Sintex Industries Ltd., Ahmedabad V. The ACIT.,OD Range-8, Ahmedabad

ITA 4091/AHD/2008

• Counselvise Citation: 409120514 RSA 2008
• Duration Of Justice: 2 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 15-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 19-12-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K GUPTA
• Keywords: Opportunity of being heard; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, AHMEDABAD BEFORE SHRI D. K. TYAGI, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.4091 / AHD/2008 (ASSESSMENT YEAR 2006-07) SINTEX INDUSTRIES LTD., 701-2, ABHIJEET I, MITHAKALI SIX ROADS, ELLISBRIDGE, AHMEDABAD VS. ACIT, (OSD) RANGE 8, AHMEDABAD I.T.A.NO. 213/AHD/2009 (ASSESSMENT YEAR 2006-07) ACIT (OSD) RANGE 8, VS. SINTEX INDUSTRIES LTD., AHMEDABAD 701-2, ABHIJEET I, MITHAKALI SIX ROADS, ELLISBRIDGE, AHMEDABAD C.O. NO.40/AHD/2009 IN I.T.A.NO. 213/AHD/2009 SINTEX INDUSTRIES LTD., 701-2, ABHIJEET I, MITHAKALI SIX ROADS, ELLISBRIDGE, AHMEDABAD VS. ACIT, (OSD) RANGE 8, AHMEDABAD PAN/GIR NO. : AADCS0858E (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI SANJAY R SHAH AR RESPONDENT BY: SHRI S K GUPTA, CIT DR DATE OF HEARING: 15.11.2011 DATE OF PRONOUNCEMENT: 25.11.2011 O R D E R PER SHRI A. K. GARODIA, AM:- I.T.A.NO. 4091 /AHD/2008 I.T.A.NO. 213/AHD/2009 C.O.NO.40/AHD/2009 2 THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE AND THE CROSS OBJECTION IS FILED BY THE ASSESSEE AND TH ESE ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A) XIV, AHMEDABAD DATED 03.10. 2008 FOR THE ASSESSMENT YEAR 2006-07. FOR THE SAKE OF CONVENIEN CE, ALL ARE BEING DISPOSED OFF BY THIS COMMON ORDER. 2. IT WAS AGREED BY BOTH THE SIDES THAT THE ISSUE A RISING OUT OF THESE CROSS APPEALS AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE ONLY 9 ISSUES AS PER THE CHART SUBMITTED BY THE LD. A.R. A ND HENCE, THESE APPEALS AND THE CROSS OBJECTION CAN BE DECIDED ON THE BASIS OF THIS CHART. 3. AS PER THIS CHART, THE FIRST ISSUE IS REGARDING ALLOCATION OF COMMON HEAD QUARTER EXPENSES OF RS.18.18 LACS TO THE CPP U NITS FOR ALLOWING DEDUCTION U/S 80-IA. THIS IS AS PER GROUND NO.2 OF THE ASSESSEES APPEAL. 4. IT WAS SUBMITTED BY THE LD. A.R. THAT THIS ISSUE IS COVERED BY THE TRIBUNAL ORDER IN THE ASSESSEES OWN CASE FOR THE A SSESSMENT YEAR 2004-05, COPY OF WHICH IS AVAILABLE ON PAGES 43-57 OF THE PA PER BOOK AND THE RELEVANT PAGE IS PAGE NO.48 OF THE PAPER BOOK PARA 16. LD. D.R. OF THE REVENUE MADE THE SAME SUBMISSIONS. