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2020 (4) TMI 812
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....e ld. DR. After taking due cognizance of the said NOC, these appeals are taken up for hearing on hearing the present Counsel for the assessee Shri Ronak Joshi and the ld. DR. 3. The primary facts of the assessee are that it is engaged in manufacturing and sale of pharmaceuticals dealing in both prescription and OTC products as well as bulk drugs, chemicals and skin care products. The company has its registered office and head office at Lower Parel, Mumbai and its units at Deonar, Pithampur, Mahad, Thane, Mulund, Bhandup and Paithan. During the relevant previous year, the assessee company has amalgamated Rhone Poulenc (India) Limited (RPIL), Super Pharma Limited (SPL) and assets and liabilities (excluding certain assets and liabilities as per Schedule A of the Scheme) of amalgamation of NPIL Finvest Private Limited (NFL) with itself under the scheme of arrangement as approved by the Bombay High Court vide its order dated 29/09/2001. As per the scheme of arrangement, all the assets and liabilities of RPIL and SPL and certain specified assets of NFL stand transferred and vested with the assessee company w.e.f. 01/04/2001 being the effective date. During the previous year, the assesse....
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....had during the year under consideration debited certain purchase of software license as a revenue expenditure, under the head "Repairs - Computers - Others", as under: REPAIRS - COMPUTERS - OTHERS A/C CODE 6286120 (B) Purchase & implementation of "Sapphire' software used by Quality Control Department Rs. 5,40,000 Purchase of Lotus notes web access licenses from Lauren Rs. 98,000 Information Technologies Purchase of Lotus notes web access licenses from Lauren Information Technologies Rs. 6,02,000 Purchase of Anti Virus Software from Softcell Technologies Rs. 1,60,000 Total Rs. 14,00,800 The A.O holding a conviction that the purchase of the aforesaid software licenses was in the nature of a capital expenditure, thus restricted the entitlement of the assessee towards claim of depreciation @ 25% of its value. In support of his aforesaid conviction, the A.O while concluding as hereinabove, was of the view that as a software license was a depreciable intangible asset under Sec.32(1)(ii) of the I.T Act, therefore, the same was only entitled for depreciation @ 25% under Part B of the depreciation schedule in the Appendix-1 of the I-T Rules 1962. In fact, the A.O ob....
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....ssessee. The Ground of Appeal No. 1 is allowed.' 4.2. Respectfully following the decision of this Tribunal in assessee's own case, we direct the ld. AO to grant deduction of expenditure on account of software in the sum of Rs. 61,24,779/- and accordingly, the Ground No. I raised by the assessee is allowed. 5. The Ground No.II raised by the assessee is with regard to the addition made u/s.145A of the Act in respect of unutilised MODVAT credit of Rs. 66,26,443/-. 5.1. We have heard rival submissions. We find that the ld. AO had recorded in the assessment order that in the tax audit report, the Tax Auditor mentioned that assessee is following EXCLUSIVE method of accounting for MODVAT with regard to inventory, purchases and consumption. The assessee vide letter dated 29/11/2004 had also contended that the aforesaid treatment had no impact on the profit at all. The ld. AO observed that unutilised balance of MODVAT credit on stock in trade is reflected in the balance sheet as an asset amounting to Rs. 152.83 lakhs and as per the proviso of Section 145A of the Act, the unutilised MODVAT needs to be included in the value of closing stock. During the course of assessment proceedings, th....
