TMI Blog2020 (8) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of the assessee by numerous orders of the Tribunal as well as of the Hon ble Delhi High Court. Even in Asst. Year 2009-10 [2020 (7) TMI 567 - ITAT DELHI] the Tribunal, in assessee s own case has decided the issue in favour of assessee by upholding the order of the Ld. CIT (A) on the issue. Now even the depreciation schedule provides depreciation on UPS @ 60%. Thus, the controversy is now settled by the amendment in the depreciation schedule itself. Accordingly, in Asst. Year 2010-11 we dismiss the ground raised by the Department and in Asst. Year: 2011-12 we allow the ground raised by the assessee with respect to depreciation on UPS and direct that the assessee should be given benefit of depreciation on UPS @ 60%. Disallowance u/s 14A - non recording of satisfaction - Suo moto disallowance - Department s challenge to a part deletion of the disallowance by the Ld. First Appellate Authority by holding that no disallowance could have been made in respect of interest expenses as the assessee had accumulated surplus - HELD THAT:- We find that this issue stands covered in favour of the assessee by the order of the Tribunal in Asst. Year: 2009-10 [2020 (7) TMI 567 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvolve identical issues. Accordingly, they were heard together and are being disposed of through this common order for the sake of convenience. 2.0 ITA No.4916/Del/2014 is Department s appeal for Asst. Year 2010-11 and is preferred against the order of the Ld. Commissioner of Income Tax (Appeals) {CIT (A)} dated 14.07.2014. The assessee has filed Cross Objection bearing C.O. No.37/Del/2019 against the Department s Appeal. ITA No.4390/Del/2016 is the assessee s appeal for Asst. Year: 2011-12 which has been preferred against the order of the Ld. CIT (A) dated 21.06.2016 whereas ITA No.4816/Del/2017 is the Department s cross appeal for the same year. ITA No.4122/Del/2017 is assessee s appeal for Asst. Year: 2012-13 which against the order of the Ld. CIT (A) dated 01.05.2017 whereas ITA No.4911/Del/2017 is the Department s Cross appeal for the same year. ITA No.4122/Del/2017 is assessee s appeal for Asst. Year: 2013-14 which challenges the order of the Ld. CIT (A) dated 01.05.2017 and ITA No.4912/Del/2017 is the Department s Cross Appeal for Asst. Year 2013-14. ITA No. 4123/Del/2017 is assessee s appeal for Asst. Year: 2014-15 and challenges the findings of the Ld. CIT (A) as contai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llution control equipments. 4. The appellant craves leave to, add to, alter, amend or vary from the above grounds of appeal at or before the time of hearing. 2.4 ITA No.4911/Del/2017 for A.Y.2012-13 (Department s appeal): 1. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in deleting addition of ₹ 1,06,54,85,768/- made by the AO on account of disallowance of 40% of general license fee, holding that the same as not incurred wholly and exclusively for the purpose of business of the assessee. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in reducing the disallowance made u/s 14A from ₹ 31,21,639/- to 30,72,696/- thereby granting relief to the extent of ₹ 48,943/- 3. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition of ₹ 2,59,26,734/- made by AO denying the claim of depreciating in respect or pollution control equipment as there was no evidence submitted to indicate that they were pollution control equipments. 4. The appellant craves leave to, add to, alter, amend or vary from the above g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in upholding the action of the Assessing Officer [ AO ] in confirming the disallowance of ₹ 14,51,315/- under section 14A of the Income-tax Act, 1961 [ the Act ] read with Rule 8D(2)(iii) of the Income-tax Rules, 1962 [ the Rules ]. b. That the CIT (A) erred on facts and in law in confirming the aforesaid disallowance without appreciating that no expenditure was actually incurred in earning the exempt dividend income. c. That the CIT (A) erred on facts and in law in not appreciating that no satisfaction as required by law before resorting to Rule 8D of the Rules for purposes of making disallowance under section 14A of the Act was recorded by the AO. d. The respondent craves leave to add, amend, alter or vary from the above grounds at or before the time of hearing. 2.8 ITA No.4121/Del/2017 for A.Y.2012-13 (Assessee s appeal): 1. That the Commissioner of Income Tax (Appeals) [ CIT(A) ] erred on facts and in law in upholding the action of the assessing officer [ AO ] in disallowing expenditure of ₹ 30,72,696 under section 14A of the Income-tax Act, 1961 [ the Act ] read with Rule 8D(2)(iii) of the Income-tax Rules, 1962 [ the Rules ]. 