TaxTMI 
TaxTMI 
2025 (9) TMI 221
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....Crores. The Ld. Counsel for the assessee informed that the appellant company is engaged in the business of manufacturing of two wheeler and other vehicles. The international transactions of the appellant assessee was subjected to TP verification whereby the Ld.TPO made impunged addition of Rs. 14,78,78,398/-. Brief factual matrix of the case is that the assessee transfers its goods from non 80IC unit to 80IC unit. In response to show cause of the Ld.TPO the assessee has contended that no TP adjustments are required to be made in its case, as the gross level margin of the eligible 80IC undertaking was lower than the gross level margin of the domestic vehicle segment at the entity level after excluding the profit of eligible undertaking. The Ld.TPO however rejected the arguments of the assessee on the premise that in the books of eligible unit though there was an incidence of excise duty but no revenue was recognized by the assessee. Ld. TPO concluded that a meaningful comparison between the two units - eligible vs domestic is only possible by eliminating the excise duty element from the eligible unit. The impugned exercise by the Ld.TPO led to variance in GP margin translating into ....
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....e used in motor bikes. The element of market value therefore cannot be attributed to its products as they are specific to its own motor bikes. We have noted that the Ld.CIT(A) has comprehensively dealt the issue in pages 3 to 11 of its order by properly collating and compiling intricate facts of the case. We are therefore of the considered view that there is no case made out for intervention to the order of the Ld.CIT(A). Accordingly, we uphold the order of the Ld.CIT(A) on the issue of upward adjustments and dismiss all the grounds of appeal raised by the Revenue. 5.0 The next issue raised by the Revenue through its grounds of appeal is regarding another upward adjustment of Rs. 17,69,67,000/- made by the Ld.AO on account of management support services and its deletion by the Ld. CIT(A). The brief factual matrix of the case is that the assessee has obtained administrative support service comprising internal audit, legal, consultancy, taxation trademark etc from its AEs namely Sundaram Clayton Ltd(SCL) and Dua Consulting Pvt Ltd (DCPL). The Ld.TPO made the following observation while making the impugned upward adjustments:- "...8.7 To sum up, the assessee has failed to ....
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....e do not find any need to interfere with the order of the Ld.CIT(A) at this stage. Non-interference by the Revenue on this issue in earlier or subsequent years has also been considered. Principle of consistency deserves to be followed by Revenue in matters particularly when there is no change in facts. Consequently, we uphold the order of the Ld.CIT(A) and dismiss all the grounds of appeal raised by the Revenue on the issue of upward adjustment of Rs. 17,69,67,000/- on account of management support services. 8.0 The next issue raised by the revenue is regarding the action of Ld. CIT(A) in deleting an addition of Rs. 16,71,32,882/- made by the Ld.AO on claim of additional depreciation. As per the brief factual matrix, the Ld.AO noted that the assessee had claimed additional depreciation qua remainder amount which could not be claimed in the earlier year. The Ld.AO held that additional depreciation is allowable only in respect of plant and machinery purchased and put to use in a year. The Ld.AO further held that assessee's reliance upon a favourable decision in its favour delivered by this tribunal for AY-2011-12 cannot be considered since the department is in appeal before the Ho....
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....eciation available for being claimed in this year by the assessee. The assessee is entitled to submit any details deemed necessary in this regard and shall be entitled to due opportunity of being heard. Accordingly, the grounds of appeal raise by the Revenue is dismissed. ITA No.2405/Chny/2019, Assessment Year-2014-15 12.0 The first ground of appeal raised by the assessee through its cross objection is regarding the addition of Rs. 3,99,16,884/- made by the Ld.AO u/s 14A and its confirmation by the Ld.CIT(A). The Ld.AO had made the impugned addition rejecting the favourable decision of this tribunal in assessee's on case in AY-2008-09 and AY-2009-10 on the premise of the same being contested by the department before the Hon'ble Madras High court. The Ld. Counsel for the assessee submitted that there is no case for any addition under 14A and that its case is covered by the decision of this tribunal in its own case for AY-2012-13 vide ITA No.672/Chny/2017 supra. 13.0 The Ld. DR would like to place reliance upon the order of lower authorities. 14.0 We have heard rival submissions in the light of material available on records. We have noted that in ITA No.672/Chny/2017 supr....