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....he assessee had also objected to the calculation of the "closing stock' and 'opening stock' by the A.O by multiplying the stock value by the ratio of purchases (including excise) and purchases (net of excise). It is further averred by the ld. A.R that insofar the valuation of inventories as per Sec. 145A was concerned, the raw material, packing material, stores and works-in-progress was valued at cost, while for the finished goods were valued at cost or net realisable value, whichever was lower. In fact, it is the claim of the assessee that the 'cost' has consistently been taken at net of MODVAT credit. On the basis of the aforesaid facts, it is stated by the assessee that the element of MODVAT was neither included in the consumption nor into cost for valuation of 'closing stock'. As such, it is the claim of the assessee that as it has debited its 'profit & loss a/c' with purchases of raw material net of MODVAT Excise duty, therefore, the valuation of 'closing stock' of raw material was also made at cost net of such excise duty. In sum and substance, it is the claim of the assessee that the costs which have not been debited to the profit and loss account at all, cannot be used for ....
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....2009-10. Accordingly, the Ground No. II raised by the assessee is allowed for statistical purposes. 6. Disallowance of expenditure on Interest of Rs. 27,10,63,014/- and Prepayment Charges of Rs. 8,62,00,000/- by treating it as capital expenditure Ground No. III of Assessee Appeal We have heard the rival submissions and perused the materials available on record. It is not in dispute that the assessee had incurred the aforesaid expenditure by way of interest payment and prepayment charges in respect of loans raised in the sum of Rs. 200 crores from ICICI Bank and the same has been duly paid within the financial year. We find that the assessee had claimed deduction for the aforesaid payment on account of interest u/s 36(1)(iii) of the Act. We find that the ld AR had alternatively pleaded that the same is otherwise allowable as deduction u/s 37 of the Act. For better appreciation of facts on record, the following datewise chronological sequence of events which led to incurrence of the aforesaid expenditure would be relevant :- S.NO. Date Event & document in support Page of Paper Book (a) 8.12.2000 Resolution of Board of Directors of assessee company 162-163 (b) 13.12.200....
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....2. It is not in dispute that with effect from 01.01.2001, in order to implement the intention of expansion of existing business under a scheme of arrangement, entire assets and liabilities of RPIL and specific assets and liabilities of NFL were amalgamated with the assessee in accordance with the provisions contained in Sections 391 to 394 of the Companies Act, 1956. We find that the said scheme of arrangement was approved by the Hon'ble Bombay High Court vide order dated 27.09.2001. We find that pursuant to take over of specific assets and liabilities of NFL, it goes to prove beyond doubt that right from inception, it was the assessee company who had intended to acquire the shares through its subsidiary in order to enable it to expand the existing business of the company, as the aforesaid manner could alone be the method to acquire the business. 6.3. We find lot of force in the argument advanced by the ld AR that the business of RPIL, subsidiary of assessee's wholly owned subsidiary i.e NFL, became the business of the assessee company pursuant to the aforesaid acquisition and accordingly it could be safely concluded that the acquisition was done to expand the existing business an....
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....of assets and liabilities of business of M/s RPIL, the nature and, character of the liability would not change and hence an expenditure incurred in relation to such a liability is capital expenditure. 6.6. We find that the ld AR submitted that RPIL was a well reputed and profit making company engaged in manufacturing and distributing of pharmaceutical products and that the primary objective of acquiring RPIL was to strengthen the assessee's pharma business and substantially increase the top line and bottom line of the assessee's business and making it the leading pharmaceutical company in India. It was further submitted that, combined entity as a result of merger of RPIL with the assessee company has led to increased production, higher sales and better profits to the assessee and the assessee has in fact only benefited from the economies of scale resulting in lower cost of manufacturing, achieving better cost efficiency etc. Infact, sales have increased from 566.76 crores to Rs. 946.48 crores i.e. increase by 67% and, operating profits increased from Rs. 87.63 crores to Rs. 133.87 crores i.e. increase by almost 53%. It was also contended that, though the loan was originally t....