1.1 That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts and in law in confirming the aforesaid disallowance without appreciating that no expenditure was actually incurred in earning the exempt dividend income. 1.2 That the CIT (A) erred on facts and in law in not appreciating that no satisfaction as required by law was recorded by the AO before resorting to Rule 8D of the Rules for purposes of making disallowance under section 14A of the Act. 1.3 That without prejudice, the CIT (A) erred on facts and in law in not appreciating that disallowance, if any, under section 14A of the Act, had to be restricted to ₹ 17,02,026/- as per computation provided by the appellant. The appellant craves leave to add, alter, amend or vary the above grounds of appeal at or before the time of hearing. 2.11 ITA No.4390/Del/2016 for A.Y.2011-12 (Assessee s appeal) : 1. That the Commissioner of Income Tax (Appeals) [ CIT(A) ] erred on facts and in law in upholding the action of the assessing officer [ AO ] in disallowing expenditure of ₹ 17,58,758/- under section 14A of the Income-tax Act, 1961 [ the Act ] read with Rule 8D (2)(iii) of the Income-tax Rules, 1962 [ the Rules ]. 1.1 That the CIT (A) erred on facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he various years under consideration, the additions/disallowances made by the Assesing Officer (AO) and the income assessed as per the assessment orders are as under: (i) Assessment Year: 2010-11 (a) Returned income - ₹ 7,79,66,41,380/- (b) Disallowance of license fee - ₹ 73,40,98,815/- (c) Disallowance u/s 14A - ₹ 16,95,310/- (d) Disallowance of depreciation - ₹ 20,28,005/- (e) Total additions - ₹ 73,78,22,130/- (f) Assessed income - ₹ 8,53,44,63,510/- (ii) Assessment Year: 2011-12 (a) Returned income - ₹ 10,10,12,81,200/- (b) Disallowance of license fee - ₹ 90,77,99,068/- (c) Disallowance u/s 14A - ₹ 18,33,783/- (d) Disallowance of depreciation - ₹ 52,55,604/- (e) Total additions - ₹ 91,48,88,455/- (f) Assessed income - ₹ 11,01,61,69,655/- (iii) Assessment Year: 2012-13 (a) Returned income - ₹ 12,53,68,36,330/- (b) Disallowance of license fee - ₹ 1,06,54,85,768/- (c) Disallowance u/s 14A - ₹ 31,21,639/- (d) Disallowance of depreciation - ₹ 2,59,26,734/- (e) Total additions - ₹ 1,09,45,34,141/- (f) Assessed income - &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the computer, is eligible to depreciation @ 60%. In AY 10-11, the Ld. CIT (A) allowed the claim of the assessee and the Department is in appeal before us whereas in Asst. Year: 2011-12, the Ld. CIT (A) upheld the action of the Assessing Officer in restricting the depreciation on UPS to 15% and the assessee in appeal against the said finding of the Ld. CIT (A). 3.6 Disallowance u/s 14A of the Act read with Rule-8D is subject to challenge by both the parties during the years under appeal. The details of dividend earned by the assessee, suo moto disallowance offered by the assessee company, disallowance made u/s 14A by the Assessing Officer, disallowance deleted by Ld. CIT (A) and disallowance sustained by the Ld. CIT (A) are depicted in the following chart: ASST. YEARS DIVIDEND INCOME (in Rs.) DISALLOWANCE OFFERED BY THE COMPANY, ON SUO MOTO BASIS (in Rs.) DISALLOWANCE UNDER 14A MADE BY THE ASSESSING OFFICER [A+B] (in Rs.) Disallowance of 14A under Rule 8D(2)(iii), deleted by CIT(A) [A] Disallowance of 14A under Rule 8D(2) (iii), sustained by CIT(A) [B] (in Rs.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held all the issues in favour of the assessee and, therefore, detailed arguments were not required on any of the issues in this bunch of appeals. The Ld. AR drew the Benches attention to the relevant paragraphs of the said order of the Tribunal and submitted that the findings recorded by the Tribunal in the immediately preceding Asst. Year: 2009-10 kindly be followed in these five years under appeal also. 5.0 Per contra, the Ld. CIT-DR fairly accepted that by and large all the issues in this bunch of appeals stood covered in favour of the assessee by the order of the Tribunal as aforesaid. The Ld. CIT-DR, however submitted that so far as the finding of the Tribunal with respect to non recording of satisfaction by the Assessing Officer prior to making the disallowance u/s 14A of the Act was concerned, each Asst. Year would have to be examined separately as there is no res-judicata in Income Tax proceedings. The Ld. CIT-DR also fairly accepted that depreciation on UPS was allowable @ 60% even as per the amended rates provided in the depreciation schedule. 