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2016 (1) TMI 1076 - ITAT DELHIAddition under section 35(2AB) - CIT(A) deleted the addition - Held that:- When the Assessing Officer has specifically not denied that the amount has been spent for R&D and has failed to appreciate the documentary evidence brought on record, the deduction should not have been disallowed by deciding the issue summarily. More so, assessee has brought on record details of revenue and capital expenditure incurred on R&D during the previous year relevant to the year under assessment, which has been duly certified by the Assessing Officer himself in sub-para 6 of para 6 of the assessment order. The Assessing Officer, without returning any finding on the revenue and capital nature of expenditure, certified report of tax auditors certifying the amount of R&D expenditure, proceeded to disallowed the deduction u/s 35(2AB). CIT(A) during appellate proceedings, has also not preferred to call upon any remand report from the Assessing Officer regarding his opinion that details of revenue and capital expenditure incurred on R&D during the relevant period and report of tax auditors certifying the amount of R&D expenditure rather proceeded to delete the addition by allowing deduction u/s 35(2AB) of the Act. Even the Assessing Officer has himself admitted that the assessee has approved R&D centre to carry out the R&D activities. So, we are of the view that the matter is required to be restored to the Assessing Officer to decide afresh after providing opportunity or being heard to the parties on ground No.1. - Decided in favour of the assessee for statistical purpose. Addition made under section 14A read with Rule 8D - CIT(A) deleted the addition - Held that:- CIT(A) while passing the impugned order, thrashed the law on the subject thread bare but has assumed the powers of Assessing Officer in deciding the matter and proceeded to partly allow the appeal of the assessee except for disallowance of ₹ 20,24, 169/- against ₹ 1,02,73,361/- made by the Assessing Officer. Ld. CIT(A) has not preferred to call for any remand report directing the Assessing Officer to record his satisfaction and cogent reasons before invoking the provisions contained u/s 14A read with Rule 8D of I. T Rules. So, we are of the considered view that the matter is required to be restored to the file of Ld. CIT(A) to decide afresh after providing opportunity of being heard to the parties. Ascertained liability as allowable expenditure u/s 37( 1) - Held that:- The estimate of warranty made by the assessee on the basis of past history cannot be treated as a provision for any ascertained liability and allowed the provision for warranty as deduction. Following the law laid down in the case entitled Rotork Controls India Pvt. Ltd. Vs CIT, (2009 (5) TMI 16 - SUPREME COURT OF INDIA ), decision of coordinate bench in the assessee's own case, we find that there is no infirmity or perversity in the findings returned by Ld. CIT(A) in allowing the ascertained liability as allowable expenditure u/s 3 7( 1) of the Act. - Decided in favour of the assessee Non compete fee receipt - long term capital gain or business income - Held that:- Cursory look at the operative clauses of the agreement entered into between the assessee and AB Volvo and VECE apparently proved that there was a negative/restrictive covenant between the assessee company and M/s. AB Volvo that assessee company shall not carry out and be engaged and carry the interest in development/manufacture/sale/distribution/provision of aforesaid services and track of the business or induce, attempt to induce, engage or employ, or solicit or contact with a view to the engagement or employment by any person, any employee, officer or manager of, or any person who has been an employee during the terms of agreement. It is a complete embargo on the assessee company. Following the law laid down in the judgement of ONGC Ltd. VSs CIT & Another, Civil [2015 (7) TMI 91 - SUPREME COURT] we are of the considered view that the amount of ₹ 39,35,00,000/- received by the assessee company as non compete fee, is a component attributable in a negative / restrictive covenant and as such, is a capital receipt as has been held by Ld. CIT(A) vide impugned order. So, finding no illegality or perversity in the findings of Ld. CIT(A) - Decided against the Revenue.
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