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....ssee to expand the existing business of the assessee company. It was submitted by the ld AR that it was with the intent of acquiring the business of M/s RPIL that, subsidiary of the assessee company had purchased shares of M/s RPIL and, since the loan had been raised for purchase of the shares of subsidiary company so as to enable the assessee company to acquire the business of M/s RPIL, hence the expenditure incurred in respect of loan raised in the instant year is a revenue expenditure u/s 36(l)(iii)of the Act. We find lot of force in the said argument of the ld AR and we accept the same. 6.10. We find that when this point was put to the ld DR, he argued that in any case, the proviso to section 36(1)(iii) of the Act would come into operation which reads as under:- Provided that any amount of the interest paid, in respect of capital borrowed for acquisition of an asset (whether capitalized in the books of account or not) ; for any period beginning from the date on which the capital was borrowed for acquisition of the asset till the date on which such asset was first put to use , shall not be allowed as deduction. We find that this proviso in any case would not be applicable f....
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....he action of the ld. CIT(A) granting deduction only in respect of 1/5th of expenditure incurred in respect of payment made to M/s. Accenture by applying provisions of Section 35DD of the Act as against the claim of deduction of the whole expenditure u/s.37(1) of the Act by the assessee. 7.1. We have heard rival submissions and materials available on record. We find that under the head legal and professional fees, the assessee had claimed deduction in respect of payments made to Accenture in the sum of Rs. 522.97 Lakhs. The assessee submitted that payment of Accenture was mainly pertaining to successful integration of RPIL with the assessee company. The assessee submitted that this expenditure has been incurred on the grounds of commercial expediency allowable as deduction u/s.37(1) of the Act. The ld. AO however, disregarded the contentions of the assessee and disallowed the claim of the assessee by treating it as capital expenditure. The ld. CIT(A) however, observed that since this expenditure had been incurred pursuant to amalgamation of RPIL with assessee company, the same would fall within the ambit of provisions of Section 35DD of the Act and accordingly only 1/5th of the sai....
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....etter dated 29.11.2004 that the break up of the sum of Rs. 679.67 lacs are as under:- Expired / Destroyed Stocks - Rs. 133.40 lacs Write off of stocks on discontinuation Of Joint Venture - Rs. 77.02 lacs Write off of receivables from Voltas - Rs. 195.20 lacs Compensation paid to CFA's - Rs. 63.03 lacs Closure of Hospital Products Division - Rs. 210.92 lacs Total Rs. 679.67 lacs 8.1. The ld AO observed that the details filed by the assessee in this regard are very sketchy in earlier year, the expenditure relating to the Thane Factory closure expenses were disallowed. The ld AO observed that the assessee had not furnished any details in support of its claim of deduction in this regard. Accordingly, he proceeded to disallow the sum of Rs. 679.67 lacs during the year under consideration also. 8.2. Before the ld CITA, the assessee requested for an opportunity to be provided to it for furnishing of details. Accordingly, the ld CITA called for a remand report from the ld AO. The assessee furnished the details that were available with it before the ld AO during the remand proceedings. The ld AO after examination of the details furnished by the assessee, furnished the remand r....
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....before the beginning of the relevant previous year can be written year under consideration. Further, the assesses company was also requested of the relevant portion of the stock register in respect of the stock. 4.14. In response, the assessee company has mentioned that stock worth only an significant amount of Rs. 1,41,698/- expired prior to the relevant assessment year. However, the assessee company has not produced the copies of the relevant portion of the stock register in respect of the stock written off. 4.1.5 In view of the above, it is seen that the assessee company has not been able to file the necessary documentary evidence to back up its claim of write off' of 'stock worth Rs. 210.50 lakhs. In the absence of the necessary documentary evidence, the assessee company'$ /claim cannot be verified. 4.2 Settlement of outstanding dues from Voltas Ltd (195.22 lakhs) 4.2.1 It is mentioned that on termination of the distribution arrangement with M/s. Voltas Ltd., an amount of Rs. 195.22 lakhs was written off on account of difference in reconciliation, Municipal Cess etc. Hence the assessee company was required to furnish details to prove that the amount writt....
