TMI Blog2018 (12) TMI 1515X X X X Extracts X X X X X X X X Extracts X X X X ..... he findings of the Ld. CIT(A) is set aside. The AO is directed to delete the addition. Addition on account of unrecorded production - Held that:- The special auditor after extensive study of production process did not find any issue against the assessee. Based on the Audit Report, no addition was made in A.Y. 1993-94. Copy of Assessment Order and Audit Report is placed on record. Further, based on the said Audit Report, no addition was made in A.Y. 1993-94. The ld. AR further submits that similar addition was made for A.Y. 2002-03 and the Tribunal on the basis of decision of A.Y. 1991-92 deleted the addition. By following the order of Tribunal, similar issue was decided in favour of assessee by Tribunal in A.Y. 2003-04 & A.Y. 2004-05. Copy of which placed on record. The ld. DR for the Revenue after going through the various as referred by ld. AR not disputed the factual position canvassed by ld. AR of the assessee. MODVAT credit relating to opening stock - Held that:- CIT(A) allowed relief to the assessee by following the decision of Hon’ble High Court in Mahalaxmi Glass Works [2009 (4) TMI 182 - BOMBAY HIGH COURT] which was also followed by his predecessors in A.Y. 2003- 04 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income tax on brand usage royalty without appreciating the fact that as per Article 13 of the agreement for payment of royalty, no condition exists for royalty being net of taxes and approval taken from RBI cannot be considered to be augmenting the terms of agreement with the principal. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the adjustment made on account of service tax paid by the assessee on brand usage royalty without appreciating the fact that approval taken from RBI cannot be taken to be augmenting the terms of agreement with the principal. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the adjustment made on account of service tax paid by the assessee on know-how royalty without appreciating the fact that approval taken from RBI cannot be taken to be augmenting the terms of agreement the principal. 4. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the adjustment made on account of payment of royalty on traded finished goods made by the assessee to J J, US. 5. On the facts and circumstances of the case and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the order of CIT(A) which is based on rulings of the Hon'ble jurisdictional Tribunal and Hon'ble Jurisdictional High Court in Assessee's own case and hence, the appeal ought to be dismissed; Transfer Pricing Grounds Withholding tax on brand usage royalty of ₹ 1.16 crore 2. erred in objecting to the Hon'ble CIT(A) order without appreciating the fact that the Hon'ble CIT(A) has followed the order of Hon'ble Jurisdictional Tribunal in Assessee's own case, wherein transfer pricing adjustment on withholding- tax on brand usage royalty was deleted; Service tax on brand usage royalty of ₹ 0.50 crore 3. erred in objecting Hon'ble CIT(A) order without appreciating the fact that the Hon'ble CIT(A) has followed the order of Hon'ble Jurisdictional Tribunal in Assessee's own case, wherein transfer pricing adjustment on tax paid on brand usage royalty was deleted; Payments of royalty on sale of traded finished goods of ₹ 8.28 crore 4. erred in objecting Hon'ble CIT(A) order without appreciating the fact that the Hon'ble CIT(A) has followed the order of Hon'ble Jurisdictional Tribunal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of the assessee on account of production loss; Adjustment of MODVAT Excise Duty Credit to Opening Stock 10. erred in objecting to the Hon'ble CIT(A)'s order which is based on rulings of the Hon'ble jurisdictional High Court and Hon'ble jurisdictional Tribunal both in Assessee's own holding that if adjustments are made to closing stock then the corresponding adjustment should also be made in the opening stock; Disallowance of depreciation on testing equipments of ₹ 53,48,110/- 11. erred in objecting to the Hon'ble CIT(A)'s order which is based on rulings of the Hon'ble Jurisdictional High Court and Hon'ble jurisdictional Tribunal both in Assessee's own case that depreciation claimed on testing equipment installed at various pathologies and hospitals under section 32 of the Act amounting to ₹ 53,48,110/- is to be allowed; Payments made to person specified under section 40A(2)(b) of ₹ 2,79,646 12. erred in objecting to the Hon'ble CIT(A)'s order which is based on rulings of the Hon'ble jurisdictional High Court and Hon'ble jurisdictional Tribunal both in Assessee's own holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal in assessee s own case for earlier Assessment Year. The ld. AR of the assessee furnished the detailed chart narrating the various ground and the reference of decision of Tribunal wherein the grounds of appeal raised by revenue are covered. 