M/S. DEEPAK INDUSTRIES LTD.,KOLKATA vs. DCIT, CIRCLE - 6(1), KOLKATA, KOLKATA

This assessee’s appeal for AY 2012-13 arises against the order dated 09.04.2018 passed by the Commissioner of Income Tax (Appeals)-2, Kolkata in Appeal No.10699/CIT(A)-2/2015-16 in proceedings u/s 143(3) of the Income tax Act, 1961 (in short the “Act”). Heard both the parties. Case file(s) perused.

The assessee's sole substantive grievance in the instant appeal seeks to reverse both the lower authorities' action restricting its Section 80IC deduction claim of ₹27,24,02,458/- to ₹27,16,80,866/- only thereby re- allocating office expenditure of ₹7,21,592/- qua its three units; respectively.

The assessee/company manufactures industrial tractors, automobile gears and shafts. It admittedly operates three units at Rudrapur, Faridabad and Kolkata having allocated administrative head of its expenses of ₹7,80,012/-, ₹46,80,075/- and ₹23,40,037/-; respectively aggregating to Assessment Year: 2012-13 M/s. Deepak Industries Ltd. ₹78,00,125/-. It had adopted 10:60:30 allocation as per revenue collection as the benchmark. The Assessing Officer's assessment order re-allocated the same to 8.95%, 53.7% and 37.34%; unit-wise respectively as affirmed in the CIT(A)'s order under challenge.

Learned DR has taken as to page 2 in assessment order that the Assessing Officer went by the unit-wise revenue generation only after noticing certain deficiencies in assessee's allocation. He seeks to pinpoint the assessee's Rudrapur unit share of expenses is 17.23% as against revenue generation of 7.23% only.

We find no merit in Revenue's foregoing stand. Case records indicate that both the lower authorities had made a similar estimation of allocation of expenses leading to disallowance of ₹3 lakhs qua the very eligible unit at Rudrapur in AY 2010-11 without rejecting the assessee's books of account. This tribunal's order in assessee's appeal no. 2317/Kol/2016 dated 26.04.2019 in the said earlier assessment year holds that such a record is not open to the department in absence of rejection of books of account. The very factual position continues in the impugned assessment year as well wherein the lower authorities, have not rejected the assessee's books. We thus adopt judicial constituency and direct the Assessing Officer to delete the impugned disallowance of ₹7,21,592/- arising from re-allocation of assessee's head of expenditure.

Before parting, it is noted that the order is being pronounced after ninety days of hearing. However, taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the foregoing period Assessment Year: 2012-13 M/s. Deepak Industries Ltd. needs to be excluded. For coming to such a conclusion, we rely upon the decision of the Co-ordinate Bench of the Mumbai Tribunal in the case of DCIT vs. JSW Limited in & 6103/Mum/2018, Assessment Year 2013-14, order dated 14th May, 2020.

In the result, this assessee's appeal is allowed. Order pronounced in the open court on 29.06.2020.