TMI Blog2016 (8) TMI 811X X X X Extracts X X X X X X X X Extracts X X X X ..... same after verification of the claim of goodwill. This being a factual finding we do not see any reason to differ from the directions of the Dispute Resolution Panel. However, it is seen that the Assessing Officer, while giving effect to the directions of the DRP, has not allowed the additional depreciation. In fact, there is no discussion about the same in the assessment order. The Assessing Officer is, therefore, directed to give effect to the directions of the DRP. This ground of the assessee is accordingly treated as allowed. Claim of provision for site restoration fund - Held that:- The issue involved in this ground, not being before the authorities below, needs verification as to facts. In view of the same, we deem it fit and proper to admit the said ground of appeal and remand the matter to the file of the Assessing Officer for reconsideration in accordance with law and judicial precedents on the issue. This ground is also treated as allowed for statistical purposes. Claim of additional depreciation on the plant and machinery - Held that:- Assessing Officer has allowed normal depreciation on the very same assets, and has thus impliedly accepted that the said assets we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... keep the issue alive, he supported the orders of the lower authorities. 6. Having regard to the rival contentions and the material on record, we find that on similar issue, this Tribunal has considered the merits of the issue and has at paras 13 and 14 of its order dated 17.4.2015 held as under- 13. We have considered the issue and pursued the evidences on record, including the documents placed on the Paper Books. We are of the opinion that the approach of the TPO is not correct. Even though the payments made by assessee to the AEs are just a fraction of the total turnover of assessee, these transactions are invariably inter-linked to the manufacturing and trading of cement by the assessee-company. Therefore, the approach of the TPO in considering the CUP method for analyzing independent transactions is not fully justifiable. Apart from that, the methodology used in various analysis is also faulty. As far as the royalty payment on sales is concerned, as rightly pointed out by the Ld.Counsel, there are no comparable companies which are offering similar services. The TPO's comparison on transactions of assessee subsidiary company much prior to the year under consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecompany from the beginning. Therefore, it cannot be stated that 'Zuari Cements' is exclusive brand owner of the Birla Group in exclusion of Italcementi Group. The entire approach by the TPO is biased and cannot be justified on the facts of the case. Therefore, we are not in a position to uphold any of the contentions raised by TPO in his order. Likewise, the disallowance of various service fees including reimbursements made by assessee to AE. Since we do not find any valid reason for TPO to disallow these expenditures, we have no other go than to set aside the entire order of the TPO which is based on wrong presumptions and propositions. DRP unfortunately, even though consisted of three senior officers, did not apply its mind to the valid objections raised by assessee. In view of this, without deciding the merits of various issues, we set aside the orders and direct the TPO to re-consider the entire order and analyse them in fresh, first by determining the most appropriate method and then analyzing the transactions under the provisions of the TP. The orders of the TPO/DRP on the TP issues are therefore set aside and the entire issue on TP analysis is restored to the file o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y villages and these expenditures are necessary to retain such employees and motivate them to work with the company for a longer term by providing necessary amenities in the villages. These expenditures are essential for smooth operations and are incurred wholly and exclusively for the purpose of business. It was further submitted that assessee has maintained proper bills and documentation in support of the expenditures and AO has incorrectly disregarded sample voucher copies submitted. Assessee places reliance on the following judicial precedents wherein it has been held that expenditure incurred on various 'corporate social responsibility' is allowed as business expenditure. i. CIT Vs. Madras Refineries Ltd., [266 ITR 170 (Madras)] ii. CIT Vs. Jayendrakumar Hiralal [327 ITR 147 (Gujarat HC)] iii. CIT Anr. Vs. Karnataka Financial Corporation [326 ITR 355] [(Kar. HC)] iv. CIT Vs. Infosys Technologies Limited [360 ITR 714 (Karnataka)] Assessee also relied on various ITAT decisions in support of the contention. 