Pr. Commissioner Of Income Tax-14, Mumbai v. M/S. Godrej Sara Lee Ltd

(Private Secretary) IN THE HIGH COURT OF JUDICATURE AT BOMBAYO.O.C.J. INCOME TAX APPEAL NO. 373 OF 2017 Pr. Commissioner of Income Tax-14, Mumbai..Appellant Versus M/s. Godrej Sara Lee Ltd (Now amalgamated with Godrej Consumer Products Ltd) ..Respondent ................... Mr. Suresh Kumar a/w Ms. Samiksha Kanani for the Appellant Mr. Suresh Kumar a/w Ms. Samiksha Kanani for the Appellant •Mr. F.V. Irani i/by Mr. Atul Jasani for the RespondentMr. F.V. Irani i/by Mr. Atul Jasani for the Respondent ................... CORAM : AKIL KURESHI & SARANG V. KOTWAL, JJ. DATE : MARCH 22, 2019. P.C.: 1.This appeal is filed by the Revenue to challenge thejudgment of the Income Tax Appellate Tribunal (“theTribunal” for short) raising following questions for ourconsideration. “(i) Whether on the facts and in the circumstances of the caseand in law, the Tribunal was justified in accepting therespondent company's computation of the profits of theunits eligible for deduction u/s. 80IB and 80IC, whereinexpenditure was allocated on turnover basis, whereas theAO had reallocated expenditure of the eligible segmentson the basis of the sales ratio, which was a reasonablebasis of the allocation of expenditure?"and in law, the Tribunal was justified in accepting therespondent company's computation of the profits of theunits eligible for deduction u/s. 80IB and 80IC, whereinexpenditure was allocated on turnover basis, whereas theAO had reallocated expenditure of the eligible segmentson the basis of the sales ratio, which was a reasonablebasis of the allocation of expenditure?" (ii) Whether on the facts and in the circumstances of the caseand in law, the Tribunal was justified in rejecting themethod proposed by the CIT(A) where he had allocated50% of the different heads of expenditure between thevarious units in its order for A.Y. 2008-09?and in law, the Tribunal was justified in rejecting themethod proposed by the CIT(A) where he had allocated50% of the different heads of expenditure between thevarious units in its order for A.Y. 2008-09? (iii) Whether on the facts and in the circumstances of the caseand in law, the Tribunal was justified in setting aside theorders of the AO to recompute the ALP without giving anyspecific directions?"and in law, the Tribunal was justified in setting aside theorders of the AO to recompute the ALP without giving anyspecific directions?" 2.Question Nos. (i) and (ii) are overlapping and arise outof the issue of allocation of expenditure by the respondentassessee between the business which is eligible fordeduction under Section 80IB and 80IC of the Income TaxAct,1961 (“the Act” for short) and the ineligible business.The Assessing OfÏcer on ad-hoc basis allocated 50%expenditure between the two sets of businesses. TheTribunal, by the impugned judgment, applied the proportionof the ratio of turnover between two businesses. 3.Learned counsel for the assessee pointed out that thisCourt in the case of this very assessee while dismissing theRevenue's Income Tax Appeal 613 of 2016 by order dated24.10.2018 had confirmed the Tribunal's similar order undersimilar circumstances. Under these circumstances no question of law arises in this respect. 3.Learned counsel for the assessee pointed out that thisCourt in the case of this very assessee while dismissing theRevenue's Income Tax Appeal 613 of 2016 by order dated24.10.2018 had confirmed the Tribunal's similar order undersimilar circumstances. Under these circumstances no question of law arises in this respect. 4.Question No. (iii) relates to the arm's length priceadjustment towards the corporate guarantee provided by theassessee to its associated enterprise. The assessee hadcharged 3% of the amount by way of corporate guaranteeagainst which the assessing ofÏcer had assessed 5.22%. TheTribunal, while disposing of the appeal of the assessee,remanded the issue back to the Assessing OfÏcer for freshconsideration and disposal, bearing in mind the earlier ordersin case of the assessee and other precedents. We areinformed that pursuant to such remand order, the AssessingOfÏcer has already passed a fresh order assessing corporateguarantee fee at 3.5%. Learned counsel for the respondentassessee states that in view of smallness of the amount, theassessee had not carried this issue any further. Under thesecircumstances, this question has become academic. 5.In the result, the Income Tax Appeal is dismissed. [ SARANG V. KOTWAL, J. ] [ AKIL KURESHI, J ]