TaxTMI 
TaxTMI 
2020 (1) TMI 1200
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.... The assessee has raised the following grounds of appeal:- GROUND NO- I: DISALLOWANCE OF PAYMENTS MADE TO PIRAMAL CORPORATE SERVICES LTD (FORMERLY KNOWN AS PIRAMAL ENTERPRISES LTD) (PCSL) OF Rs. 2,03,08,000/- 1. On, the facts and in the circumstances of the case and in law. the AO erred in following the erroneous direction of Dispute Resolution Panel ('the DRP") in disallowing part of payment made to PCSL of Rs. 2,03,08,000/- on the alleged ground that same is not wholly and exclusively for the purpose of business. 2. The Appellant prays that disallowance of payments made to PCSL amounting to Rs. 2,03,08,000/- be deleted. GROUND NO. II: DISALLOWANCE OF SOFTWARE EXPENSES AMOUNTING TO Rs. 25,01,579/- 1. ON the facts and in circumstances of the case and in law the AO erred in following the erroneous direction of DRP in disallowing software expenses claimed under the head "Repairs - Computer - Others" and "Repairs - Computer - Annual Maintenance" on the alleged jocund that the said expenses are capital in nature and has long term benefits. 2. The Appellant prays that the AO be directed to treat expenditure incurred on software a....
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....imited ("BMIL") merged with the Appellant on the alleged ground that the Appellant has not provided working of depreciation. 2. The AO failed to appreciate and ought to have held that the depreciation chart for AY 1997-98 was submitted before him. 3. On the feels and in the circumstances of the case and in law, the AO erred in Mewing the erroneous direction of the DRP in recomputing depreciation allowable in respect of assets of Pharma Division taken over from Piramal Holdings Ltd. in a manner different from the one calculated by the Appellant. 4. The AO further erred in reducing from the block of assets the sale value as recorded in the books of purchasing company pertaining to glass division and bulk drug division sold in A.Y, 1999-00 on slump sale basis on the alleged ground that the AO has considered it as itemized sale of assets. 5. The Appellant pays that the AO be directed to allow depreciation as claimed in Return of income. GROUND NO. VI: ADJUSTMENT OF INVENTORV AS PER SECTION 145A OF THE ACT AMOUNTING TO Rs. 1,20,83,000/-: 1. On the facts and circumstances of the case and in law, the AO erred in following the erroneous....
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....rch and development expenditure of Rs. 11,23,00,000/- and interest expenditure of Rs. 11,02,00,000/- to fee Baddi unit eligible for deduction u/s. 80IC on the alleged ground that such expenditure are attributable to the said Baddi Unit. 2. The AO failed to appreciate and ought to have held that the * Research and development expenditure are incurred mainly on Process Development for customs manufacturing (PDG) and it has no connection directly or indirectly with the manufacturing activity carried out at Baddi unit. * The assesses has not made any borrowing specifically for the purpose of setting Baddi unit and it working capital requirement is met by the cash or fund generated in the unit. * The Appellant prays that the AO be directed not to allocate research and development expenditure of Rs. 11,23,00,000/- and interest expenditure of Rs. 11,02,00,000/- to the Baddi Unit. GROUND NO. X : ELIGIBILITY OF DEDUCTION UNDER SECTION 80IC OF THE ACT; 1. On the facts sad circumstance of the case and in law, the AO erred in following the erroneous direction of the DRP in disallowing the deduction of Rs. 3,73,57,78,443/- claimed u/s. 80IC ....
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....e Appellant has recovered guarantee commission from AE's. GROUND NO. XIII: ADDITION OF DISALLOWANCE UNDER OECTION 14A BF THE ACT TO COMPUTATION OF BOOK PROFITS UNDER SECTION 115JB OF THE ACT AMOUNTING TO Rs. 4,55,36,000/- 1. On The facts and circumstances of the case and in law, the AO erred in following the erroneous direction of the DRP in adding back the amount disallowed u/s. 14A to the book profit computed u/s. 115JB of the Act. 2. The AO failed to appreciate and ought to have held that the disallowance made under sub-sections (2) and (3) of section 14A is not to be added while computing the book profits u/s. 115JB of the Act in the absence of any express provision for the same' in section 115JB. 3. Therefore, the Appellant prays that the AO be directed not to add the expanses computed u/s. 14A of the Act to the book profit u/s. 115JB. GROUND NO. XIV: GENERAL Appellant craves leave to add, amend, alter and/or delete any/all of the above ground of appeal. 3. The first issue that came up for our consideration from ground No. 1 of assessee appeal is disallowances of payments made to Piramal Corporate Services Limite....