5. On going through the details on the chart with regard to grounds of appeal, the ld. DR for the Revenue submits that the grounds of appeal are covered in favour of assessee. The ld. DR further submits that he relied upon the order of Assessing Officer/TPO. In the rejoinder submission, the ld. AR of the assessee submits that the grounds of appeal in cross objection filed by assessee are in support of the order of the ld. CIT(A). 6. We have considered the rival submission of the parties and have gone through the orders of authorities below. 7. Ground No. 1 relates to disallowance of Tax on brand usage royalty amounting to ₹ 1.16 Crores. The ld. AR of the assessee submits that this ground of appeal is covered in favour of assessee s own case for AY 2002- 03 in ITA No. 4092/Mum/2007 dated 28th August 2013 and again in assessee s own case for A.Y. 2006-07, A.Y. 2008-09, A.Y. 2009-10 wherein the Tribunal deleted the adjustment base ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice tax paid on no how royalty. The ld. AR of the assessee submits that this ground of appeal is covered in favour of assessee s own case for AY 2002-03 in ITA No. 4092/Mum/2007 dated 28th August 2013 and again in assessee s own case for A.Y. 2006-07 and again on 2008-09 in ITA No. 133/Mum/2012 2009-10 in ITA No.829/Mum/2014. The ld. AR further submits that the facts in the year under consideration are same as of previous year and the appeal of the revenue is dismissed. The ld. DR relied on the order of Assessing Officer. 11. We have considered the submission of the parties and have gone through the order of authorities below. We have noted that similar ground of appeal was raised before Tribunal in assessee s own case for A.Y. 2006-07 in ITA No. 83/Mum/2011 dated 05.02.2014 and the co-ordinate bench passed the following order: 34. In respect of Ground taken by assessee for making disallowance on account of tax, service tax paid by assessee on the payment of royalty, we observe that the said issue has already been considered by Tribunal in assessee's own case for the assessment year 2002-03 (supra) and the Tribunal has held after considering the agreements entered int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... J J USA. We, therefore, do not find any reason to interfere with the findings of the Ld. CIT(A). 15. Considering the decision of Tribunal in assessee s own case for A.Y. 2002- 03 in ITA No. 4092/Mum/2007 and in ITA No. 4070/Mum/2007, which was followed in A.Y. 2006-07 in ITA No.83/Mum/2011 and in A.Y. 2008- 09 and A.Y. 2009-10 in ITA No. 829/Mum/2014, on identical ground, we confirmed the order of ld. CIT(A). In the result, ground no.4 of the appeal is dismissed. 16. Ground No.5 relates to restricting technical no how and market services royalty @ 1% for manufactured goods. The ld. AR of the assessee submits that similar ground of appeal was adjudicated by Tribunal in assessee s own case for A.Y. 2006-07 in ITA No. 83/Mum/2011 and in A.Y. 2002-03 in ITA No. 4092/Mum/2007 and ITA No. 4070/Mum/2007. The ld. DR relied on the order of Assessing Officer. 17. We have considered the submission of the parties and find that in assessee s own case for A.Y. 2002-03 in ITA No. 4092/Mum/2007 and ITA No. 4070/Mum/2007, the Tribunal passed the following order: 55. We have considered the submissions and perused the orders. As we have already held hereinabove that the payment of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on identical ground, we confirmed the order of ld. CIT(A). In the result, ground no.6 of the appeal is dismissed. 23. Ground No.7 relates to disallowance of part of publicity and sale promotion expenses. The ld. AR of the assessee submits that this ground of appeal is covered by the decision of Tribunal in assessee s own case for A.Y. 2006- 07 in ITA No. 83/Mum/2011. The ld. AR further submits that ld. CIT(A) deleted the addition by following the decision of Tribunal in assessee s own case for A.Y. 2006-07. The ld. DR relied on the order of Assessing Officer. 