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....s, was not warranted and is directed to be deleted. 6.3 Coming to disallowance under Rule 8D(2)(iii), it is noted that the Special Bench of this Tribunal in the case of ACIT v. Vireet Investment (P.) Ltd. reported in [2017] 82 taxmann.com 415, has held that only the dividend yielding investments are to be considered in computation of disallowance under this Rule. In this regard, the Ld. AR for the assessee also referred to the revised computation of disallowance in terms of Rule 8D(2)(iii) with reference to dividend yielding investments, which was placed at Page 106 of the Paper Book. Respectfully following the decision of Special Bench (supra), the AO is directed to verify the computation provided by the assessee andre-compute the disallowance under section 14A read with Rule 8D(2)(iii) accordingly. This ground is therefore partly allowed..." 15.0 We have noted that the facts of the present case are identical to those as available in AY-2012-13 supra and no distinguishment could be pointed out by the Revenue's counsel. Accordingly, respectfully following the cited judicial precedence we deem it appropriate, in the interest of justice to direct the Ld.AO to verify the c....
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....was observed that the company had claimed depreciation on these as intangible assets eligible for higher depreciation of 25% per year. The Ld. CIT(A) observed that the assessee has already enjoyed a special benefit available under the Act and that if these intangible assets were to be categorized as plant and machinery, they will be eligible for depreciation only @ 15%. It was concluded that the assessee cannot have both the benefits i.e to say either it can claim depreciation as the assets being plant and machinery @ 15% and deduction u/s 32AC or alternatively claim deduction @ 25% treating the same as intangible assets. 17.0 The Ld.DR reiterated the arguments taken by the Ld.AO and the Ld.CIT(A). It was vehemently argued that the assessee can either treat the impugned asset as an intangible asset or thus make claim for the special rate of depreciation or else claim it as normal asset eligible for routine rate of depreciation in furtherance of its claim u/s 32AC. It was submitted that the judicial ratio laid down by the Hon'ble Apex Court in the case of Scientific Engineering House Pvt Ltd 157 ITR 86, which has been heavily relied upon in this case therefore has no applicabilit....
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....f the actual cost of such new assets for the assessment year relevant to that previous year: ^4[Provided that where the installation of the new assets are in a year other than the year of acquisition, the deduction under this sub-section shall be allowed in the year in which the new assets are installed:] ^5[Provided further that] no deduction under this sub-section shall be allowed for the assessment year commencing on the 1st day of April, 2015 to the assessee, which is eligible to claim deduction under sub-section (1) for the said assessment year. (1B) No deduction under sub-section (1A) shall be allowed for any assessment year commencing on or after the 1st day of April, 2018.] (2) If any new asset acquired and installed by the assessee is sold or otherwise transferred, except in connection with the amalgamation or demerger, within a period of five years from the date of its installation, the amount of deduction allowed under sub-section (1) 6[or sub-section (1A)] in respect of such new asset shall be deemed to be the income of the assessee chargeable under the head "Profits and gains of business or profession" of the previous year in which s....
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....st day of April, 2020 in the said backward area, then, the provisions of clause (iia) shall have effect, as if for the words "twenty per cent", the words "thirty-five per cent" had been substituted :] Section 32 regarding entitlement of depreciation 32. (1) ^43[In respect of depreciation of- (i) buildings^44, machinery^44, plant^44 or furniture, being tangible assets; (ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature^44, being intangible assets acquired on or after the 1st day of April, 1998, ^45[not being goodwill of a business or profession,] owned^44, wholly or partly, by the assessee44 and used44 for the purposes of the business44 or profession, the following deductions shall be allowed-] Section-32(1)(ii) ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998, Section-43(3) defining plant (3) "plant" includes ships, vehicles, books, scientific apparatus and surgical equipm....