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.... been considered by the co-ordinate bench of ITAT, Mumbai in assessee's own case for AY 2008-09 and after considering relevant facts, including agreement between the parties dated 29/04/1995 held that the Ld. AO is under a misconception of fact has disallowed payment made to PCSL towards reimbursement of expenses, as well as payment of royalty, on the ground that PCSL has charged more to the assessee, then what is contemplated in the agreement. The relevant findings of the Tribunal are as under:- 21. We have considered rival submissions and perused materials on record. On a reading of the agreement dated 29th April 1995 with PEL a copy of which is at Page-859 of the paper book, it is noticed that in addition to the reimbursement of expenses incurred by PEL on behalf of the assessee, the assessee was also required to pay to PEL royalty @ not exceeding 0.5% of his turnover of goods manufacture and traded. Thus, it is evident that the payment made of ' 822 crore to PEL constitutes both reimbursement of expenses and royalty. This fact is also clear from the working of reimbursement of expenses and royalty at Page-237 of the paper book, which indicates that an amount of....
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....of ITAT, Mumbai 'J' bench in assessee's own case for AY 2009-10 in ITA No. 1257/Mum/2014, where under identical set of facts, the Tribunal by following the decision of Hon'ble Bombay High Court in the case of CIT vs Raychem RPG Ltd. (2012) 346 ITR 138 held that expenditure incurred on purchase of a software and licenses are in the nature of revenue expenditure deductible u/s. 37(1) of the I.T. Act, 1961. The relevant findings of the Tribunal are as under:- 11. We have deliberated at length on the issue under consideration and are unable to persuade ourselves to subscribe to the view taken by the lower authorities. We find that the issue that expenses incurred by an assessee on purchase of a software which brought greater efficiency in functioning of its business had been held by the Hon'ble High Court of Bombay in the case of PCIT Vs. Holicin Services (South Asia) Ltd. (2018) 93 Taxmann.com 270 (Bom), as allowable as a revenue expenditure. Further, the Hon'ble High Court of Bombay in the case of CIT Vs. Raychem RPG Ltd. (2012) 346 ITR 138 (Bom) had observed that the expenditure incurred by an assessee on purchase of a software which facilitated its ....
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....d approval in form No. 3CM. The Ld. DR, on the other hand, fairly accepted that this issue may be set aside to the file of the Ld. AO and direct him to follow the directions given by the ITAT for earlier assessment years. 12. We have heard both the parties, perused the material available on record and gone through orders of the authorities below. We find that for AY 2008-09 and 2009-10 the issue has been restored back to the file of the Ld. AO to provide an opportunity to the assessee to furnish required approval in form 3CM from the competent authority. The relevant findings of the Tribunal are as under:- 13. Admittedly, the issue pertaining to the entitlement of the assessee towards claim of weighted deduction under Sec. 35(2AB) is a recurring issue which was also involved in its case for the immediately preceding year i.e A.Y. 2008-09. We find that the Tribunal while disposing off the appeal of the assessee for the immediately preceding year i.e A.Y. 2008-09, had after considering the contention of the assessee that it had applied for approval in "Form 3CM" which was still pending, restored the issue to the A.O. for providing an opportunity to the assessee to furnish....