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE TRIBUNAL DECISION CITED BY THE LD. A.R. WE FIND TH AT AS PER PARA 16 OF THIS TRIBUNAL ORDER IN ASSESSEES OWN CASE FOR THE ASSES SMENT YEAR 2004-05, THIS ISSUE HAS BEEN DECIDED BY THE TRIBUNAL AGAINST THE ASSESSEE. FOR THE SAKE OF READY REFERENCE, WE REPRODUCE PARA 16 FROM THE TRIBUNAL ORDER IN ASSESSEES OWN CASE OF THE ASSESSMENT YEAR 2004-05 WHICH IS AVAILABLE AT PAGE 48-49 OF THE PAPER BOOK: 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. AFTER CONSIDERING THE NATURE O F EXPENSES COMPRISED IN COMMON HEAD-QUARTER EXPENSES OF RS. 46 1.79 LAKHS, WE FEEL THAT THE SAME WERE RIGHTLY ALLOCATED BY THE A.O. TO CPP I.T.A.NO. 4091 /AHD/2008 I.T.A.NO. 213/AHD/2009 C.O.NO.40/AHD/2009 3 UNIT BECAUSE DIRECTORS AND HEAD QUARTER ALSO HAVE I MPORTANT ROLE IN THE WORKING OF CPP UNIT AND HENCE THESE EXPENSES AR E TO BE APPORTIONED TO CPP UNIT ALSO AND HENCE, WE DECLINE TO INTERFERE IN THE ORDER OF THE LD. CIT (A) ON THIS ISSUE AND ACCO RDINGLY THIS PART OF GROUND NO.L AND 1.1 OF C.O. ARE REJECTED. THE R EMAINING PART OF THIS ISSUE IS RAISED BY THE ASSESSEE IN GROUND NO.1 .2. 6. SINCE, BOTH THE SIDES AGREED THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE TRIBUNAL DECISION IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004-05, WE DECIDE THIS ISSUE AGAIN ST THE ASSESSEE BY RESPECTFULLY FOLLOWING THIS TRIBUNAL DECISION. 7. THE 2 ND ISSUE AS PER THE CHART SUBMITTED BY THE LD. A.R. I S REGARDING ALLOCATION OF INTEREST EXPENDITURE OF RS. 12.64 LACS TO THE DAMAN UNIT FOR COMPUTING DEDUCTION U/S 80-IB. THIS IS AS PER GROUND NO.3 OF ASSESSEES APPEAL. IT WAS AGREED BY BOTH THE SIDES THAT THIS ISSUE IS ALSO COVERED BY THE TRIBUNAL ORDER IN ASSESSEES OWN CAS E FOR THE ASSESSMENT YEAR 2003-04 AND 2004-05. IT HAS BEEN SUBMITTED TH AT THE TRIBUNAL ORDER FOR THE ASSESSMENT YEAR 2003-04 IS AVAILABLE ON PAG ES 63-67 OF THE PAPER BOOK AND PARA 8 ON PAGE 66 IS THE RELEVANT PARA OF THE TRIBUNAL ORDER. IT HAS ALSO SUBMITTED THAT THE TRIBUNAL ORDER FOR THE ASSESSMENT YEAR 2004-05 IS AVAILABLE ON PAGE 43-57 OF THE PAPER BOOK AND TH E RELEVANT PARA OF THE TRIBUNAL ORDER IS PARA NO.20 OF THIS TRIBUNAL ORDER AS AVAILABLE ON PAGE 50 OF THE PAPER BOOK. WE FIND THAT IN ASSESSMENT YEAR 2003-04, IT WAS HELD BY THE TRIBUNAL THAT INTEREST EXPENDITURE HAS TO BE ALLOCATED ON THE BASIS OF INVESTMENT IN RESPECTIVE UNITS AND NOT IN THE RATIO OF TURNOVER. SIMILARLY, IN ASSESSMENT YEAR 2004-05, IT IS NOTED BY THE TRIB UNAL THAT IN THAT YEAR, IT IS HELD BY THE CIT(A) THAT INTEREST EXPENDITURE HAS TO BE ALLOCATED ON THE BASIS OF INVESTMENT MADE AND NOT ON THE BASIS OF TU RNOVER AND THE REVENUE HAS NOT RAISED ITS ISSUE IN THIS APPEAL. HENCE, IT IS SEEN THAT THIS ISSUE HAS ATTAINED FINALITY THAT INTEREST EXPENDITURE HAS TO BE ALLOCATED ON THE BASIS OF INVESTMENT MADE BY THE ASSESSEE IN FIXED ASSETS. IN THE PRESENT YEAR, I.T.A.NO. 4091 /AHD/2008 I.T.A.NO. 213/AHD/2009 C.O.NO.40/AHD/2009 4 LD. CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE FOR A LLOCATING INTEREST EXPENDITURE TO DAMAN AND BADDI UNIT IN THE RATIO OF INVESTMENT. HENCE, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF LD. C IT(A) ON THIS ASPECT. 