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....CFAs in lieu of the same, during the relevant previous year. 4.3.4. In view of the above, the expenditure on account of discontinuance of CFA should be treated as capital expenditure. 4.4. Closure of Hospital Products Division: (Rs. 210.92 lakhs) 4.4.1. USS Subdivision:- It is mentioned that the losses in USS subdivision were on of high sales returns. A perusal of (he annexure A shows (hat the sales return of 1.56,82,89 5/- have been reduced from the total sales. However, the stock has not been increased by a corresponding amount. In view of the above, the assessee company was requested to file details of the goods returned back and their treatment in the books if accounts. In response the assessee company has submitted that the sales return, of Rs. 1,56,82,695 has been reflected in the closing inventory of the assesses company at the end of the year. From what is stated above, it is seen that the loss of Rs. 1,29,90,965/-from USS subdivision has been worked out by the assesses company and without considering the effect of the sales return of Rs. 1,56,82,895/-. When the sales return is considered as a part of the closing stock of USS subdivision there is no resultant loss w....
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....sed by the ld AO vide letter dated 3.3.2006 during the remand proceedings. We also find from the details enclosed in page 249 of the paper book I before us, that the assessee had duly furnished the details such as code, description, product line, quantity, expiry date etc. When all these details are available both before the ld AO and ld CITA, it would be unjust and unfair to conclude that no details were furnished by the assessee. Moreover, from the said details, we also find that the stocks contained only those stocks, the period of which was beyond the prescribed expiry date, thereby making the stocks unsaleable and useless. Hence the assessee being in pharmaceutical industry, has no other option but to write off the same in its books and claim the same as deduction which is a normal business loss occurring to the assessee. We find that the assessee had submitted before the lower authorities that out of total stock of Rs. 133.48 lacs, entire stock had expired other than stock to the tune of Rs. 1,41,698/-. We find that with regard to the observation made by the ld AO for non-furnishing of stock register by the assessee , we find that the assessee had duly adduced the reason that....
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.... as a result of which, a sum of Rs. 195.22 lacs was written off by the assessee. The assessee had also furnished the invoice wise statement of the amounts written off. These details are available in pages 251 to 257 of paper book I. Since Voltas Ltd did not pay the sum due to the assessee company , it became irrecoverable pursuant to settlement letter dated 23.5.2002 as stated supra, the assessee had no other option but to write off the same which was duly done in its books. Accordingly, the assessee would be entitled for deduction u/s 36(1)(vii) of the Act in respect of the same. 8.7. With regard to compensation paid to Cost and Freight Agents (CFAs) amounting to Rs. 63.01 lacs, we find that as a result of merger of RPIL with assessee company with effect from 1.4.2001, some of the CFAs of RPIL were discontinued by the assessee company as the assessee company already had existing CFAs at such locations and the fact that their performance was not satisfactory. Accordingly, the assessee company thought it fit to pay compensation to 8 CFAs as evident from page 259 of paper book I together with its workings enclosed in pages 260 to 261 of paper book I. This compensation was paid by th....
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....ccepted by the lower authorities in the instant case without raising any dispute thereon. It is not in dispute that the sales made in respect of these items were offered to tax in the earlier year. In any case, when the stocks come back to the assessee, the same are included in the closing inventory and hence there cannot be any grievance for the revenue. Hence there is no artificial loss as claimed by the revenue in the instant case. Hence we direct the ld AO to grant deduction towards loss on closure of USS Subdivision amounting to Rs. 129.01 lacs. 8.11 With regard to loss on closure of STYR Subdivision, we find that the assessee had submitted that the same was on account of demonstration stocks which are used to demonstrate the features, efficiency, usefulness etc of the products to the customers including potential customers. These stocks obviously would lose their value over a period of time. It was submitted that on account of improper use and wear and tear of stocks, the stocks had to be disposed off at a reduced price. We further find that this explanation has been found to be acceptable by the ld AO in the remand proceedings. Then there is absolutely no basis for the ld C....