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....r depreciation @ 60%, when the computers were purchased along with software. In case, the software is purchased separately, then the same would be an acquisition of intangible assets as envisaged in part- B of depreciation schedule and such intangible asset is entitled for depreciation @ 25%. Accordingly, disallowed excess depreciation claimed by the assessee. 15. The Ld. AR for the assessee submitted that this issue is also squarely covered in favour of the assessee by the decision of ITAT, Mumbai bench in assessee's own case for AY 2009-10, where under identical set of facts, the Tribunal held that the assessee is entitled for depreciation @ 60% on up gradation of software. The Ld. DR, on the other hand, fairly accepted that the issue is covered in favour of the assessee by the decision of ITAT for earlier years. But, he strongly supported the findings of the Ld. AO, as well as the Ld. DRP. 16. We have heard both the parties, perused the material available on record and gone through orders of the authorities below. We find that the co-ordinate bench had considered an identical issue for AY 2009-10 and after considering relevant facts and also, by following the decision ....
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....he issue under consideration and vacate the disallowance of Rs. 17,63,425/- made by the A.O. on the said count. The Ground of appeal No. III is allowed. Disallowance of claim of depreciation on assets of BMIL and PHL : Rs. 68,75,396/-: 17. In this view of the matter and consistent with view taken by the co-ordinate bench, we direct the Ld. AO to allow depreciation as claimed by the assessee. 18. The next issue that came up for our consideration from ground No. 5 of assessee appeal is disallowances of claim of depreciation pertaining to BMIL and PHL of Rs. 94,43,089/-. The Ld. AR for the assessee submitted that this issue is covered in favour of the assessee by the decision of ITAT for AY 2008-09 and 2009-10, where under identical set of facts, the Tribunal has allowed the claim of the depreciation pertaining to BMIL and PHL units. The Ld. DR, on the other hand, fairly accepted that the issue is squarely covered in favour of the assessee by the decision of Tribunal for earlier years. But, he strongly supported order of the Ld. AO, as well as the Ld. DRP. 19. We have head both the parties, perused the material available on record and gone through orders of the authorities be....
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....t followed such directions while passing the final assessment order u/s. 143(3) r.w.s 144C(13), dated 28.01.2014. In terms of our aforesaid observations, we direct the A.O. to allow the assesses claim of depreciation insofar the assets of BMIL are concerned. 19. As regards the claim of depreciation raised by the assessee on the assets of PHL which w.e.f 01.06.1996 were taken over by the assessee under a scheme of arrangement duly sanctioned by the Hon'ble High Court of Bombay, vide its order dated 14.08.1997, we find that the assessee subsequent to the takeover had taken the WDV on the basis of the Income Tax records of PHL. As is discernible from the orders of the lower authorities and admitted by the assessee in its objections raised before the DRP, though PHL had not claimed depreciation on its assets, however, the A.O. while framing the assessment in its hands for A.Y. 1996-97 had allowed the same. Apart there from, the assessee had during the year relevant to A.Y. 1999-2000 sold its two divisions viz. (i). Glass Division (GGL); and (ii). Bulk Drug Division (BDD) on a slump sale basis. As such, the assessee company in A.Y. 1999-2000 while computing the deprecation ....
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....for the assessee, at the time of hearing, submitted that this issue is also covered by the decision of ITAT, 'J' bench in assessee's case for AY 2009-10, where the issue has been restored back to the file of the Ld. AO to verify the claim of the assessee that the impact of grossing up of tax, duty, cess, etc., by restating the values of purchases and inventories by inter alia, including the effect of CENVAT credit would be nil subject to section 43B that the duty, taxes, cess, etc is paid before the due date of filing the return of income. The Ld. DR, on the other hand strongly supported order of the Ld. AO, as well as the Ld. DRP. 22. We have heard both the parties, perused the material available on record and gone through orders of the authorities below. We find that a similar issue has been considered by the co-ordinate bench for AY 2009-10 and after considering relevant facts has restored the matter back to the file of the Ld. AO to verify the claim of the assessee that impact of grossing up of tax, duty, cess, etc by revaluing the purchases and inventories by inter alia including the effect of CENVAT credit would be nill. The relevant findings of the Tribunal ar....