8. THE 3 RD ISSUE IS REGARDING ALLOCATION OF GENERAL EXPENSES OF RS.168.99 LACS AND ADMINISTRATIVE EXPENSES OF RS.49 .49 LACS FOR COMPUTATION OF DEDUCTION U/S 80-IB OF THE INCOME TA X ACT, 1961. THIS ISSUE IS RAISED AS PER GROUND NO.4 OF THE ASSESSEE S APPEAL. IT WAS AGREED BY BOTH THE SIDES THATS THIS ISSUE IS COVERED AGAI NST THE ASSESSEE BY THE TRIBUNAL DECISION IN THE ASSESSEES OWN CASE FOR TH E ASSESSMENT YEAR 2004-05 AND THE RELEVANT PARA OF THE TRIBUNAL ORDER IS PARA 21 ON PAGE 50 OF THE PAPER BOOK. FOR THE SAKE OF READY REFERENCE , WE REPRODUCE PARA 21 OF THE TRIBUNAL ORDER FROM PAGE 50-51 OF THE PAPER BOOK: 21. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF T HE AUTHORITIES BELOW. WE FIND THAT WE HAVE TO DECIDE ONLY REGARDIN G ALLOCATION OF SALARY EXPENSES AND ADMINISTRATIVE/GENERAL EXPENSES TO TWO UNITS I.E. DAMAN AND BADDI UNITS FOR THE PURPOSE OF C OMPUTATION OF DEDUCTION ALLOWABLE U/S. 80IB. THE SUBMISSI ON OF THE ASSESSEE IS THIS THAT SINCE DIRECT EXPENSES HAS BEEN DIRECTL Y ALLOCATED TO THESE TWO UNITS, NO PART OF COMMON EXPENSES SHOULD BE FURTHER ALLOCATED. WE DO NOT FIND ANY MERIT IN THIS CONTENT ION BECAUSE ACTUAL DIRECT EXPENSES ARE TO BE ALLOCATED DIRECTLY AND THE COMMON EXPENSES, HAS TO BE APPORTIONED ON A REASONABLE BAS IS, WHICH HAS BEEN DONE BY THE A.O. IN THE PRESENT CASE AND HENCE , NO INTERFERENCE IS CALLED FOR. 9. BY RESPECTFULLY FOLLOWING THIS TRIBUNAL DECISION IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004-05, WE HOLD T HAT IN THE PRESENT YEAR ALSO, THIS ISSUE IS COVERED AGAINST THE ASSESS EE AND THE ALLOCATION OF GENERAL EXPENSE OF RS.168.99 LACS AND ADMINISTRATIV E EXPENSES OF RS.49.49 LACS FOR COMPUTATION OF DEDUCTION U/S 80-I B IS UPHELD. 10. THE 4 TH ISSUE AS PER CHART IS ALLOCATION OF LOSS OF DAMAN UNIT TO OTHER UNITS FOR COMPUTATION OF DEDUCTION U/S 80-IA AND 80-IB. THIS ISSUE I.T.A.NO. 4091 /AHD/2008 I.T.A.NO. 213/AHD/2009 C.O.NO.40/AHD/2009 5 IS RAISED AS PER GROUND NO.5 OF THE ASSESSEES APPE AL. IT WAS THE SUBMISSION BY THE LD. A.R. OF THE ASSESSEE THAT IN THE ASSESSMENT YEAR 2004-05, THIS ISSUE WAS THERE BUT IT IS NOTED BY TH E TRIBUNAL IN PARA 18 ON PAGE 49 OF THE PAPER BOOK THAT AFTER REVISED ALLOCA TION OF INTEREST EXPENSES TO DAMAN AND BADDI UNITS, THERE WILL BE NO LOSS IN THESE TWO UNITS AND HENCE THIS GROUND REGARDING ALLOCATION OF LOSS IS OF ACADEMIC INTEREST ONLY. IT WAS SUBMITTED THAT ON THIS BASIS , THIS ISSUE WAS NOT DECIDED BY THE TRIBUNAL IN THAT YEAR. IT WAS ALSO SUBMITTED THAT IN ASSESSMENT YEAR 2005-06 ALSO, THIS ISSUE IS THERE A S PER ORDER OF LD. CIT(A) FOR THAT YEAR, WHICH IS AVAILABLE ON PAGE 37 -42 OF THE PAPER BOOK BUT THERE IS NO TRIBUNAL DECISION ON THIS ASPECT TI LL NOW. HE PLACED RELIANCE ON THE JUDGMENT OF HONBLE DELHI HIGH COUR T RENDE4RED IN THE CASE OF DEWAN KRAFT SYSTEM (P) LTD. AS REPORTED IN 160 TAXMAN 343 (DEL.) AS AGAINST THIS, LD. D.R. OF THE REVENUE S UPPORTED THE ASSESSMENT ORDER. