Appeal partly allowed: Transfer pricing grounds withdrawn, repairs issue restored, 80G deduction allowed.

The tribunal partly allowed the appeal filed by the assessee for statistical purposes. It permitted the withdrawal of grounds related to transfer pricing adjustment due to a bilateral APA, restored the issue of repairs and maintenance expenses for further examination, directed the A.O. to allow the deduction under section 80G after verification, and rejected the claim for deduction of education cess. The order was pronounced on 23rd February 2022.

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Issues Involved:
1. Addition on account of transfer pricing adjustment
2. Disallowance of part of repairs and maintenance expenses treating it as capital in nature
3. Disallowance of deduction under section 80G of the Income-tax Act, 1961
4. Alternative claim to allow depreciation on amount disallowed from repairs and maintenance expenses
5. Claim for deduction of Education Cess

Issue-wise Detailed Analysis:

1. Addition on account of transfer pricing adjustment:
The assessee sought permission to withdraw all grounds relating to transfer pricing adjustment due to a bilateral Advance Pricing Agreement (APA) covering the assessment years 2014-15 and 2015-16, which dissolved the transfer pricing adjustment for the year under consideration. The tribunal allowed the withdrawal and dismissed these grounds as not pressed.

2. Disallowance of part of repairs and maintenance expenses treating it as capital in nature:
The assessee initially claimed Rs. 3.68 crores as repairs and maintenance expenses. The A.O. disallowed 50% of this amount, treating it as capital in nature due to lack of details. Upon furnishing details before the DRP, the A.O. accepted Rs. 2.28 crores as revenue in nature and reported Rs. 1.40 crores as capital in nature. The DRP further examined and confirmed Rs. 75,24,807/- as capital in nature. The tribunal noted that the assessee accepted 23 items as capital in nature and required verification for the remaining 32 items. The tribunal restored this issue to the A.O. for further examination.

3. Disallowance of deduction under section 80G of the Income-tax Act, 1961:
The assessee claimed a deduction of Rs. 21,36,801/- under section 80G for CSR-related expenses. The A.O. disallowed Rs. 15,20,000/- of this claim, considering CSR expenses as non-eligible for deduction under section 37(1). The tribunal referred to a coordinate bench decision in Allegis Services India Pvt. Ltd., which allowed CSR expenses as deductible under section 80G. The tribunal directed the A.O. to allow the deduction after verifying the eligibility of the payments under section 80G.

4. Alternative claim to allow depreciation on amount disallowed from repairs and maintenance expenses:
The tribunal restored this issue to the A.O. with a direction to allow depreciation on the disallowed amount in accordance with the law.

5. Claim for deduction of Education Cess:
The tribunal referred to the Kolkata Bench decision in Kanoria Chemicals & Industries Ltd., which held that education cess is an additional surcharge on income tax and not allowable as a deduction. The tribunal followed this decision and rejected the assessee's claim for deduction of education cess.

Conclusion:
The appeal filed by the assessee was partly allowed for statistical purposes. The tribunal allowed the withdrawal of grounds related to transfer pricing adjustment, restored the issue of repairs and maintenance expenses for further examination, directed the A.O. to allow the deduction under section 80G after verification, and rejected the claim for deduction of education cess. The order was pronounced in the open court on 23rd February 2022.

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