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....l is disallowances of expenditure, in relation to exempt income u/s. 14A of the I.T. Act, 1961 for Rs. 4,55,36,000/-. The facts with regard to the impugned disputes are that the assessee has earned tax free income being dividend from shares, but has not declared any expenses attributable to the earning of exempt income. The Ld. AO has determined disallowances contemplated u/s. 14A by invoking Rule 8D(2)(ii) & (iii) of I.T. Rules, 1962 and has worked out total disallowances of Rs. 4,55,36,000/-. The claim of the assessee before the authorities was that when, own funds is in excess of investments made in shares and securities, which yield exempt income, then interest expenses cannot be disallowed under Rule 8D(ii) of I.T. Rules, 1962. Insofar as, disallowances of other expenses, only those investments, which yield exempt income can be considered, while computing the average value of investments in order to determine total disallowances required to be made under Rule 8D(2)(iii) of I.T. Rules, 1962. 25. The Ld. AR for the assessee, at the time of hearing submitted that this issue is also covered in favour of the assessee by the decision of ITAT, 'J' bench for AY 2009-10, whe....
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....d (iii) CIT Vs. Reliance Utilities & Power Ltd. (2009) 313 ITR 340 (Bom). In fact, a similar issue had came up before the Tribunal in the assesses own case for the immediately preceding year i.e A.Y. 2008-09 viz. M/s. Piramal Enterprises Ltd. Vs. Asst. CIT (ITA No. 5471/Mum/2017, dated 30.07.2018). The Tribunal after deliberating on the issue under consideration, had directed the A.O. to verify the assesses claim of availability of sufficient interest free funds for the purpose of making investments in exempt income yielding assets, and if the said claim was found to be in order, then no disallowance of interest expenditure U/rule 8D(2)(ii) could be made. We thus respectfully following the view taken by the Tribunal in the assesses own case for A.Y. 2008-09 in the backdrop of the aforesaid settled position of law, thus direct the A.O. to verify the claim of availability of sufficient interest free funds with the assessee. After verification, if the assesses claim is found to be in order, then the disallowance of the interest expenditure made in its hands u/s. 14A r.w 8D(2)(ii) shall be deleted. 25. As regards the disallowance of administrative expenditure U/rule 8D(2)(iii)....
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....s prohibited by any law in force and are inadmissible u/s. 37(1) of the I.T. Act, 1961. The Ld. AO had also taken support from circular of CBDT No. 05/2012 and also, provisions of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 and held that any expenditure in violation of the above Act is in the nature of expenditure incurred for the purpose, which is prohibited by law and accordingly, disallowed 50% of said expenditure. 30. The Ld. AR for the assessee, at the time of hearing submitted that this issue is squarely covered in favour of the assessee by the decision of ITAT, Mumbai 'J' bench in assessee's own case for AY 2009-10, where under identical set of facts, the Tribunal after considering relevant facts has deleted additions made by the Ld. AO towards disallowances of advertisement and business promotion expenses. 31. The Ld. DR, on the other hand, fairly accepted that the issue is covered in favour of the assessee by the decision of ITAT, Mumbai 'J' bench for AY 2009-10. But, he strongly supported findings of the Ld. AO, as well as the Ld. DRP. 32. We have heard both the parties, perused the material available ....
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....the same were not applicable to the pharmaceutical companies; (ii) that as the CBDT Circular No. 5 of 2012, dated 01.08.2012 imposing prohibition on the medical practitioners and their professional associations from taking any gifts, travel facility, hospitality, cash or monetary grant from the pharmaceutical and allied healthcare sector industries was applicable prospectively, therefore, the same was not applicable in the case of the assessee for the year under consideration i.e A.Y. 2009-10; (iii) that in any case the MCD guidelines which came into effect from 10.12.2009 itself were not applicable in the year under consideration; (iv) that the circular issued by the CBDT cannot impose an obligation adverse to an assessee; and (v) that the samples, expenses incurred on conference etc. by the assessee were not in the nature of freebies. 30. We have deliberated at length on the issue under consideration and find that the issue that the expenses incurred by an assessee which is a pharmaceutical company would not be hit by the Explanation 1 to Sec. 37 of the I.T. Act, is covered by the order of a coordinate bench of the Tribunal i.e ITAT "A" Bench, Mumbai in the case of Arist....