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....of the assessee. 10. Ground Nos. VII, VIII and IX of assessee appeal and ground No.6 of revenue appeal relate to computation of capital gains on arising out of transfer of property styled as "Rhoni Poulenc House". 10.1. Brief facts of this issue relevant to the computation of capital gains are as under:- "That on 7th of May' 2000 in financial year 2000-01 relevant to assessment year 2001-02, M/s Rhone Poulenc India Ltd. (hereinafter referred to as "RP1L") entered into a Memorandum of Understanding with M/s Grasim Industries Ltd. (hereinafter referred as "GIL"), M/s Hindalco Industries Ltd. (hereinafter referred as "HIL") and, M/s Indo Gulf Corporation Ltd. (hereinafter referred as "IGCL") for sale of land measuring 8000 sq. yard together with a building and other structures standing thereon bearing Plot No. 216 of Worli Estate of Municipal Corporation of Greater Mumbai for a consideration of Rs. 84.50 crores, which was to be paid in the following manner. a) a sum of Rs. 5,00,00,000/- (Rupees Five Crores only) to be paid on or before the execution of this Memorandum of Understanding as earnest money. b) the balance sum of Rs. 79,50,00,000/- (Rupees Seventy Nine Crores ....
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....ation) 1,34,27,920/- Indexed Cost of Acquisition of Land (1,34,27,920 x 426/100) 5,72,02,940/- Long Term Capital Gain on the portion of Land sold (13,25,53,652 - 5,72,02,940) 7,53,50,712/- 10.1.3. The assessee in their notes to the computation of income with regard to the subject mentioned capital gains had stated as under:- "During the relevant previous year, RPIL had entered into an Agreement for sale dated 23.11,2001 with Grasim Industries Limited (GIL), Hindalco Industries Limited (HIL) & Indo Gulf Corporation Limited (IGCL) for sale of RPIL House (RPIL House), situated at Worli, for a total consideration of Rs. 84.5 Crores. Pursuant to the amalgamation of RPIL with the assessee company, under the scheme of Arrangement referred in Note 1 above, the assessee company adopted and confirmed the Agreement dated 23.11.2001 entered into between RPIL and GIL, HIL & IGCL. The transfer of RPIL House is intended to be completed in installments over a period of 4 years, on or before 30.09.2005. Accordingly, part consideration of Rs. 33,13,84,129/- has been received in the previous year relevant to the current assessment year and possession of the appropri....
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....termined as on 01.04.1981. Likewise, the corresponding sale value and fair market value of building was Rs. 3157/- per sq. ft. and. Rs. 320/- per sq. ft. respectively. 10.1.6. Later during the course of assessment proceedings, assessee filed the revised computation of long term capital gains and arrived at the revised long term figure at Rs. 11.03 Crores as against original long term gain declared at 7.53 Crores. The assessee submitted that the revised calculation of such capital gain was on account of the fact that, in the computation, sale portion of land had been incorrectly adopted at 40% instead of 60% of the aggregate sale consideration. The assessee submitted that this was also based on the Chartered Engineers Report dated 14th of October 2003. The revised computation of long term gain is as under:- Particulars Amount Amount Total Sale Proceeds received on transfer (partial) of RPIL House at Worli, as per Agreement dated 23.11.2001 33,13,84,129/- Sale Proceed received (pertaining to land as per Valuation Report) 19,88,30,477/- Fair Market Value of RPIL House as n 01.04.1981 as per Valuation Report (60% of total sale proceeds) 8,56,00,000/- ....
