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2019 (3) TMI 1612 - AT - Income TaxDisallowance of Late Delivery Charges - company follows mercantile system of accounting and expenses relating the previous year have been properly provided to arrive the correct profit during the year - HELD THAT:- Late Delivery Fees and pointed out that the issue in earlier year had been decided partly in favour of assessee. The CIT(A) notes that though the assessee had provided details of customer names, invoice number and percentage of Late Delivery Charges but had not provided the copies of purchase orders showing Late Delivery Charges were payable. The Tribunal further while deciding appeal of assessee for assessment year 2007-08 had also considered the said issue and applying the ratio laid down in earlier years, had remitted the issue back to the file of AO - following the same parity of reasoning, we remit this issue also to the file of AO to follow the directions of Tribunal in earlier years and decide the issue after affording reasonable opportunity of hearing to the assessee. Addition u/s 14A r.w.r. 8D - HELD THAT:- The issue arising in the present appeal is similar to the issue before the Tribunal in Capgemini Technology Services India Limited Vs. DCIT [2018 (3) TMI 540 - ITAT PUNE] and following the same parity of reasoning, where the Assessing Officer has failed to record satisfaction, having regard to the accounts of assessee, we hold that there is no merit in the order of Assessing Officer since there is no proper satisfaction being recorded by him. Disallowance of R & D units purchased as per Technical License Agreement - whether it is mere case of purchase of equipment for R&D projects or the payment is in the form of royalty paid by the assessee, licensee to the licensor? - disallowance u/s 40(a)(i) for non deduction of TDS - HELD THAT:- When the assessee has purchased a product in order to carry out improvements in its technology for future development and its sales thereafter, then such purchases cannot be said to be payment of royalty. It may be pointed out that additional purchase obligation for R&D units was though as per terms of Technology Transfer Agreement but its procurement could not be held to be payment of royalty to WED. The grant of license to use existing technology for the manufacture of W200 and 220 engines by the assessee is an independent activity and the terms of agreement for payment of royalty are in that regard or for the same. The purchase of two R&D units though emanates from the same agreement cannot be held to be payment of ‘royalty’. We may refer to the definition of ‘royalty’ under section 9(1)(vi) of the Act in this regard, which clearly lays down that the payment should be for use or use of any technology. In the present case, the payment is made for purchase of equipment for R&D purpose. We thus, find no merit in the orders of authorities below in holding that the aforesaid payment is royalty under both domestic Income Tax Law and also under the Treaty between India and USA. Hence, we direct the Assessing Officer to allow the claim of assessee. - The grounds of appeal raised by assessee are thus, allowed. Depreciation allowed on windmill in respect of cost of allied civil construction, erection and commissioning and whether the same were integral part of windmill - HELD THAT:- Depreciation on windmill is to be allowed even on the cost like erection and commissioning charges, electric items, application charges, etc. which are capitalized to windmill. Following the same parity of reasoning, we dismiss the ground of appeal No.1 raised by Revenue. Depreciation on Printers, UPS and other allied items @ 60% - AO was of the view that Printers, UPS and other allied items were not eligible for deduction @ 60% i.e. rate applicable to computers - HELD THAT:- CIT(A) has allowed the claim of assessee. The issue stands settled by various decisions of Tribunal that the assessee is entitled to higher claim of depreciation at 60% on Printers, UPS and other allied items as in the case of computers. Consequently, there is no merit in the plea of Revenue and the ground of appeal No.2 raised by Revenue is thus, dismissed. Disallowance of commission paid to Directors u/s 40A(2) - HELD THAT:- In assessment year 2007-08, Tribunal has allowed the payment of commission, rejecting the plea of AO that it is excessive payment, in view of provisions of section 40A(2) of the Act. Following the same parity of reasoning, we find no merit in the ground of appeal No.3 raised by Revenue and the same is dismissed. The grounds of appeal raised by Revenue are thus, dismissed.
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