TaxTMI 
TaxTMI 
TaxTMI 
2019 (6) TMI 542
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.... acquired Glass Division from Nicholas Piramal India Ltd. In connection with the said acquisition, assessee had paid an amount of Rs. 18 crore towards non-compete fee. The assessee allocated the non-compete fee to various fixed assets and claimed depreciation at the rate applicable to those assets. While framing the draft assessment order the Assessing Officer, however, disallowed assessee's claim of depreciation following his decision in earlier assessment years. Challenging the disallowance of depreciation, assessee raised objections before learned DRP. 4. Learned DRP also sustained the disallowance made by the Assessing Officer relying upon the decision of the Tribunal in assessment year 1999-2000. Further, learned DRP also disallowed alternative claim of depreciation on non-compete fee @ 25% by treating it as an intangible asset. It is further relevant to observe, learned DRP also rejected assessee's claim of deduction on account of write-off of non-compete fee to the extent of 1/18th spread over a period of 18 years. 5. The learned Counsels appearing for both the parties have agreed before us that the issues raised in these grounds are covered by the decisions of the Tribuna....
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....h Courts cited supra, we uphold the decision of the learned Commissioner (Appeals) on the issue. Ground is dismissed." 7. The facts being identical, respectfully following the consistent view of the Tribunal, we direct the A.O. to allow deprecation on non-compete fee @ 25% by treating it as an intangible asset. 8. Thus, ground no.(i) is dismissed and ground no.(ii) is allowed. 9. In view of our decision in ground no.(ii), ground no.(iii) becomes infructuous, hence, dismissed. 10. In ground no.(iv), the assessee has challenged the disallowance of depreciation on various fixed assets on the basis of wrong actual cost. 11. Brief facts are, in the course of assessment proceedings, the Assessing Officer noticed that the assessee has allocated the lamp sum consideration paid for acquisition of business of Nicholas Piramal on the basis of fair value of the depreciable assets acquired on transfer of business and accordingly claimed depreciation with reference to those assets. The Assessing Officer, however, did not allow assessee's claim of depreciation and held that the acquisition of business is by way of amalgamation, therefore, he took the written down value of the transferred ass....
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.... Ltd., Sri Lanka, and G.G. USA Inc., USA. Further, he found that borrowed funds were utilized for making such investment. Being of the view that the investments made in the subsidiary companies is not for the purpose of assessee's business, the Assessing Officer disallowed interest expenditure of Rs. 3,98,75,785 under section 36(1)(iii) of the Act. 17. The learned Authorised Representative submitted, while deciding identical issue in assessee's own case for preceding assessment years, the Tribunal has allowed assessee's claim of interest expenditure having found that the investment made in subsidiary companies is for the purpose of assessee's business. In this context, he drew our attention to the orders passed by the Tribunal in assessment years 2001-02, 2006-07 and 2011-12. 18. The learned Departmental Representative agreed that the issue has been decided in favour of the assessee in the preceding assessment years. 19. We have considered rival submissions and perused the material on record. As could be seen from the facts available on record, this is a recurring issue between the assessee and the Department from the assessment year 2001-02 onwards. While deciding identical iss....
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.... free advance to the subsidiary, interest expenditure to that extent should be disallowed. Accordingly, he computed interest @ 6.74% which worked out to Rs. 70,13,311. The aforesaid amount was disallowed from the interest cost claimed by the assessee. While deciding the objections raised by the assessee, learned DRP confirmed the disallowance made by the Assessing Officer. 24. The learned Authorised Representative submitted, while deciding identical issue in the preceding assessment years, the Tribunal has deleted the disallowance made by the Assessing Officer. In this context, he drew our attention to the orders passed by the Tribunal in the assessment years 2001-02, 2006-07 and 2011-12. 25. The learned Departmental Representative agreed that the Tribunal has decided the issue in favour of the assessee in the preceding assessment years. 26. We have considered rival submissions and perused the material on record. As could be seen, this is a recurring issue between the assessee and the Department from the preceding years. In the latest order passed by the Tribunal in assessee's own case for the assessment year 2006-07, vide ITA no.8360/Mum./2010, dated 16th December 2016, the Tri....
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..... We have considered rival submissions and perused the material on record. Identical issue arose in assessee's own case in the assessment year 2006-07. The Tribunal while deciding the issue in ITA no.8360/Mum./2010, dated 16th December 2016, has held as under:- "43. We have considered the submissions of the parties and perused the material available on record in the light of the decisions relied upon. On a reading of section 145A of the Act, it is to be noted that as per the said provision, while valuing the opening stock and closing stock further adjustment has to be made to include amount of any tax, duty, cess or fee actually paid / incurred by the assessee to bring the goods to the place of its location and condition as on the date of valuation. It is further relevant to observe, the Hon'ble Delhi High Court in CIT v/s Mahavir Aluminium Ltd., 168 taxmann.com 27, interpreting the provisions of section 145A has observed that adjustment of closing stock by including tax, cess, or fee cannot be made without making corresponding adjustment to the opening stock. This view has been reiterated in a number of decisions of the Tribunal which the learned Authorised Representative ....
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....has directed the Assessing Officer to charge guarantee commission @ 0.5%. Thus, he submitted, similar direction may be given in the impugned assessment year. 39. The learned Departmental Representative relied upon the observations of learned DRP. 40. We have considered rival submissions and perused the material on record. As regards the rate at which interest on interest free loan is to be computed, we find that learned DRP has directed the Assessing Officer to compute interest at LIBOR plus 3%. We find that while deciding identical issue in assessee's own case in assessment year 2007-08 in ITA no.4778/Mum./2016, dated 30th April 2019, the Tribunal has directed to compute interest on interest free loan advanced to the AE at LIBOR plus 200 basis points. Insofar as adjustment on account of corporate guarantee commission is concerned, the Tribunal has directed the Assessing Officer to compute the corporate guarantee fee @ 0.5%. Similar view was expressed by the Tribunal while deciding assessee's appeal in assessment year 2011-12. Respectfully following the aforesaid decisions of the Co-ordinate Bench, we direct the Assessing Officer to compute interest on interest free loan to AE at....