6.0 We have gone through the records and have also perused the orders of the lower authorities and have also perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required satisfaction, such disallowance could not have been made. However, since, the Ld. AR has argued that the disallowance may be restricted to ₹ 8,34,934/-, we, accordingly, restrict the disallowance to ₹ 8,34,934/- and direct the AO to delete the remaining disallowance. Thus, ground No.1 of the assessee s appeal stands partly allowed. 6.0.1 We also note that although the Ld. CIT-DR has submitted that the issue of recording the satisfaction has to be examined every year and that there is no res-judicata in Income Tax proceedings, all the same, a perusal of the Asst. orders for the years under appeal shows that the Assessing Officer has made identical observations in all the years under appeal and in all the years the factum of recording of satisfaction is completely absent. We also note that the assessee had made suo moto disallowances in the years under appeal as under: 2010-11 ₹ 11,52,656/- 2011-12 ₹ 10,02,954/- 2012-13 ₹ 9,64,928/- 2013-14 ₹ 20,13,989/- 2014-15 ₹ 17,02,026/- 6.0.2 The above suo moto disallowances were not commented upon by the Assessing Officer but were completely disregarded and no sati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se fee. It is seen that the Assessing Officer, following the order of his predecessor for the immediately preceding assessment year 2008-09, disallowed on ad hoc basis 40% of the general license fee paid by the assessee to M/s Societe des Produtis Nestle, S.A. Switzerland for use for know-how and technical assistance, alleging that the same was excessive and not reasonable and had not been incurred for the purposes of business of the assessee. The Ld. CIT (A) on appeal, relying on the various orders of the Hon ble High Court and the Tribunal in assessee s own case deleted the disallowance. 7.4.1 It is seen that this issue is covered in favour of the assessee by the following orders of the Hon ble High Court and the Tribunal rendered in assessee s case in the earlier Assessment Years as under: Assessment Years Authority Passing Order Appeal No. Date of order 1997-98 ITAT ITA NO.4545/Del/2000 10.01.2005 1998-99 ITAT ITA NO.2239/Del/2002 10.01.2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Department vis a vis license fee in all the years under consideration. 6.3 The next issue before us is the rate of depreciation to be allowed on UPS. The assessee has claimed deprecation @ 60% in all the years under appeal whereas the AO has restricted the same to 15% in AY 2010-11 and 2011-12. In Asst. Years: 2010-11, the Ld. CIT (A) deleted the disallowance but in Asst. Year 2011-12 the Ld. CIT (A) has upheld the disallowance. We note that this issue is squarely covered in favour of the assessee by numerous orders of the Tribunal as well as of the Hon ble Delhi High Court. Even in Asst. Year: 2009-10, the Tribunal, in assessee s own case has decided the issue in favour of assessee by upholding the order of the Ld. CIT (A) on the issue. The relevant observations of the Tribunal are contained in paragraph 7.5 of the said order which are as under: 7.5 Ground No.3 of the Department s appeal challenges the action of the Ld. CIT (A) in deleting the disallowance of ₹ 1,39,152/- made by the Assessing Officer by restricting the claim of depreciation in respect of UPS from 60% to 15%. The Ld. CIT-DR as fairly accepted that this issue is covered in favour of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T in assessee s own case for Asst. Year: 2009-10 wherein the Tribunal has upheld the findings of the Ld. CIT (A) in deleting the said depreciation disallowance made by the Assessing Officer. The relevant findings of the Tribunal are contained in paragraph 7.6 of the order of the ITAT and the same is being reproduced herein under for a ready reference: 7.6 Ground No.4 of the Department s appeal challenges the action of the Ld. CIT (A) in deleting the disallowance of ₹ 33,90,330/- made by the Assessing Officer by denying the claim of the depreciation in respect of energy saving and pollution control equipment on the ground that it was not put to use. It is seen that the Assessing Officer disallowed the claim of depreciation by alleging that the assessee has only established the factum of purchase of assets and not the condition of assests being put to use. The Assessing Officer further observed that comparative results were not submitted to establish that assets were energy saving and pollution control equipment. It is also seen that no adverse observation had been made by the Assessing Officer with respect to the purchase and installation of such assets. In addition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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