TMI Blog2019 (9) TMI 879X X X X Extracts X X X X X X X X Extracts X X X X ..... defend the litigation created by Purolite. Such litigation was initiated not only against the assessee but also its USA subsidiary. The benefit of such expenditure in the shape of fee paid to Baker and Mckinsey LLP and others, has obviously gone to the assessee in asmuchas it had defended itself. The mere fact that the subsidiary in the USA also got benefitted by the expenditure, cannot come in the way of allowing deduction in the hands of the assessee. Even in the absence of its USA entity being a party to the litigation, the assessee was bound to incur such expenditure to defend itself. The Hon ble Supreme Court in Sassoon J. David Company Private Limited Vs. CIT [ 1979 (5) TMI 3 - SUPREME COURT] has held that deduction has to be allowed for the expenditure incurred wholly and exclusively for the purpose of business even if benefit of such expenditure percolates to someone else also Disallowances made on account of Public Relation expenses, Membership subscription, Garden expenses, Misc. Expense, House Magazine expenses, Vehicle expenses, Misc Foreign Travel Expenses and Telephone expenses - HELD THAT:- Both the sides agree that this ground is similar to the grounds ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epreciation. He further directed the AO to exclude interest of ₹ 19.99 lakh incurred in Post Shipment packing credit. All the above three directions given by the ld. CIT(A) are perfectly in order. Since the issue has been restored to the AO, we uphold the impugned order to this extent thereby affirming the specific directions given in the impugned order. - ITA Nos. 510 & 511/PUN/2014, ITA Nos. 715 & 716/PUN/2014 - - - Dated:- 13-9-2019 - SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER For the Appellant : Shri H.P. Mahajani For the Respondent : Mrs. Nandita Kanchan ORDER PER BENCH : This batch of four cross appeals comprising of two appeals by the assessee and equal number of appeals by the Revenue relate to the assessment years 2007-08 and 2008-09. Since some of the issues raised in these appeals are common, we are, therefore, proceeding to dispose them off by this consolidated order for the sake of convenience. 2. Before proceeding with these appeals, it is pertinent to mention that the cross appeals of the assessee for the A.Y. 2006-07 were simultaneously argued, for wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asons as discussed in our order for the A.Y 2006-07, we order to delete the sustenance of ad hoc disallowance out of the Commission expense. 10. Ground No.7 of the assessee s appeal is against the confirmation of addition of ₹ 4.21 crore towards legal and professional fees paid to Baker Mckinsey LLP and others. The factual scenario of this ground is that the assessee paid a sum of ₹ 8.42 crore towards legal fees paid for Purolite litigation in USA to Baker and Mckinsey and Silverman Berhheim Vogel and Wilentz Goldman Spitzer P.A. The assessee was called upon to explain the nature of such payment, in response to which it was submitted that Purolite filed a Civil action against the assessee company and its USA subsidiary in the Eastern District of Pennsylvania, USA on the ground that certain employees leaving Purolite joined Thermax Ltd. and shared secret details of Purolite with the assessee and its USA subsidiary. The assessee submitted that this expenditure was incurred to defend the litigation. Not convinced, the AO held that such expenditure was covered by the Explanation to section 37(1) of the Act as it involved infringement of rights. He, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Medical and LTA expenses. Both the sides agree that the facts and circumstances of this ground are similar to the Ground No.6 of the Revenue s appeal for the A.Y. 2004-05. Relevant discussion has been made in paras 58 to 60 on pages 39 40 of the Tribunal order dated 25-05- 2009 in which such an issue has been determined in assessee s favour. Following the same, we uphold the impugned order on this score. 15. In the result, the appeal of the assessee is partly allowed and that of the Department is dismissed. A.Y. 2008-09 : 16. Ground No.1 of the assessee s appeal and Ground No. 1 of the Revenue s appeal are against the confirmation of addition on account of income recognition from contract activity. 17. Both the sides agree that similar issue has been decided by the Tribunal in assessee s own case for the A.Y. 2005-06 in the assessee s favour. Relevant discussion has been made in para 8.1 pages 9 to 12 of the order. Following the precedent, we decide this issue in favour of the assessee. The ground of the assessee is allowed and that of the Revenue is dismissed. 18. Ground No.2 of the assessee s appeal is against the denial of deduction on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of certain items of plant and machinery instead of allowing depreciation @25%. 23. Here again, it is found as an admitted position that similar issue has been decided by the Tribunal in the assessee s favour for the immediately preceding assessment year and earlier years. Respectfully following the precedent, we decide this issue in assessee s favour. 24. Ground No.5 of the assessee s appeal is against the disallowance u/s.14A. The assessee earned exempt dividend income of ₹ 34.25 crore. The AO invoked the provisions of section 14A r.w. Rule 8D and accordingly computed the net disallowance at ₹ 244.14 lakh, after allowing the benefit of ₹ 85.63 lakhs as disallowed by the assessee. The ld. CIT(A) restored the matter to the file of AO with direction to recompute the disallowance by holding that in computing the average value of investments, the investments which yield taxable income, should be excluded. He jettisoned the contention of the assessee that the fixed assets should be considered at their gross value without excluding depreciation. He further directed the AO to exclude interest of ₹ 19.99 lakh incurred in Post Shipment packing c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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