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....rused the orders of the lower authorities and the material available on record. We find that our indulgence in the cross appeals filed by the assessee and the revenue has been sought for adjudicating the allowability of the sales promotion expenses incurred by the assessee on the distribution of articles to the stockists, distributors, dealers, customers and doctors, in the backdrop of the CBDT Circular No. 5/2012, dated 01.08.2012 and the MCI regulations. We find that it is the case of the revenue that as per the CBDT Circular No. 5/2012, dated 01.08.2012 any expense incurred by a pharmaceutical or allied health sector industry in providing any "freebies" to medical practitioners or their professional associations in violation of the regulation issued by Medical Council of India which is a regulatory body constituted under the Medical Council Act, 1956, would be liable to be disallowed in the hands of such pharmaceutical or allied health sector industry or any other assessee which had provided such "freebies" and claimed the same as a deductible expense against its income in the accounts. 21. We have deliberated at length on the issue under consideration and after perusin....
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....l practitioners/doctors, and such a regulation or code of conduct would not cover the pharmaceutical company or healthcare sector in any manner. We are further of the view that in the backdrop of our aforesaid observations, as the Medical Council of India does not have any jurisdiction under law to pass any order or regulation against any hospital, pharmaceutical company or any healthcare sector, then any such regulation issued by it cannot have any prohibitory effect on the manner in which the pharmaceutical company like the assessee conducts its business. On the basis of our aforesaid observations, we are unable to comprehend that now when the MCI has no jurisdiction upon the pharmaceutical companies, then where could there be an occasion for concluding that the assessee company had violated any regulation issued by MCI. We thus, in terms of our aforesaid observations are of the considered view that even if the assessee had incurred expenditure on distribution of "freebies" to doctors and medical practitioners, the same though may not be in conformity with the Indian Medical Council (Professional Conduct, Etiquette and Ethics) regulations, 2002 (as amended on 10.12.2009), however....
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....ffence or prohibited by law. Thus, the claim of any expense incurred in providing above mentioned or similar freebees in violation of the provisions of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 shall be inadmissible under section 37(1) of the Income Tax Act being an expense prohibited by the law. This disallowance shall be made in the hands of such pharmaceutical or allied health sector Industries or other assessee which has provided aforesaid freebees and claimed it as a deductible expense in its accounts against income. 4. It is also clarified that the sum equivalent to value of freebees enjoyed by the aforesaid medical practitioner or professional associations is also taxable as business income or income from other sources as the case may be depending on the facts of each case. The assessing officers of such medical practitioner or professional associations should examine the same and take an appropriate action. This may be brought to the notice of all the officers of the charge for necessary action." We may herein observe that a perusal of the aforesaid CBDT Circular reveals that the "freebies" prov....
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....(1), then the same would debar the doctors or the registered medical practitioners and not the pharmaceutical companies and the allied healthcare sector for claiming the same as an expenditure." 31. Apart there from, we are also in agreement with the alternative contention advanced by the ld. A.R that though a benevolent CBDT Circular may apply retrospectively, but a circular imposing a burden has to apply prospectively only. As a result thereof, now when the CBDT Circular No. 5/2012 was issued only as on 01.08.2012, therefore, the same would not be applicable to the case of the assessee before us i.e for the period relevant to A.Y. 2009-10. In fact, the aforesaid issue as regards the period of applicability of the CBDT Circular No. 5/2012, dated 01.08.2012 was also looked into by the ITAT "A" Bench, Mumbai, in the aforementioned case of Aristo Pharmaceuticals Pvt. Ltd. Vs. ACIT (ITA No. 6680/Mum/2012, dated 26.07.2018), wherein it was observed as under: "25. We thus, in the backdrop of the aforesaid settled position of law as regards the prospective applicability of an oppressive circular, are of the considered view that as the CBDT as per its Circular No. 5/2012....