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE MATERIAL ON RECORD AND THE JUDGMENT OF HONBLE DELHI HIGH COURT CITED BY THE LD. A.R. IN THAT CASE, THE A.O. ADJUSTED THE LOSS OF DELHI UNIT AGAINST THE PROFITS OF KALAMB UNIT AND RESTRICTED THE DEDUCTION TO THE SAID AMOUNT. IN THAT CASE, IT IS OBSERVED BY THE HONBLE DELHI HIGH COURT THAT KALAMB UNIT WAS THE ONLY UNIT OF THE ASSESSEE WHICH WAS EL IGIBLE FOR DEDUCTION U/S 80-IA AND HENCE, IT WAS TO BE TREATED AS INDEPENDEN T UNIT AND THE SAME HAS TO BE TREATED AS THE ONLY SOURCE OF INCOME FOR THE ASSESSEE FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S 80-IA AND, THEREFORE, IT WAS HELD THAT THE A.O. WAS NOT JUSTIFIED IN RESTRICTING THE DEDUCTION. IN THE PRESENT CASE, THE A.O. HAS ALLOCATED THE LOSS OF DAMAN UNIT ON PROPORTIONATE BASIS TOWARDS PROFIT OF CPP UNIT AND BADDI UNIT WHICH ARE ELIGIBLE FOR DEDUCTION U/S 80-IA AND 80-IB RESPECTIVELY. IN THE PRESENT CASE, EVEN THE DAMAN UNIT IS ALSO ELIGIBLE FOR DEDUCTION U/S 80-IB WHEREAS IN THE CASE OF I.T.A.NO. 4091 /AHD/2008 I.T.A.NO. 213/AHD/2009 C.O.NO.40/AHD/2009 6 CIT VS DEWAN KRAFT SYSTEMS P. LTD. (SUPRA), ONLY KA LAMB UNIT WAS ELIGIBLE FOR DEDUCTION U/S 80-IA AND OTHER UNITS I. E. DELHI AND NOIDA UNITS WERE NOT ELIGIBLE FOR DEDUCTION U/S 80-IA OR 80-IB. HONBLE DELHI HIGH COURT IN THAT CASE HAD REPRODUCED PROVISIONS O F SUB-SECTION (7) OF SECTION 80-IA OF THE ACT AND FOR THE SAKE OF READY REFERENCE, THE SAME IS REPRODUCED HERE ALSO: (7) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHE R PROVISION OF THIS ACT, THE PROFITS AND GAINS OF AN ELIGIBLE BUSI NESS TO WHICH THE PROVISIONS OF SUB-SECTION (1) APPLY SHALL, FOR THE PURPOSES OF DETERMINING THE QUANTUM OF DEDUCTION UNDER SUB-SECT ION (5) FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR, BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL AS SESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UP TO AND INCLU DING THE ASSESSMENT YEAR FOR WHICH THE DETERMINATION IS TO B E MADE. 12. WE ALSO REPRODUCE PARA 15 OF THIS JUDGMENT OF H ONBLE DELHI HIGH COURT, WHICH HIS AS UNDER: 15. THUS, THE KALAMB UNIT BEING THE ONLY UNIT OF T HE ASSESSEE ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IA OF THE A CT IS TO BE TREATED AS AN INDEPENDENT UNIT AND THE SAME IS TO B E TREATED AS THE ONLY SOURCE OF INCOME FOR ASSESSEE FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 80-IA OF THE ACT. THE DEDUC TION CLAIMED BY THE ASSESSEE UNDER SECTION 80-IA OF THE ACT, THU S, IS IN ACCORDANCE WITH THE SAID PROVISIONS AND AS SUCH WE FIND THAT THERE IS NO INFIRMITY IN THE IMPUGNED