4.3 DRP however, accepted that this expenditure was incurred for the purpose of business which should be allowed u/s.37(1) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficial daughter's marriage, purchase of gifts to other Govt. employees etc. Except the purchase of gold coins from Corporation Bank, Bangalore on 16-02- 2008 for ₹ 3,85,166/- vide Invoice No.120 for which no details were furnished, rest of the expenditure has same identity etc. Since the business necessity was already decided by the DRP, AO's duty is only to examine the vouchers. In our opinion, except the amount of ₹ 3,85,166/- for which details were not available, rest of the expenditure cannot be disallowed on the reasons stated by AO. We therefore, direct the AO to allow the expenditure, except the amount of ₹ 3,85,166/-. This ground is partly allowed. Contribution to Zuari School: 6. The last item is the expenditure incurred in the nature of contribution to Zuari School amounting to ₹ 13,43,496/-. As per the copy of the MOU entered between assessee and DAV College Trust and management society, New Delhi, assessee-company was required to reimburse the expenditure on running the school after deducting the income realized as fees etc., from the students. AO, however, noticed that 'school' was not defined in the MOU and disallowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 29th June, 2007. The goodwill amounting to ₹ 17975.03 lakhs arose as a result of merger and subsequently, the amount was increased by ₹ 16.95 lakhs as additional purchase consideration was paid. The assessee has recognized such goodwill in its books of accounts with effect from 1.1.2007 and claimed depreciation on such enhanced goodwill. We find that the DRP has taken into consideration the fact that the assessee had not claimed depreciation on such goodwill, while filing return of income from 2007-08 to 2011-12, but since the law is clear by virtue of the judgment of the Hon'ble Supreme Court in the case of Smifs Securities Ltd., DRP has directed the Assessing Officer to allow the same after verification of the claim of goodwill. This being a factual finding and in accordance with the law as settled by the judgment of the Hon'ble Supreme Court, we do not see any reason to differ from the directions of the Dispute Resolution Panel. However, it is seen that the Assessing Officer, while giving effect to the directions of the DRP, has not allowed the additional depreciation. In fact, there is no discussion about the same in the assessment order. The Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed for statistical purposes. 15. As for ground no.21 for the claim of provision for site restoration fund amounting to ₹ 88,30,000, it is stated by the assessee that this fund was inadvertently added back by the assessee in the computation of income, while fling the return of income for the assessment year 2010-11, and the same was missed by the assessee to be claimed before the lower authorities, and that the same may be admitted and adjudicated upon. 16. The Learned Departmental Representative however, objected to the admission of this additional ground as well on the ground that the assessee has not made any claim with regard to such fund in the return of income and therefore, it cannot be raised at this stage. We find that this additional ground of appeal also deserves to be admitted in view of the decision of this Tribunal in the case of NMDC reported in 68 SOT 199. However, the issue involved in this ground, not being before the authorities below, needs verification as to facts. In view of the same, we deem it fit and proper to admit the said ground of appeal and remand the matter to the file of the Assessing Officer for reconsideration in accordance with law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessee submitted that the Assessing Officer has allowed regular depreciation on the same assets, while disallowing additional depreciation holding that the assets were purchased only on 30th and 31st of Mach of the relevant financial year, and therefore, they were not put to use. He submitted that this is a contradictory finding of the Assessing Officer in respect of the same assets, and therefore, the same has to be set aside for reconsideration. 20. The Learned Departmental Representative submitted that the Assessing Officer has rightly pointed out that the assets were purchased only on 30th and 31st March, and therefore sufficient time was not there for the assessee to install the machinery and also to use the same to be eligible to claim additional depreciation thereon. Thus, according to him, the assessment order needs no interference 21. Having regard to the rival contentions and the material on record, we find that the Assessing Officer has allowed normal depreciation on the very same assets, and has thus impliedly accepted that the said assets were acquired and put to use before the end of the relevant financial year. That being so, the Assessing Officer canno ..... X X X X Extracts X X X X X X X X Extracts X X X X
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