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.... or under the Indian Medical Council Regulations. We are of a strong conviction that the CBDT cannot provide casus omissus to a statute or notification or any regulation which has not been expressly provided therein. Still further, though the CBDT can tone down the rigours of law in order to ensure a fair enforcement of the provisions by issuing circulars for clarifying the statutory provisions, however, it is divested of its power to create a new impairment adverse to an assessee or to a class of assessee without any sanction or authority of law. We are of the considered view that the circulars which are issued by the CBDT must confirm to the tax laws and though are meant for the purpose of giving administrative relief or for clarifying the provisions of law, but the same cannot impose a burden on the assessee, leave alone creating a new burden by enlarging the scope of a regulation issued under a different act so as to impose any kind of hardship or liability on the assessee. We thus, are unable to persuade ourselves to subscribe to the rigours contemplated in the CBDT Circular No. 5/2012 :, dated 01.08.2012, which we would not hesitate to observe, despite absence of anything pro....
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.... As a matter of fact, the A.O. in the course of the assessment proceedings had vide his letter dated 06.03.2013 directed the assessee to file sample bills of expenses in respect of (i) Key Account Manager (KAM) Expenses; (ii) Customer Relation Manager (CRM) Expenses; and (iii) Gift Articles, which admittedly were filed by the assessee. Thereafter, the A.O. without pointing out any specific instance with reference to any such sample bill or had made a general observation, that the assessee besides the statement that was made by it in the ledger that a certain amount was given to CRM/KAM Manager, had no other primary evidence. Further, it is also observed by him that as in certain cases it was also not known as to who was the beneficiary of the amount that was given and what was the benefit that was accorded, therefore, the expenses claimed by the assessee cannot be considered as established to have been incurred by it wholly and exclusively in the course of its business. We are unable to persuade ourselves to endorse the aforesaid observations of the A.O. for drawing of adverse inferences as regards the aforesaid expenses incurred by the assessee. As a matter of fact, as is discerni....
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....or re-adjudication for the reasons stated therein. The relevant findings of the Tribunal are as under;- 40. We have deliberated on the aforesaid claim of the assessee and are of the considered view that bypassing the specific claim of the assessee, the A.O. had carried out part allocation of the interest & R&D expenditure to its Baddi unit, only for the reason that there was a disparity between the profit rate of Baddi unit and the other units. As is discernible from the records, the department had failed to place on record any cogent and irrefutable material which would conclusively establish that the borrowed funds were utilised in setting up the Baddi unit and further the R&D expenditure incurred was in context of the manufacturing activity carried out at the Baddi unit. Apart there from, there is also no clarity on the fact whether the assessee had maintained unit wise accounts and the expenditure claimed is as per the accounts. In nut shell, there is no evidence which would justify attribution and allocation of the interest expenditure and the R&D expenditure to the Baddi unit of the assessee. We find that similar facts were involved as regards allocation of the afore....
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....of facts, it was held that eligibility criteria for claiming deduction u/s. 80IC of the Act, needs to be examined in the year of formation, as envisaged u/s. 80 IC (4) of the Act, 1961. The relevant findings of the Tribunal are as under:- 50. In the backdrop of our aforesaid observations that the satisfaction of the conditions prescribed in Sec. 80IC(4) are required to be satisfied only in the year of "formation", we shall now deliberate on the facts involved in the case before us. Admittedly, the assessee had set-up its Baddi unit on 10.06.2006, being the date on which production had commenced in the said unit. The said date of "formation" of the Baddi unit is discernible from the certificate issued by a Chartered Accountant in "Form No. 10CCB" for A.Y. 2007-08, wherein at Col No. 8 the date of commencement of operation activity by the undertaking or enterprise is stated as "June 10, 2006". Further, the assessee in the course of its assessment for A.Y. 2007-08 had vide its letter dated 24.09.2009 (Page 524 of "APB") furnished with the A.O. viz. (i). copy of the certificate of commencement of commercial production issued by the Government of Himachal Pradesh, Department of....