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....,78,10,122/- worked out as under:- Sr. No. Particulars Amount Total Amount 1) Opening WDV i) WDV as on 01. 04.2001 21,34,13,284/- 2) Additions i) WDV as on 01.04.2001 of RPH of M/s. RPIL 4,28,00,000/- ii) WDV as on 01.04.2001 of M/s SPL 51,000/- 4,28,51,000/- iii) Other Additions 6,24,39,848/- 3) Total 31,87,04,132/- 4) Sales i) RPH of M/s RPIL 42,25,00,000/- ii) Other Assets 2,40,14,254 44,65,14,254/- 5) SHORT TERM CAPITAL GAIN 12,78,10,122/- 10.2. The ld. CIT(A) upheld the action of the ld. AO in (a) Allocating the sale consideration towards land and building in the ratio of 50:50. (b) Adopting total sale consideration of 84.50 Crores as against 33.13 Crores actually received by the assessee. (c) However, the ld. CIT(A) granted the benefit of indexation on the actual cost of acquisition of the land which was replaced in the place of fair market value of land as on 01/04/1981 while computing the cost of acquisition for the purpose of acquisition of long term capital gains. Accordingly, the ld. CIT(A) re-computed the long term capital gains at Rs. ....
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.... stood merged with assessee company on 01/04/2001, Grasim Industries Ltd., and Hindalco Industries Ltd., and Indo-Gulf Corporation Ltd., for sale of land measuring 8000 sq. yards together with building and other structure standing thereon for total consideration of Rs. 84.50 Crores. Now, what is to be seen is whether the assessee had transferred the entire property or part of the property during the year under consideration. There is no dispute that the sale consideration of Rs. 84.50 Crores represents the consideration for the whole of the property. It is the case of the ld. AR that there was no transfer of the entire property in the instant year but only transfer of part of the property. The assessee was to receive total sale consideration of Rs. 84.50 Crores on transfer of property free from all encumbrances for the whole of the property. It is not in dispute that the subject mentioned property was encumbered till 31/03/2002 and hence no transfer could have been made for the same. In this regard, the following undisputed facts are relevant for our consideration:- 10.5.1. From Clause-2 of the agreement dated 23/11/2001, we find that there is a built up area on 1,07,000/- sq.ft o....
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.... 8655 78175508 TOTAL 25965 234526525 B Hindalco Ltd. 02-03 36688.3 331384129 Hindalco Ltd. 03-04 731.5 6607208 Hindalco Ltd. 04-05 4202.1 37954740 TOTAL 41621.90 375946077 C Indogulf Corporation Ltd. 03-04 17310 156351017 05-06 4327.5 39087754 06-07 4327.6 39088658 TOTAL 25965.1 234527429 GRAND TOTAL 93552 845000031 10.6. We find that property has been transferred to each of the aforesaid three purchasers in various assessment years as under:- A. GRASIM INDUSTRIES LTD S.NO Unit No. Area Amount Received 1 A-21 3900 35226399 2 A-31 3900 35226399 3 A-41 3900 35226399 4 A-51 3900 35226399 5 . 1710 15445421.1 TOTAL 17310 156351017.1 Assessment year 05-06 S.NO Unit No. Area Amount Received I A-01 3900 35226399 2 A-ll 3900 35226399 3 855 7722710.55 TOTAL 8655 78175508.55 B. GRAND TOTAL (A) = 156351017.10 + 78175508.55 = 234526525.65 M/s Hindalco Ltd. Assessment year 02-03 S.NO Unit No. Area Amount Received i C-01 550 4967825.50 2 C-02 3350 30258....
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....nsferred only 36,688/- sq.ft to M/s. Hindalco Industries Ltd., during the year under consideration i.e. A.Y.2002-03. The remaining portion had been transferred to M/s.Hindalco Industries Ltd., M/s.Grasim Industries Ltd., and M/s. Indo Gulf Corporation Ltd., in subsequent years commencing from A.Yrs. 2003-04, 2004-05 and 2005-06 as tabulated hereinabove. It is not in dispute that assessee had duly offered the capital gains arising of transfer of land to the extent of 36,688/- sq.ft to M/s. Hindalco Industries Ltd in Asst Year 2002-03. We hold that the above table clearly shows that assessee had not transferred the whole property during the A.Y.2002-03 and hence, the action of the revenue in considering the total sale consideration of Rs. 84.50 Crores as full value of consideration for the property sold during the year is factually incorrect. We also find that as per Clause-5 of the agreement that assessee was entitled to receive the rent from the subject mentioned property from tenant till the possession of the respective portion of the property was handed over to the purchaser. The said rental income had been duly taxed by the department in the hands of the assessee till the time o....
