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DCIT, Circle-10(1) New Delhi Vs M/s Deepak Auto P. Ltd. (Now Lumax Ancillary Ltd.), B-86, Mayapuri Ind. Area, Ph-I, New Delhi
September, 26th 2014
               DELHI BENCH `B', NEW DELHI
        Before Sh. I. C. Sudhir, JM And Sh. J. S. Reddy, AM
           ITA No. 5631/Del/2012 : Asstt. Year : 2009-10
DCIT, Circle-10(1)                Vs M/s Deepak Auto P. Ltd. (Now
New Delhi                            Lumax Ancillary Ltd.), B-86,
                                     Mayapuri Ind. Area, Ph-I,
                                     New Delhi
(APPELLANT)                          (RESPONDENT)
            Assessee by : Sh. Pradeep Dinodia, CA & R. K. Kappor, CA
            Revenue by : Smt. Parwinder Kaur, Sr. DR
Date of Hearing : 30.7.2014       Date of Pronouncement : 24.9.2014

Per J. S Reddy, AM:

     This is an appeal filed by the Revenue directed against the order of
the CIT(A)-13, New Delhi dated 3.8.2012.

2.   The assessee is a company engaged in the business of
manufacturing and trading of auto components. It has three
manufacturing units, namely, Gurgaon, Pune and Rudrapur. The
Rudrapur unit is located in a backward region and is eligible for
incentives. The assessee claimed exemption u/s 80IC for the Rudrapur
unit. The Assessing Officer disallowed the claim of deduction made by
the assessee u/s 80IB for its Rudrapur unit on the ground that the profit
rate of Rudrapur unit is much more than the profit rate of other two
                                    2                    ITA No. 5631/Del/2012
                                                            Deepak Auto P. Ltd.

units. He was also of the opinion that the expenditure pertaining to
Rudrapur unit has been diverted and claimed in the other units to reduce
tax liability. Aggrieved the assessee carried the matter an appeal. The
first appellate authority considered the facts of the case and gave a
factual finding that the conclusions drawn by the Assessing Officer were
erroneous. He granted relief.

3.    Aggrieved the Revenue is before us on the following grounds:
     "1. Whether the Ld. CIT(A) under the facts and circumstances
     of the case and in law was justified in deleting the addition of
     Rs. 36,66,420/- made by the A.O on account of disallowance of
     deduction u/s 80IC of the I.T. Act, 1961 and allowed deduction
     of Rs. 36,66,420/- ?

     2. Whether the Ld. CIT(A) under the facts and circumstances of
     the case and in law was justified in giving the verdict on the
     issue on the basis of submission made by the assessee before
     him which were never been put on records before the Assessing
     Officer during the assessment proceedings ?"

4.    We have heard Smt. Parwinder Kaur, Sr. Departmental
Representative on behalf of the Revenue and Shri Pradeep Dinodia, CA
on behalf of the assessee. The ld. DR relied on the order of the
Assessing Officer and whereas the ld. Counsel for the assessee relied on
the order the ld. CIT(A).

5.    On a careful consideration of the rival submissions and on perusal
of the papers on record we hold as follows.
                                     3                    ITA No. 5631/Del/2012
                                                             Deepak Auto P. Ltd.

6.     The First Appellate Authority at para 5.3 of this order gave the
following factual findings:

A) The Gurgaon is a very old unit and whereas Rudrapur and Pune unit
started manufacturing on 1.11.2007 and 16.1.2008 respectively.

B) The assessee is maintaining separate books of accounts for each unit
and is preparing profit and loss account, balance sheet unit wise.

C) The consumption of raw material for Rudrapur Unit and Pune Unit
during the year has come down as compared to F. Y. 2007-08, but it is
still higher as compare to Gurgaon Unit. The comparative details
justifies the difference in consumption of raw material as each unit is
manufacturing different varieties of products under the same
classification and the quantum of goods manufactured, selling price as
well as customers are different for each unit.

D) The percentage of consumption of raw material for Rudrapur Unit is
lower in comparison with the percentage of consumption of raw material
of Pune Unit.

E) No deficiency was found by the DCIT in the stock records
maintained in Rudrapur Unit and the excise record maintained in
Gurgaon and Pune Unit.
                                     4                   ITA No. 5631/Del/2012
                                                            Deepak Auto P. Ltd.

F)   No defects were pointed out by the Assessing Officer, while
verifying the expenses of all the units.

G) The data dissclose that the manufacturing expenses of Gurgaon Unit
have come down from 21.41% in assessment year 2006-07 to 20.07% in
assessment year 2009-10 and therefore, the allegation of Assessing
Officer that the assessee has diverted the Rudrapur Unit expenses to
Gurgaon Unit to claim more deduction is not substantiated by these
figures and the allegation of the Assessing Officer is not based on
correct appreciation of facts.

H) Similarly, the figures of administrative, selling and distribution
expenses do not substantiates the allegation of the Assessing Officer that
the assessee is diverting expenses of Rudrapur Unit to Gurgaon Unit to
claim the higher deduction u/s 80IC of the Act.

I) The data shows that the profits declared by Gurgaon Unit has
increased as compare to the earlier years and hence the allegation of the
Assessing Officer of transferring expenses for Rudrapur Unit to Gurgaon
Units is erroneous.

J) The allegation of the Assessing Officer that no proper allocation of
common expenses has been done by the assessee is not based on correct
appreciation of facts.
                                       5                    ITA No. 5631/Del/2012
                                                               Deepak Auto P. Ltd.

K) Details of wages, allowances and job work charges of Gurgaon Unit
has come down during the year as compare to A.Y 2006-07. This shows
that the allegation of the Assessing Officer of transfer of expenses on
wages from Rudrapur Unit to Gurgaon Unit is not supported by facts.

L) Gurgaon Unit and Pune Unit are paying excise duty on the items
manufactured and whereas Rudrapur Unit does not pay any excise duty.
This has resulted in the profit percentage being different for each unit.

M) There are no defects pointed out buy the A.O in the books of
accounts maintained by the assessee.

6. These factual findings of the First Appellate Authority could not be
controverted by the ld. Departmental Representative. Hence we have to
uphold the finding of the ld. CIT(A).

7.      In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open Court on 24/9/2014.

                     Sd/-                                        Sd/-
        (I. C. Sudhir)                              (J. S. Reddy)
     JUDICIAL MEMBER                           ACCOUNTANT MEMBER
Dated: 24/9/2014

Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
                                                    ASSISTANT REGISTRAR
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