The Commissioner Of Income Tax-7 v. M/S. Ronch Polymers Pvt. Ltd

sg IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1547 OF 2012 The Commissioner of Income Tax-7 Vs.M/s. Ronch Polymers Pvt. Ltd. … Appellant … Respondent ..... Mr. Arvind Pinto for the Appellant.B.V. Jhaveri, for the Respondent. …. CORAM : S.C. DHARMADHIKARI AND S.C. GUPTE, JJ. DATE : 03 DECEMBER 2014 PC : .This appeal of the Revenue is challenging the order passed on 16 May 2012 by the Income Tax Appellate Tribunal, Mumbai Bench, in two Income Tax Appeal Nos. 6629/Mum/2010 and 6729/Mum/ 2011. 2.The only argument arising from the order of the Commissioner dated 25 May 2010 before the Tribunal was as to whether the allocation of portion of administrative expenses and financial charges to unit eligible for deduction under Section 80IB can be on the basis of sum total of turnover and job work charges for all the units. Pg 1 of 3 3.The Tribunal noted the facts from paras 3 to 3.2 of the order under challenge. The Tribunal held that only four units were operational and they were manufacturing items and there were also a job work carried out. Therefore, the apportionment of the indirect expenses must be looked at from the nature of the activities, namely, job work and sales of materials. In para 9 of the order of the Tribunal this aspect has been considered. The findings in para 9 on page 97 and 98 of the impugned order read as under :- “9. Even though the allocation of direct expenses have been accepted by the CIT(A) as per the working of the assesee, however, we fail to appreciate that indirect expenses has no direct bearing on job work as turnover of job work cannot be at par with sales of materials. We partly agree with the contention of the learned AR that various activities of different units should be apportioned in a like situation by making them comparable for the purposes of allocation of expenses. In job working the material cost is not the part of the turnover whereas in manufacturing and sales material is the main ingredient. Therefore, some multiplier is required for balancing the expenses of the unit. Since the CIT(A) has already accepted the direct expenses, the some multiplier is required for indirect expenses also. Here in this case only in one unit there is job work, therefore, the multiplier of 2.5 would suffice for allocation of indirect expenses. Accordingly the Assessing Officer is directed to apply the multiplier of 2.5% in job work for allocation of expenses. Accordingly, this ground is partly allowed.” 4.It is in these circumstances that we are of the opinion that the Tribunal's order does not raise any substantial question of law. The distinction and difference between a job work and sales of materials has been outlined and emphasized to conclude that indirect expenses has no Pg 2 of 3 direct bearing on job work as turnover of job work cannot be at par with sales of materials. 5.Such a view of the Tribunal and which is in consonance with facts and circumstances peculiar to the assessee, cannot be termed as perverse. It is not vitiated by any error of law apparent on the face of record either. The appeal does not raise any substantial question of law and has no merit. It is, accordingly, dismissed. No order as to costs. (S.C.GUPTE, J.) (S.C. DHARMADHIKARI, J.) Pg 3 of 3