COMMISSIONER OF INCOME TAX Vs. PUNJ LLOYD LTD.

JUDGEMENT

(1.) 2009 on this appeal only on two issues. The first issue is with regard to the disallowance of deduction under s. 80HHB of the IT Act, 1961. The Revenue was of the view that the assessee had failed to attribute any head office expenses to the foreign branches of the assessee company and that the AO has correctly estimated an amount of Rs. 1.5 crore relating to the asst. yr. 2003 -04 and Rs. 1 crore relating to the asst. yr. 2004 -05 as being the expenditure attributable to the foreign projects and consequently made an addition of Rs. 30 lakhs in respect of the asst. yr. 2003 -04 and a sum of Rs.20 lakhs relating to the asst. yr. 2004 -05. The said amounts were computed being 20 per cent of the aforesaid expenditure attributable to the foreign projects. The said addition was made on account of the disallowance of the deduction under s. 80HHB to the aforesaid extent.

(2.) The second issue relates to the addition of Rs. 10 lakhs made by the AO on account of the expenditure allegedly incurred by the assessee on behalf of other companies alleged to have been in occupation of the building taken on lease by the assessee. The said addition was deleted by the CIT(A) as well as by the Tribunal.

(3.) Insofar as the first issue is concerned, the AO was of the view that the company has not attributed any part of its head office expenses to the foreign branches of the assessee company. Since no details were provided to the AO in this regard, the AO was left with no alternative but to estimate the aforesaid amounts of Rs. 1.5 crore and Rs. 1 crore as being attributable to the foreign projects and subsequent thereto the aforesaid additions were made in respect of each of the assessment years in question on account of the disallowance of deduction under s. 80HHB. The Tribunal came to the conclusion that the disallowance by the AO was not on account of any defect pointed out in the accounts of the assessee. Nor had the AO pointed out any defect with regard to the computation of the profits of the foreign projects which were eligible under s. 80HHB. Consequently, the Tribunal took the view that the decision of the CIT(A) in deleting the said allowance made by the AO was correct. The Tribunal concluded that the AO had merely deleted the disallowance on the basis of presumption without bringing any material on record. The Tribunal, therefore, confirmed the findings of CIT(A).