IN THE INCOME TAX APPELLATE TRIBUNAL “B BENCH KOLKATA BEFORE SHRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER AND SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER Assessment Year: 2017-18 M/s. La Opala RG Ltd. DCIT, Circle-11(1) (formerly

8th Floor, Premises No.803 & Circle-12(1), Kolkata)

Vs.

804 Eco Centre EM-4, Sector-V, Kolkata-91.

(PAN: AAACL5569J)

(Appellant) (Respondent)

Present for:

Appellant by : Shri A. K. Tulsyan, FCA Respondent by : Smt. Monalisha Pal Mukherjee, JCIT, Sr. DR Date of Hearing : 30.04.2025 Date of Pronouncement : 06.05.2025

O R D E R

Per Sanjay Awasthi, Accountant Member :

The present appeal emanates from order passed u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) on 31.07.2024 by Ld. CIT(A), NFAC, Delhi.

1.1. It is seen that on the two issues surviving for adjudication at the second appellate stage (i.e. allocation of common expenses between the four units; and allowing the claim of duty draw back etc. for relief u/s. 80IC of the Act), the Ld. Assessing Officer has given a detailed finding, which may be briefly summarized. Regarding the issue of allocation of common expenses between the eligible unit (Sitarganj in Uttarakhand) and other three units elsewhere (outside the purview of section 80IC of the Act), it has been recorded that initially the assessee had not allocated expenses under Fuel & Gas, sitting fees, audit fees, commission to non-executive Directors and provision for Excise between the eligible and non-eligible units. The Ld. Assessing Officer also detected an allegedly improper allocation of expenses under the heads Misc. Expenses, employee expenses and electricity expenses. It is seen from the Ld. Assessing Officer’s order (page 5) that the assessee had admitted to not bifurcating the said expenses exactly between the eligible and non-eligible units. Thereafter, it is seen from the Ld. Assessing Officer’s order that the assessee had attempted a bifurcation of sorts (pages 6 – 9 of Ld. Assessing Officer’s order) which did not find favour with the ld. Assessing Officer. Secondly, on the issue of deduction claimed in respect of indirect income of the assessee, it has been recorded that non-operating expenses of Rs.25,39,952/- and Export incentive receipt of Rs.2,43,75,193/- (pages 14 and 15 of Ld. Assessing Officer’s order), were not ‘derived’ from the industrial undertaking eligible for relief u/s. 80IC of the Act. Thereafter, the ld. Assessing Officer disallowed Rs.80,74,544/- from the relief available to the assessee. It needs to be mentioned that the Ld. Assessing Officer has relied on a number of authorities to arrive at the conclusion that such income cannot be said to be ‘derived’ from the industrial undertaking as is mentioned in 80IC of the Act.

1.2. Aggrieved with these additions to income, the assessee approached the Ld. CIT(A), where also he could not succeed. Regarding the first issue of allocation of expenses between eligible and non-eligible units, the Ld. CIT(A) has recorded on page 41 of the impugned order that “I am of the considerate (sic) opinion that though the appellant has claimed to have allocated common expenses but has not filed the requisite documentary evidence and sufficient explanation to support its claim. Therefore, the alternative methodology adopted by the ld.

Assessing Officer i.e. selecting sales of respective unit as allocation key is found to be reasonable for allocating these common costs”. Regarding the second issue of other income being claimed as part of income exigible for relief u/s. 80IC of the Act, the ld. CIT(A) is seen to have upheld the action of Ld. Assessing Officer (pages 42-43 of impugned order) by following the cases of Liberty India [316 ITR 218 (SC)] and the case of Sterling Foods [237 ITR 218 (SC)], to hold that such income was not ‘derived’ from the industrial undertaking and hence, not eligible for relief u/s. 80IC of the Act.

1.3. Further aggrieved with this order of Ld. CIT(A), the assessee has filed the present appeal with th