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......" 19.0 On the principal controversy of allowance of deduction u/s. 32AC of the Act to the appellant, the first issue that came up for our consideration is as to whether the appellant meets the various criterion laid down in section 32AC. We have noted that to be eligible for the same the assessee ought to be engaged in manufacturing of an article or thing. This fact is clearly borne from records and Revenue doesn't contests the same. Further, the assessee ought to have invested a sum of Rs. 100 crores between the period 1/4/2013 to 31/3/2015 in its acquisition of a new asset for the new plant and machinery. The assessee placed on records through its paper book, detailed evidences to allude fulfillment of this condition regarding investment of sum of Rs. 100 crores between the period 1/4/2013 to 31/3/2015. There is no dispute on this aspect as well. This brings us to the next limb of the dispute as to whether the drawings per se would fall within the definition of "plant" to be eligible for claim of deduction u/s 32AC. We have noted that the word plant has not been is specifically defined in the Act. Section 32AC merely says that an assessee is eligible for deduction of 15% of ....
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....iety, would prohibit the assessee from claiming a deduction u/s 32AC. At the outset, we have noted that neither section 32 nor section 32AC anywhere provides that claims made in either of the section would cast a prohibition in making any claim qua the other section. Thus seen as there is no specific prohibition in making simultaneous claims, an assessee is entitled to make a claim of depreciation under section 32 as well as under section 32AC. Section 32 is a generic statute which entitles every taxpayer to make a claim of depreciation subject to fulfillment of certain conditions, inter-alia including, qua ownership and utilization of the asset. This section is applicable to all without any limitations. The statute postulates that every taxpayer while calculating its taxable income in a particular year would be entitled to take the benefit of reduction of an expenditure in the nature of depreciation which is deemed erosion in the value of assets. The law of section 32 postulates that since an asset from the date of its inception / acquisition starts loosing its value year after year, the taxpayer must be compensated qua this loss by allowance of depreciation. On the contrary secti....
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....ion by the Ld.CIT(A) is not based upon correct understanding and interpretation of the facts of the case as well as accompanying statute. We therefore set aside the order of lower authorities and direct the Ld.AO to allow the assessee its claim of deduction u/s 32AC of Rs. 2,75,60,290/-. Accordingly, all the grounds of appeal raised by the assessee on this issue are allowed. 20.0 The next issue raised by the assessee is regarding the denial of its claim of additional depreciation u/s 32(1)(iia) of Rs. 3,67,47,054/- being 20% of the asset value of Rs. 18,77,35,270/-, which was made during the course of assessment proceedings. The assessee had claimed before the Ld.AO that it had omitted to claim the impugned depreciation in its Return of Income. The Ld.AO rejected the claim by applying the decision of Hon'ble Apex Court in the Goetz India. The assessee had argued that it is entitled for allowance of its claim within the meanings of explanation-5 to section 32 of the Act postulating that an assessee is entitled for an allowance of depreciation whether or not it was claimed in the Return of Income. It was accordingly requested that the Ld.AO may be directed to allow the assessee's ....
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....se the points of law even before the Appellate Tribunal. 4. The decision in question is that the power of the Tribunal under section 254 of the Income Tax Act, 1961, is to entertain for the first time a point of law provided the fact on the basis of which the issue of law can be raised before the Tribunal. The decision does not in any way relate to the power of the assessing officer to entertain a claim for deduction otherwise than by filing a revised return. In the circumstances of the case, we dismiss the civil appeal. However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Income Tax Appellate Tribunal under section 254 of the Income Tax Act, 1961. There shall be no order as to costs.....". 23.0 A plain reading of the above shows that no doubt their Lordship have mandated that claims of the assessee cannot be entertained by the Ld. AO, which are made otherwise then through a return of income - original or revised, however they have excluded consideration of such claims made before the tribunal. Thus, a tribunal would be well within its rights to consider entertaining such claims....