ORDER PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL. 13. FROM THE ABOVE, WE FIND THAT IT IS MENTIONED IN SUB-SECTION (7) OF SECTION 80-IA THAT THE PROFITS OF ELIGIBLE BUSINESS SHOULD BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF T HE INCOME OF THE ASSESSEE. THE USE OF WORD WERE IN SUB-SECTION (7 ) OF SECTION 80-IA IS SUGGESTING THAT IF THERE ARE MORE THAN ONE ELIGIBLE BUSINESS, ALL ELIGIBLE BUSINESS SHOULD BE CONSIDERED TOGETHER. FROM PARA 15 OF THIS JUDGMENT OF HONBLE DELHI HIGH COURT ALSO, IT IS SEEN THAT THIS DECISION IS ON THIS BASIS I.T.A.NO. 4091 /AHD/2008 I.T.A.NO. 213/AHD/2009 C.O.NO.40/AHD/2009 7 THAT IN THAT CASE, KALAMB UNIT WAS THE ONLY UNIT WH ICH WAS ELIGIBLE FOR DEDUCTION U/S 80-IA. BUT IN THE PRESENT CASE, ALL THE THREE UNITS I.E. DAMAN UNIT, BADDI UNIT AND CPP UNIT ARE ELIGIBLE FO R DEDUCTION U/S 80- IA/80-IB AND HENCE, IN OUR CONSIDERED OPINION, THE LOSS OF DAMAN UNIT WAS RIGHTLY ALLOCATED TO THE REMAINING TWO UNITS I. E. BADDI UNIT AND CPP UNIT AND HENCE, NO INTERFERENCE IS CALLED FOR IN TH E ASSESSMENT ORDER ON THIS ASPECT. THE JUDGMENT OF HONBLE DELHI HIGH CO URT CITED BY THE ASSESSEE IS NOT APPLICABLE IN THE PRESENT CASE BECA USE THE FACTS ARE DIFFERENT AS NOTED ABOVE. THIS ISSUE IS DECIDED AG AINST THE ASSESSEE. 14. THE 5 TH ISSUE AS PER THE CHART IS REGARDING DISALLOWANCE U /S 14A. THIS ISSUE IS AS PER GROUND NO.6OF THE ASSESSEES A PPEAL. IT WAS SUBMITTED BY THE LD. A.R. OF THE ASSESSEE THAT THIS ISSUE IS NOT PRESSED DUE TO SMALLNESS OF AMOUNT AND HENCE, THIS ISSUE IS ALS O DECIDED AGAINST THE ASSESSEE. 15. THE SIXTH ISSUE IS REGARDING ALLOWING PARTIAL R ELIEF OF RS.22,43,803/- IN RESPECT OF APPORTIONMENT MADE FOR THE CLAIM OF HEADQUARTER EXPENSES. THIS ISSUE IS AS PER GROUND NO.1 OF THE REVENUES APPEAL. IT WAS SUBMITTED BY THE LD. A.R. THAT ALTH OUGH THIS ISSUE HAS BEEN DECIDED BY THE TRIBUNAL AGAINST THE ASSESSEE IN ASS ESSMENT YEAR 2004-05 AS PER PARA 16 ON PAGE 40 OF THE PAPER BOOK BUT REL IANCE IS PLACED ON THE DECISION OF HONBLE DELHI HIGH COURT RENDERED IN TH E CASE OF DEWAN KRAFT SYSTEM P. LTD (SUPRA). LD. D.R. OF THE REVEN UE SUPPORTED THE ASSESSMENT ORDER. 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGEMENT OF HONBLE DELHI HIGH COURT CITED BY THE LD. A.R. WE FIND THAT THIS JUDGMENT OF HONBLE DELHI HIGH COURT CITE D BY THE LD. A.R. IS NOT APPLICABLE IN THE PRESENT CASE BECAUSE THE FACT S ARE DIFFERENT AND THIS HAS BEEN DISCUSSED BY US WHILE DECIDING THE ISSUE N O.4 REGARDING GROUND I.T.A.NO. 4091 /AHD/2008 I.T.A.NO. 213/AHD/2009 C.O.NO.40/AHD/2009 8 NO.5 OF THE ASSESSEES APPEAL. HENCE, THIS JUDGMEN T HONBLE DELHI HIGH COURT IS OF NO HELP TO THE ASSESSEE IN THE PRESENT CASE. IN ASSESSMENT YEAR 2004-05, THIS ISSUE HAS BEEN DECIDED BY THE TRIBUNA L AGAINST THE ASSESSEE AS PER PARA 16 