TaxTMI 
TaxTMI 
2017 (2) TMI 1552
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....atio of turnover to the Silvassa Unit II despite the fact that the amount of managerial commission was already included in the aggregate amount of salary, wages & bonus of Rs. 3,77,46,150/- and thereby confirming double adjustment made by the AO. 3. At the very outset, the ld. counsel for the assessee stated that the impugned issues have been decided in favour of the assessee and against the revenue by the Tribunal in assessee's own case in earlier assessment years i.e. A.Y. 2008-09 & 2009-10 in ITA Nos. 1086 & 1087/Ahd/2013. 4. The ld. D.R. could not bring any distinguishing decision in favour of the revenue. 5. We have carefully perused the orders of the authorities below. We find force in the contention of the ld. counsel. A perusal of the order of the First Appellate Authority shows that he has followed the decision in the appellant's case for A.Y. 2009-10 in Appeal No. CAB/III-214/2011-12. The matter travelled up to the Tribunal and the Tribunal in ITA No. 1086 & 1087/Ahd/2013 for A.Ys. 2008-09 & 2009-10 had considered similar issues and held as under:- 18. We have given a thoughtful consideration to the orders of the authorities below. Th....
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....lity. Present Tax Case (Appeal) is filed by the Revenue as against the orders of the Tribunal relating to assessment years 1991-92, 1993-94, 1994-95, 1995-96, 1996-97 and 1997-98. When the same was pointed out to the learned standing counsel, he placed reliance on the decision of the Apex Court reported in 248 ITR 432 CONSOLIDATED COFFEE LIMITED v. STATE OF KARNATAKA as well as to the decision of the Madhya Pradesh High Court reported in (2012) 81 CCH 031 PRESTIGE FOODS LIMITED v. CIT, and submitted that the common expenses be apportioned among the various units depending on the turnover. We do not find that the above stated decisions would be of any assistance to the Revenue, particularly the decision of the Apex Court. 4. A reading of the Apex Court decision reported in 248 ITR 432 CONSOLIDATED COFFEE LIMITED v. STATE OF KARNATAKA shows that it relates to the claim under the Karnataka Agricultural Income Tax Act, 1957 and a specific rule framed in 1957. The Apex Court referred to Rule 7 of the Karnataka Agricultural Income Tax Rules, which reads as follows:- "Computation of deduction on mixed income where a deduction in respect of any item admissible under Secti....
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....rnover. The question that arises for consideration is not the same as had been considered in the Madhya Pradesh High Court. It is not denied by the Revenue that assessee's units have separate accounts indicating their income and the expenses. The assessee does not claim any deduction on the expenses incurred by the Head Office. The only question is as to whether the common expenses incurred by the Head Office for the purpose of maintaining the units would nevertheless be subjected to the doctrine of proportionality for the purpose of deduction. 21. The Hon'ble High Court of Bombay in the case of Zandu Pharmaceutical Works Ltd. in Tax Appeal No. 8 of 2007 was seized with the following question of law. "Whether Tribunal was justified in confirming the allocation of research and development expenses incurred by the head office among the four manufacturing units on the presumption that the expenditure so incurred was for the benefit of these manufacturing units?" 22. And the Hon'ble High Court held as under:- * The head office and each of the units have their own separate R&D departments, including laboratories. The R&D work related to the d....
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....the benefit thereof to a third party. It can always grant a licence in respect of any patent or design to a third party. In that event, the other units would not derive any benefit in respect thereof. The presumption of a nexus between the R&D activities and the units is not well founded. [Para 18] Therefore, the Tribunal was not justified in confirming the allocation of R&D expenses incurred by the head office among manufacturing units. [Para 19] 23. In the light of the judicial decisions discussed hereinabove , we find that the assessee has maintained separate books of accounts for Silvassa unit-I & II as evident from the two Audit Reports exhibited at pages 7 to 19 and 20 to 33 of the paper book. A perusal of the orders of the authorities below shows that the allocation of expenses have been made more out of compulsion then out of necessity. In our considered opinion and the understanding of the facts, the A.O. has not pointed out any flaw or defect in the allocations statement exhibited elsewhere. We find force in the contention of the ld. counsel that the Managerial Commission cannot be allotted to the Silvassa unit. We also agree that only expenses relating ....