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....4), thus it was not eligible for the same. On the basis of our aforesaid observations, we are of the considered view that now when admittedly the Baddi unit was "formed" by the assessee on 10.06.2006 i.e the period relevant to A.Y. 2007-08, therefore, in the backdrop of the settled position of law as had been deliberated by us at length hereinabove, the satisfaction of the conditions prescribed in Sec. 80IC(4) was confined to the initial year i.e year of "formation" viz. A.Y. 2007-08. In fact, we are of the considered view that now when the A.O. had vide his assessment framed u/s. 143(3), dated 18.12.2009 for A.Y. 2007-08, had allowed the assesses claim of deduction u/s. 80IC, therefore, there could have been no reason for him to have drawn adverse inferences as regards the eligibility of the assesses towards claim of such deduction during the year under the consideration viz. A.Y. 2009-10 i.e the 3rd year of its operation, on the ground that the assessee had violated the conditions of constitution/formation as envisaged in Sec. 80IC(4). Be that as it may, as the satisfaction of the conditions prescribed in Sec. 80IC(4) is required to be looked into in the year of "formation", ther....
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....e to the AE cannot be determined by applying Indian PLR. The relevant findings of the Tribunal are as under;- 70. We have considered rival submissions and perused materials on record. Undisputedly, the AE of the assessee is located in Switzerland and the loan availed by the AE is also in the currency of its residence. It is well settled, in case of such loan availed by the AE in foreign currency, the appropriate method for bench marking the interest rate is by applying either LIBOR or EUROBOR. Therefore, the arm's length price of interest chargeable to the AE cannot be determined by applying Indian PLR as the loan given was not in Indian currency. This view of ours gets support from the decisions cited by the learned Sr. Counsel. In case of Tata Autocomp Systems Ltd. (supra), the Hon'ble Jurisdictional High Court held that when the AE is situated in Germany, rate of interest on the loan advanced to the AE has to be determined on the basis of rate of interest prevailing in Germany where the loan has been consumed. The Hon'ble Delhi High Court in Cotton Naturals (I) Pvt. Ltd. (supra) has also expressed similar view. The other decisions relied upon by the learned ....
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.... the book profit u/s. 115JB of the I.T. Act, 1961. We, further noted that the ITAT, bench in the case of ACIT vs Vireet Investments Pvt. Ltd. had considered a similar issue and after considering relevant facts held that computation under Clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to computation as contemplated u/s. 14A r.w. Rule 8D of the I.T. Rules, 1962. Therefore, by respectfully following the decision of Hon'ble Bombay High court, in the cases discussed hereinabove, we direct the Ld. AO to delete additions made towards book profit computed u/s. 115JB of the Act, in respect of disallowances made u/s. 14A of the I.T. Act, 1961. 46. In the result, appeal filed by the assessee is allowed for statistical purpose. ITA No. 1832/Mum/2015: 47. The revenue has raised the following grounds of appeal: 1. "On the/acts and circumstances of the case and in taw, the Hon'ble DRP erred in directing the AO to allow the claim of deduction of Rs. 2,42,85,714/- u/s. 35A, relating to amortization of expenses on account of trademarks. 2. On the facts and circumstances of the case and in law, the Hon'ble DRP erred in directing ....
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....eding year viz A.Y. 2008-09. It was observed by the Tribunal that "SPPL" had paid an amount of Rs. 34 crore towards purchase of trademark from "ASE", as per "agreement" dated 03.10.1997. After making the said payment, SPPL and thereafter the assessee had amortized the expenditure and claimed deduction of 1/14th of Rs. 34 crores paid, in each subsequent year, which was allowed by the CIT(A) and the Tribunal in the said preceding years. It was noticed by the Tribunal that despite the fact that the A.O. had accepted that in the preceding years CIT(A) and the Tribunal had allowed the assesses claim for deduction u/s. 35A, however, he had disallowed the claim of deduction for the year before him i.e A.Y. 2008-09 by following the view taken by his predecessor in the said earlier years. Apart there from, it was noticed by the Tribunal that as was discernible from the order of the Hon'ble High Court of Bombay while deciding the Revenue's appeal on the said issue in the case of "SPPL" for A.Y. 1998-99, the Tribunal had allowed the appeal of the assessee on the said issue on two grounds viz. (i). that as trade mark is not alien to patent right as there is a direct link between patent....