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..... Grasim Industries Ltd. and Indo-Gulf Corporation Ltd., for which capital gains had been duly offered to tax in those respective assessment years by the assessee, we direct the ld. AO to accept the said offer of capital gains on substantive basis instead of protective basis for the A.Yrs. 2003-04, 2004-05 and 2005-06. 10.10. We hold that out of the total area of Rs. 1,07,000/- sq.ft, the assessee had sold only 36,688/- sq.ft to M/s. Hindalco Industries Ltd., during the assessment year 2002-03 and the remaining portion continued to be in possession of the assessee herein till the time it was handed over to the purchasers. In this regard, we find that the Co-ordinate Bench decision of this Tribunal in the case of ACIT vs. Geetadevi Pasari reported in 14 SOT 463 (Mum) which was confirmed by the Hon'ble Jurisidictional High Court in 17 DTR 280 (Bom), supports the case of the assessee. Hence, we hold that sale consideration for transfer of RPH property should be considered only at Rs. 33.13 Crores for the A.Y.2002-03. Hence the first question raised hereinabove is decided in favour of the assessee. 10.11. With regard to bifurcation of sale consideration of Rs. 33.13 Crores between la....
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....s reflected separately and, further superstructure thereon was reflected as part of "Building", on which depreciation was also claimed. * That entire property of RPH comprising of both leasehold land and, building thereon was agreed to be sold by M/s. RPIL to M/s. Grasim Industries Ltd, M/s. Hindalco Industries Ltd and M/s. Indo Gulf Corporation Ltd. 10.13. Since RPIL stood merged with assessee company, the assessee while determining capital gains, adopted the fair market value as on 01/04/1981 as cost of acquisition and claimed indexation thereon. The same was accepted by the ld. AO in the assessment order. However, the same was sought to be disturbed by the ld. CIT(A) by issuing enhancement notice by holding that what was transferred by RPIL to the assessee pursuant to the merger was only the lease hold rights which falls in Section 55(2)(a) of the Act and as such assessee is not entitled to substitute the actual cost of tenancy rights of Rs. 6.50 lakhs with the fair market value as on 01/04/1981 by invoking Section 55(2)(b) of the Act. 10.14. We find that assessee company herein as well as M/s. RPIL were in possession of the said lease hold rights in perpetuity. We hold that....
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....ompute the long-term capital gains on sale of land and short term capital gains and sale of building in the light of above mentioned directions and findings. Accordingly, the ground No.VII to IX raised by the assessee and ground No.6 of the revenue are disposed off in the aforesaid manner. 11. The ground No.1 raised by the revenue is with regard to action of the ld. CIT(A) directing the ld. AO to allow depreciation on the basis of computation made by the assessee. 11.1. We have heard the rival submissions and perused the materials available on record. We find that both the parties before us fairly agreed that this issue is already covered in favour of the assessee by the order of this Tribunal in assessee's own case in ITA No.1257/Mum/2014 and 1486/Mum/2014 for A.Y.2009-10 dated 07/05/2019 wherein it was held as under:- "Disallowance of claim of depreciation on assets of BMIL and PHL: Rs. 68,75,396/- : 17. We shall now advert to the disallowance of the claim of depreciation raised by the assessee on the assets of "Boehringer Mannhem India Limited" (for short BMIL) and pharmaceutical division of "Piramal Healthcare Limited." (for short PHL), aggregating to Rs. 68,75,396/-. The....
