ADOR WELDING LTD., MUMBAI V. ADDL.CIT, RANGE-2(1), MUMBAI

ITA 6145/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71488 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-10-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 06-09-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: GIRISH M BALEKUNDRI
• Keywords: Business expenditure
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUM BAI . . , , BEFORE SHRI B. R. MITTAL, JM AND SHRI SANJAY ARORA , AM ./ I.T.A. NO. 6145/MUM/2011 ( / ASSESSMENT YEAR: 2008-09) ADOR WELDING LTD. 4 TH & 5 TH FLOOR, ADOR HOUSE, 6K DUBASH MARG, FORT, MUMBAI-400 001 / VS. ADDL. CIT, RANGE-2(1), MUMBAI ! ./' ./PAN/GIR NO. AAACA 9076 B ( !# /APPELLANT ) : ( $!# / RESPONDENT ) !# % / APPELLANT BY : SHRI GIRISH M. BALEKUNDRI $!# & % / RESPONDENT BY : SHRI SURENDRA KUMAR ' ()* & + / DATE OF HEARING : 01.10.2013 ,-. & + / DATE OF PRONOUNCEMENT : 09.10.2013 / / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-4, MUMBAI (CIT(A) FOR SHO RT) DATED 01.07.2011, DISMISSING THE ASSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S .143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A. Y.) 2008-09 VIDE ORDER DATED 08.12.2010. 2 ITA NO. 6145/MUM/2011 (A.Y. 2008-09) ADOR WELDING LTD. VS. ADDL. CIT 2. OPENING THE ARGUMENTS FOR AND ON BEHALF OF THE A SSESSEE, IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE (AR), ITS COUNSEL, TH AT THE ASSESSEE-COMPANY HAS FIVE UNITS, OF WHICH ADMITTEDLY ONLY ONE, I.E., AT SILVA SSA, IS AN ELIGIBLE UNIT U/S.80-IB OF THE ACT. THE ONLY CONTROVERSY THAT ARISES IS THE DETERM INATION OF THE PROFIT DERIVED FROM THE SAID UNIT QUALIFYING FOR DEDUCTION UNDER THE SAID S ECTION. SEPARATE BOOKS OF ACCOUNT ARE ADMITTEDLY BEING MAINTAINED FOR THE SAID UNIT, AND REPORT IN THE PRESCRIBED FORM, I.E., FORM 10CCB, HAS ALSO BEEN OBTAINED AND PLACED ON RE CORD. THE DIFFERENCE ARISES IN VIEW OF THE ALLOCATION OF INTEREST AND FINANCE CHARGES F OR RS.117.39 LACS. THE SAME FORMING PART OF THE HEAD OFFICE EXPENDITURE, INCURRED AT A TOTAL OF RS.222.15 LACS UNDER THE SAID HEAD, STANDS ALLOCATED TO THE VARIOUS UNITS ON THE BASIS OF THEIR RESPECTIVE TURNOVERS, SO THAT THE SALES OF THE SILVASSA UNIT (AT RS.77.22 CR ORES), BEING AT 29.6% OF THE ASSESSEES TOTAL TURNOVER (RS. 260.55 CRORES), THE SAID SUM ( RS.117.39 LACS) WAS ALLOCATED TO THE SAID UNIT IN THE SAME RATIO, I.E., AT RS.34.75 LACS , REDUCING THE DEDUCTION U/S. 80IB CLAIMED BY THE ASSESSEE QUA THE SAID UNIT PER ITS RETURN TO THAT EXTENT. THE S AME STOOD CONFIRMED IN APPEAL ON THE SAME BASIS, SO THAT, AGGRIEVED, THE A SSESSEE IS IN SECOND APPEAL. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. NO INFIRMITY WHATSOEVER IN THE SAID ALLOCATION STOOD POINTED OUT BY THE LD. AR BEFORE US, EVEN ON BEING SPECIFICALLY CALLED UPON TO STATE THE SAME, HAVING APPEALED AGAINST THE ORDER BY THE FIRST APPELLATE AUTHORITY. HIS SUBMISSION THAT THERE HAS IN FACT BEEN A DECLINE IN THE INTEREST EXPENSE OF THE SILVASSA UNIT, I.E., VIS--VIS THE P RECEDING YEAR, AS WOULD BE APPARENT FROM THE PROFIT AND LOSS ACCOUNT OF THE SAID UNIT, BEING A CASH GENERATING UNIT, WOULD BE TO NO CONSEQUENCE. ADMITTEDLY, THE INTEREST EXPENDITURE H AS BEEN INCURRED BY THE HEAD OFFICE, WHICH EXISTS AND OPERATES ONLY FOR SERVICING THE DI FFERENT OPERATIONAL UNITS. THE ASSESSEES INCOME COULD ONLY BE DETERMINED AFTER DE DUCTING THE HEAD OFFICE EXPENSES, BEING ADMITTEDLY BUSINESS EXPENSES AND CLAIMED AS S UCH, AND WHERE SUBJECT TO ANY DEDUCTION, I.E., IN RESPECT OF THAT DERIVED FROM AN Y SPECIFIC SOURCE OF INCOME OR OPERATION, TO THE EXTENT IT IS RELATABLE THERETO. ON A QUERY B Y THE BENCH, IT WAS EXPLAINED BY THE LD. AR THAT THE SAID INTEREST EXPENDITURE IS WITH REGAR D TO THE BORROWINGS MADE TOWARD THE 3 ITA NO. 6145/MUM/2011 (A.Y. 2008-09) ADOR WELDING LTD. VS. ADDL. CIT POOL OF CARS BEING USED BY THE HEAD OFFICE. THE CAS E FOR ALLOCATION IS, THEREFORE, UNEXCEPTIONAL. ANY INCOME THAT MAY HAVE BEEN EARNED BY THE HEAD OFFICE, AS CLAIMED BY THE LD. AR BEFORE US, WOULD BE TO NO CONSEQUENCE; T HE SAME BEING ASSESSABLE AS SUCH. IT IS ONLY WHERE THE RELEVANT EXPENDITURE, I.E., ALLOCATI ON OF WHICH IS BEING MADE, STANDS INCURRED FOR THE PURPOSE OF EARNING OR TOWARD THE S AID INCOME, THAT A SET OFF OF THE SAID EXPENDITURE AGAINST THE RESULTING INCOME WOULD ARIS E, PRECLUDING ALLOCATION OF THE SAID EXPENDITURE. WE, THEREFORE, FIND NO INFIRMITY WHATS OEVER IN THE ALLOCATION AS MADE BY THE REVENUE; IT HAVING ALREADY EXCLUDED FROM THE RELEVA NT HEAD OFFICE EXPENDITURE THE SUMS WHICH WERE DIRECTLY RELATABLE TO SPECIFIC PURPOSES. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. 0. 1 (230 & 0 & 45 ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 09, 2 013 SD/- SD/- (B. R. MITTAL) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ' * MUMBAI; 6( DATED : 09.10.2013 ).(../ ROSHANI , SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $!# / THE RESPONDENT 3. ' 7 ( ) / THE CIT(A) 4. ' 7 / CIT CONCERNED 5. :);< $ (=2 , + =2. , ' * / DR, ITAT, MUMBAI 6. <>3 ?* / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , ' * / ITAT, MUMBAI