24. We have considered the submission of the parties and find that in assessee s own case for A.Y. 2006-07 on similar ground in ITA No. 83/Mum/2011, the Tribunal passed the following order: 40. We have considered the order of the TPO/AO and the submissions of ld. Representatives of the parties. We observe that the TPO has suggested disallowance on the ground that the AE of the assessee viz J J US is reaping the benefit of higher royalty amount as a result of higher sales realized by assessee by incurring higher expenses by way of publicity and sales promotion undertaken by assessee and therefore the parent company o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acceptable work and made addition on account of unaccounted sale. The ld. CIT(A) deleted the addition by following the order of earlier years as Assessing Officer has not brought anything on record to show that loss incurred by assessee is excessive. The ld. AR submits that a similar issue came up in assessee s own case for A.Y. 1993-94, wherein the then Assessing Officer directed for special audit. The special auditor after extensive study of production process did not find any issue against the assessee. Based on the Audit Report, no addition was made in A.Y. 1993-94. Copy of Assessment Order and Audit Report is placed on record. Further, based on the said Audit Report, no addition was made in A.Y. 1993-94. The ld. AR further submits that similar addition was made for A.Y. 2002-03 and the Tribunal on the basis of decision of A.Y. 1991-92 deleted the addition. By following the order of Tribunal, similar issue was decided in favour of assessee by Tribunal in A.Y. 2003-04 A.Y. 2004-05. Copy of which placed on record. The ld. DR for the Revenue after going through the various as referred by ld. AR not disputed the factual position canvassed by ld. AR of the assessee. 27. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier years order. 30. On the other hand, the ld. DR for the Revenue relied upon the order of Assessing Officer. 31. We have considered the submission of the parties and have gone through the order of lower authorities. The ld. CIT(A) allowed relief to the assessee by following the decision of Hon ble High Court in Mahalaxmi Glass Works (supra), which was also followed by his predecessors in A.Y. 2003- 04 A.Y. 2004-05. Considering the consistent view on the issue which was followed by ld. CIT(A), therefore, we do not find any justification to interfere in his order. 32. Ground No. 10 relates to disallowance of depreciation on testing equipment. The ld. AR submits that this ground of appeal is also covered by the decision of Tribunal in assessee s own case for A.Y. 2001-02 in ITA No. 9437/Mum/2004 vide order dated 05.02.2013. The revenue filed appeal before Hon ble Bombay High Court and the same was dismissed vide order dated 04.07.2016 in ITA No. 2441 of 2013. By following the decision of Tribunal and Hon ble High Court, the assessee was allowed similar relief in A.Y.2002-03, A.Y.2006-07, A.Y. 2008-09 A.Y.2009-10. The ld. DR relied on the order of Assessing Officer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's appeal before the Tribunal in A.Y. 2001-02 in ITA No. 9437/M/04 wherein the Tribunal has deleted the addition mentioning that in order to make any disallowance u/s. 40A(2)(b), it is for the AO to bring on record some material to indicate that the payment was in fact excessive having regard to the fair market value of goods or services for the legitimate needs of the business. We find that during the year under consideration, The AO has disallowed invoking provisions of Sec. 40A(2)(b) on fees paid for legal counseling. We find that the Ld. CIT(A) has deleted the addition holding that for the payments for legal counseling, it is futile to think of comparables because counsels may not charge standard fee but may charge according to the issue involved. The Ld. CIT(A) further observed that if the AO wanted to disallow on the ground of excessive payment, he ought to have established excessiveness of the payment. This has not been done. Considering the decision of the Tribunal in assessee's own case, in the light of the observations made by the Ld. CIT(A), we do not find any reason to interfere with the findings of the Ld. CIT(A). Ground No. 7 is accordingly dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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