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....eliberations, it was concluded by the tribunal that the A.O was not justified in notionally reducing the depreciation for A.Y 1995-96 & A.Y 1996-97 from the WDV of the assets of BMIL while quantifying the depreciation in the hands of the assessee. As a matter of fact, the Tribunal while concluding as hereinabove had relied on a similar view taken by a coordinate bench in the assesses own case viz. Additional CIT Vs. Nicholas Piramal India Ltd. (2012) 150 TTJ 1 (Mum). In the said case the Tribunal drawing support from the judgment of the Hon'ble Supreme Court in the case of CIT Vs. Mahendra Mills (2000) 159 CTR (SC) 381, had concluded that in the absence of a claim of depreciation by the assessee, the same could not have been thrust upon it even if the particulars were available with the AO. We have perused the order of the Tribunal for A.Y. 2008-09 and finding no reason to take a different view, respectfully follow the same. Apart there from, we are also in agreement with the ld. A.R that now when the DRP while disposing off the objections filed by the assessee had specifically directed the A.O to allow claim of depreciation as was raised by the assessee in respect of BMIL, therefo....
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....zed sale of assets or slump sale is pending before the ITAT in the preceding years of the assessee. Accordingly, the DRP had directed the A.O to allow depreciation to the assessee on the basis of the outcome of the main appeal regarding slump sale vs. itemized sale. In the backdrop of the aforesaid fact situation, now when the matter as to whether the sale of the aforesaid two divisions by the assessee is to be treated as an itemized sale or a slump sale is pending in the case of the assessee for the preceding years, therefore, we find no infirmity in the order of the DRP who had rightly directed the A.O to allow depreciation to the assessee on the basis of the outcome of the main appeal. In terms of our aforesaid observations the Ground of appeal No. IV raised by the assessee is partly allowed." 11.2. Respectfully following the same, the Ground No. 1 raised by the revenue is dismissed. 12. The ground No.2 raised by the revenue is challenging the action of the ld. CIT(A) in deleting the addition of Rs. 7,26,737/- made by the ld. AO u/s.40(a)(i) of the Act in respect of payment in foreign exchange for professional services rendered. 12.1. We have heard rival submissions and peru....
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....d cost reduction etc., It was argued that these expenditure were incurred on the grounds of commercial expediency and business prudence and accordingly, wholly and exclusively incurred for the purpose of business and allowable as deduction u/s.37 of the Act. We find that the ld. CIT(A) had perused the complete details filed by the assessee before the lower authorities and had given a categorical finding as under:- "A perusal of details filed show that the services of Mckinsey & Co. were engaged for the purpose of overall improvement in the performance of the company. The scope of work to be done by Mckinsey and as per the agreement is as under:- "The project would aim to ensure successful conversion of NPIL 's strategy into the sales force. The project would work in two phases. In the first phase, lasting 3 months, the team will lead a pilot that would include supporting a move to the revised divisions, an improvement in sales force performance through superior targeting and segmentation of doctors and launching them on the path to distinctiveness. The team will also ensure an appropriate structural and process is put into place that rolls out and maintains these initiative....
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....; working closely with the senior management of Nicholas Piramal India Ltd., becoming an extension of the management team, providing a global perspective and a sounding board; assisting Nicholas Piramal India Ltd in identifying potential corporate partners, licensing opportunities or acquisition targets; assisting in devising optimal approaches to establishing contact with selected prospective corporate partners or acquisition targets; evaluating and recommending financial and strategic alternatives with respect to a strategic alliance; counselling Nicholas Piramal India Ltd with respect to negotiation tactics and strategies; assisting Nicholas Piramal India Ltd in conducting detailed negotiations (directly or behind the scenes) with a prospective corporate partner or acquisition target; assisting in (he preparation implementation and evaluation of post-transaction business plans, and assisting in the raising of capital (Financing), if and as needed, to advance Nicholas Piramal India Lid's operations (each a "Strategic and Financial Counselling Service"). 13.2. The ld. CIT(A) had given a categorical finding that the aforesaid legal and professional fees were paid to parties f....