Basis of allocation of expenses

This query is : Resolved

ATUL GANDHI (Querist)
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17 November 2011 HELP ME PLZ. . .

ONE OF THE COMPANY IN MY OFFICE.ITS BUSINESS ENGAGED IN EXPORTING SOFTWARES
IT HAS TWO UNIT ONE IS SITUATED GURGAON AND SECOND IN PUNE.
GURGAON UNIT REGISTERED IN STPI.(EXMPTED IN SECTION 10A)AND PUNE UNIT NOT COVERD UNDER SECTION 10A.

BOTH UNIT DEAL WITH EXPORT SALES.ACCOUNTS OF BOTH UNIT SEPARATE MAINTAINED.BUT THERE ARE SOME EXPENSES LIKE DIRECTOR SALARY,AUDIT FEE,ADVERTISEMENT EXPENSES AND COMMUNICATION EXPENSES WERE BORNE BY GURGAON UNIT.

CAN I ALLOCATE ABOVE EXPENSES IN BOTH UNIT,IF YES
WHAT IS THE BASIS OR SUPPORT?

I HAVE RECEIVED A NOTICE FROM INCOME TAX U CANT ALLOCATE EXPENSES IN ANY RATIO.

I WANT ANY CASE ON ABOVE MATTER FOR SUPPORTING OR HAVE ANY GUIDELINE OF ICAI ON THIS MATTER.

Vishal D Shah

Vishal D Shah (Expert)
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19 November 2011 Dear Sir,
There is no guidelines for allocation. You have to make prudent judgement & make allocation may be based on the time devoted by Director for each unit or so. You need to justify it based on the performance of the unit, etc when scrutiny comes.