the light of the aforesaid decision of the Tribunal, we are of the view that there is no merit in ground No.1 raised by the assessee and accordingly the same is dismissed." 5.2 There is nothing on record brought by revenue to make as counter view. 5.3 Respectfully following the aforesaid decision of the Tribunal, we dismiss this grounds raised by the assessee. 6. Ground No.4 - Repairs and renovation 6.1 This ground is not pressed by the assessee, hence dismissed. 7. Ground No.5 - Disallowance u/s 14A 7.1 The coordinate bench of this Tribunal on identical facts in assessee's own case for AY 2002-2003 & 2003-04 in ITA No.79....
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.... to the appellant. Besides this, the AC has also pointed out certain discrepancies / contradictions in the accounts and the TDS certificates issued by the appellant, indicating that the transaction is not free from doubt. However, the appellant in its submission during appeal proceedings and also during assessment proceedings has never contested the statement of the Managing Director of M/s.Kotawala (India) Ltd. The appellant reiterates its stand that the payment has been made by account-payee cheque, which is duly reflected in its bank account and the TDS on such payments has been made and credited to the government account accordingly. Further, it is also stated by the appellant that M/s.Kotawala (India) Ltd. is assessed to tax as evidenced by the PAN number without confirming whether the recipient has reflected the amounts received by it in its return of income. The appellant has not produced any evidence regarding rendering of the service by the recipient of commission either at the assessment stage or at the appeal stage, except the copies of the agreement entered into by it with M/s.Kotawala (India) Ltd. dated 02/01/2002 and 18/10/2002 and the invoices raised by M/s.Kotawala ....
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....ccounts were maintained in respect of each foreign project and audit certificates in Form No.10CCAH have also been furnished in respect of each project. In these circumstances, we are of the view that the decision rendered by the Tribunal in assessee's own case for the earlier Assessment Years on identical ground would apply and therefore the assessee cannot be denied the benefit of deduction under section 80HHA of the Act on the ground that separate books of accounts were not maintained for the foreign projects. Ground No.2 raised by the Revenue is accordingly dismissed." 11.2 There is nothing brought on record by the revenue to take a contrary view. Respectfully following the aforesaid decision of the Tribunal, we dismiss this grounds raised by the revenue. 12. Ground No. 3 - Entrance and subscription fees paid to the club 12.1 The coordinate bench of this Tribunal on identical facts in Assessee's own case for AY 2002-2003 & 2003-04 in ITA No.790 & 791/Bang/2008 order dated 4.3.2021 decided this issue as under: 6. As far as the above ground is concerned, the law is well settled that entrance fee and membership fees paid where the employees become members i....
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....to the total income of the assessee as value of closing stock. 14. On appeal by the assessee, the CIT(A) deleted the addition made by the AO by following the order of the CIT(A) on identical issue for Assessment Year 2000-01 and 2001-02. At the time of hearing, it was brought to our notice that identical issue was decided by the Tribunal in Assessment Year 2000-01 in ITA No.3959/Mum/2004 order dated 08.03.2020 and the Tribunal held as follows: "We have given a careful consideration to the rival submissions and are of the view that the order of the CIT(A) on this issue has to be upheld. Admittedly the method of accounting followed by the Assessee was consistent and accepted in the past by the Revenue authorities. There is no reason why the same should be disturbed. The decision in the case of Abdul Latif (supra) supports the plea of the Assessee. In the said decision, the facts were that the Assessee was engaged in business of manufacture of papers. In return of income for AY 2005-06, assessee had shown, inter alia, purchases of packing material as on 31-3-2005, but no amount of packing material was shown in closing stock. The Assessee submitted before Assessing Of....
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.... We may also mention that the provisions of 80HHC which is the applicable provision for ground No. 6 and the provisions of section 80HHC of the Act which is the applicable section for ground No.9, are identical." 14.2 There is nothing brought on record by the revenue to take a contrary view. Respectfully following the aforesaid decision of the Tribunal, we dismiss this grounds raised by the revenue. 15. Ground No. 6 - Gross interest receipt or net interest income to be reduced for computing business profit under clause (baa) of Section 80HHC 15.1 The coordinate bench of this Tribunal on identical facts in Assessee's own case for AY 2002-2003 & 2003-04 in ITA No.790 & 791/Bang/2008 order dated 4.3.2021 decided this issue as under: "24. Aggrieved by the order of the CIT(A), the Revenue has raised ground No.8 before the Tribunal. At the time of hearing, learned Counsel for the assessee brought to our notice decision of the Tribunal rendered on an identical year for Assessment Year 2001-02 in ITA No.562/Bang/2007 order dated 04.03.2021 wherein the Tribunal accepted a similar decision rendered by the CIT(A) in Assessment Year 2001-02. Learned DR reiterated the stand of....