Revenue appeals dismissed, assessee appeals partly allowed for statistical purposes. Order pronounced on August 6, 2019.

The appeals of the Revenue were dismissed, and the appeals of the assessee were partly allowed for statistical purposes. The order was pronounced on August 6, 2019, at Chennai.

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Issues Involved:
1. Disallowance of royalty paid to M/s. Nippon Piston Ring Co. Ltd.
2. Allowance of additional depreciation carried forward from earlier assessment years.
3. Disallowance of deduction under Section 35(2AB) of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Disallowance of Royalty Paid to M/s. Nippon Piston Ring Co. Ltd.:
The primary issue in both the Revenue's and assessee's appeals for the assessment years 2013-14 and 2014-15 was the disallowance of royalty payments. The Assessing Officer had disallowed the royalty paid by the assessee, treating it as capital expenditure. The Co-ordinate Bench of the Tribunal, in the assessee’s own case for previous years, had ruled that 75% of the royalty payment should be treated as revenue expenditure and 25% as capital expenditure, following the Supreme Court's decision in Southern Switchgear Ltd. The CIT(A) adhered to this precedent, and both the Revenue and the assessee appealed against this decision. The Tribunal found no reason to interfere with the CIT(A)'s order, which followed judicial discipline. Consequently, the appeals on this ground by both the Revenue and the assessee were dismissed.

2. Allowance of Additional Depreciation Carried Forward from Earlier Assessment Years:
The issue here was whether the balance of additional depreciation carried forward from earlier years could be allowed. Both parties acknowledged that this issue was covered by the Tribunal's decision in the assessee’s own case for the assessment year 2010-11, and the CIT(A) had allowed the balance additional depreciation. The Tribunal upheld the CIT(A)'s decision, noting that it followed the jurisdictional High Court's ruling in Brakes India Ltd. Consequently, the Revenue's appeals on this ground were dismissed.

3. Disallowance of Deduction under Section 35(2AB):
The assessee's appeals for the assessment years 2013-14 and 2014-15 also contested the disallowance of deductions under Section 35(2AB) for R&D expenditures. The Assessing Officer had disallowed the claim due to the absence of approval from DSIR in Form 3CL. The assessee argued that the R&D facilities were approved, and the expenses should be allowed, or alternatively, they should be considered under Section 35(1)(iv). The Tribunal agreed to restore the issue to the Assessing Officer for re-adjudication in line with the jurisdictional High Court's decision in Tube Investments of India. Consequently, these grounds were partly allowed for statistical purposes.

Conclusion:
The appeals of the Revenue in ITA Nos. 3539 & 3540 of 2018 were dismissed, and the appeals of the assessee in ITA Nos. 3501 & 3502 of 2018 were partly allowed for statistical purposes. The order was pronounced in the open court on August 6, 2019, at Chennai.

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