OF THE TRIBUNAL ORDER WHICH IS REPRO DUCED BELOW: 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. AFTER CONSIDERING THE NATURE O F EXPENSES COMPRISED IN COMMON HEAD-QUARTER EXPENSES OF RS. 46 1.79 LAKHS, WE FEEL THAT THE SAME WERE RIGHTLY ALLOCATED BY THE A.O. TO CPP UNIT BECAUSE DIRECTORS AND HEAD QUARTER ALSO HAVE I MPORTANT ROLE IN THE WORKING OF CPP UNIT AND HENCE THESE EXPENSES AR E TO BE APPORTIONED TO CPP UNIT ALSO AND HENCE, WE DECLINE TO INTERFERE IN THE ORDER OF THE LD. CIT (A) ON THIS ISSUE AND ACCO RDINGLY THIS PART OF GROUND NO.L AND 1.1 OF C.O. ARE REJECTED. THE R EMAINING PART OF THIS ISSUE IS RAISED BY THE ASSESSEE IN GROUND NO.1 .2. 17. AS PER THIS PARA OF THE TRIBUNAL ORDER, IT WAS HELD BY THE TRIBUNAL THAT THE EXPENSES WERE RIGHTLY ALLOCATED BY THE A.O . TO CPP UNIT. HENCE, ON THIS ASPECT, WE REVERSE THE ORDER OF LD. CIT(A) AND RESTORE THAT OF THE A.O. GROUND NO.1 OF THE REVENUES APPEAL IS ALLOWE D. 18. THE NEXT ISSUE I.E. ISSUE NO.7 AS PER THE CHART IS REGARDING ALLOCATION OF INTEREST EXPENSES OF RS.12.81 LACS ON THE BASIS OF INVESTMENT RATIO. THIS ISSUE HAS BEEN RAISED AS PER GROUND NO.2 OF TH E REVENUES APPEAL. 19. IT WAS AGREED BY BOTH THE SIDES THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT BY THE T RIBUNAL ORDER IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2003-04 AND 2004-05. RELEVANT PARA OF THE TRIBUNAL DECISION IS AT PARA 8 ON PAGE 56 OF THE PAPER BOOK FOR THE ASSESSMENT YEAR 2003-04 AND PARA 20 ON PAGE 50 OF THE PAPER BOOK FOR THE ASSESSMENT YEAR 2004-05. SINCE THIS ISSUE HAS ATTAINED FINALITY IN THE EARLIER YEARS THAT INTEREST EXPENDITURE HAS TO BE ALLOCATED ON THE BASIS OF INVESTMENT RATIO, WE DO NOT FIND ANY MERIT IN TH IS GROUND OF THE REVENUE AND HENCE, THE SAME IS REJECTED BY RESPECTF ULLY FOLLOWING THE TRIBUNAL ORDER IN THE ASSESSEES OWN CASE FOR THE A SSESSMENT YEAR 2003-04. I.T.A.NO. 4091 /AHD/2008 I.T.A.NO. 213/AHD/2009 C.O.NO.40/AHD/2009 9 20. THE ISSUE NO. 8 IS REGARDING RELIEF ALLOWED BY THE LD. CIT(A) FOR THE ALREADY ALLOCATED SALARY EXPENSES. THIS ISSUE HAS BEEN RAISED BY THE REVENUE AS PER GROUND NO.3 OF THE REVENUES APPEAL. LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHEREAS THE LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). HE ALSO SUBMITTED THAT DOUBLE DISALLOWANCE HAS TO BE ELIMINATED AND IN THIS REGARD, HE DRAWN OUR ATTENTION TO PAGES 23-33 OF THE PAPER BOOK WHICH ARE P & L ACCOUNT OF DAMAN AND BADDI UNI TS RESPECTIVELY. 21. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY THE LD. CIT(A) A PER PARA 5.2 OF HIS ORDER WHICH IS REPRODUCED BELOW: I FIND THAT SIMILAR ISSUE WAS INVOLVED IN EARLIER YEARS AND THE STAND OF THE A.O. WAS CONFIRMED. FOLLOWING THE STAND TAK EN IN EARLIER YEARS, I CONFIRM THE ALLOCATION MADE BY THE A.O. H OWEVER, AS REGARDS ALTERNATIVE CONTENTION THAT TO THE EXTENT O F ALLOCATION OF SALARY ALREADY MADE BY THE APPELLANT, THE SAME SHOU LD BE REDUCED TO AVOID DOUBLE DISALLOWANCE, I AGREE WITH THE APPE LLANT AND DIRECT THE A.O. TO GRANT RELIEF ACCORDINGLY. THE OTHER AL TERNATIVE CONTENTION THAT ONLY SALARY OF PLASTIC DIVISION SHO ULD BE ALLOCATED AMONG DAMAN AND BADDI UNITS IN THE RATIO OF SALES O F THESE UNITS IS FOUND TO BE REASONABLE AND THE SAME IS ACCEPTED, TH E A.O. IS DIRECTED TO GRANT RELIEF ACCORDINGLY. 22. FROM THE ABOVE PARA, WE FIND THAT THE LD. CIT(A ) HAS IN PRINCIPLE APPROVED THE STAND OF THE A.O. BUT HE HAS GIVEN DIR ECTION TO THE A.O. THAT TO THE EXTENT OF ALLOCATION OF SALARY ALREADY ALLOC ATED BY THE ASSESSEE, THE SAME SHOULD BE REDUCED TO AVOID DOUBLE DISALLOWANCE . HE HAS NOT GIVEN FINDING AS TO WHAT EXTENT, THERE IS DOUBLE DISALLOW ANCE AND HENCE, WE FEEL THAT THIS ASPECT SHOULD BE EXAMINED BY THE A.O. WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THE MATTER BAC K TO THE FILE OF THE A.O. THE ASSESSEE SHOULD BRING EVIDENCE ON RECORD TO SHOW AS TO HOW MUCH WAS THE TOTAL SALARY EXPENSES AND HOW MUCH WAS THE ALLOCATION BY THE ASSESSEE ITSELF AND HOW MUCH WAS THE REMAINING PORTION OUT OF WHICH I.T.A.NO. 4091 /AHD/2008 I.T.A.NO. 213/AHD/2009 C.O.NO.40/AHD/2009 10 PROPORTIONATE ALLOCATION HAS TO BE MADE BY THE A.O. AND THEREAFTER, THE A.O. SHOULD DECIDE THIS ASPECT AFTER PROVIDING ADEQ UATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS GROUND OF THE RE VENUE IS ALLOWED FOR STATISTICAL PURPOSES. 23. THE LAST ISSUE IS THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE CROSS OBJECTION ABOUT ADDITION ON ACCOUNT OF ALLOCATION O F SALARY EXPENSES FOR THE DAMAN AND BADDI UNITS. 24. IT WAS SUBMITTED BY THE LD. A.R. THAT THE LD. C IT(A) SHOULD HAVE DIRECTED TO ALLOCATE SALARY OF ONLY THOSE EMPLOYEES WHO HAVE BEEN MANAGING CORPORATE AFFAIRS AND NOT OF ALL THE EMPLO YEES BUT WE DO NOT FIND ANY MERIT IN THIS CONTENTION RAISED BY THE ASS ESSEE AND HENCE, THIS GROUND OF THE ASSESSEE RAISED IN THE CROSS OBJECTIO N IS REJECTED. 25. IN THE RESULT, APPEAL OF THE ASSESSEE AND THE R EVENUE ARE PARTLY ALLOWED WHEREAS THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. 26. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD./- SD./- (D. K. TYAAGI) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD I.T.A.NO. 4091 /AHD/2008 I.T.A.NO. 213/AHD/2009 C.O.NO.40/AHD/2009 11 1. DATE OF DICTATION 22/11 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 23/11 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S.24/11 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 25/11 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S. 25/11 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 25/11/2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..