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TMI Blog2020 (9) TMI 1165X X X X Extracts X X X X X X X X Extracts X X X X ..... d 142(1) of the I.T. Act, 1961 were issued and served upon the assessee. In response, assessee filed relevant information as called for and after considering the detailed submission of assessee, AO rejected the contention of assessee and made disallowance. 3. Aggrieved with the above order, assessee preferred appeal before Ld. CIT(A) and made the detailed submission before Ld. CIT(A) with respect to addition/disallowance made by the AO, and Ld. CIT(A) considering the submissions of assessee, partly allowed the appeal of assessee. 4. Aggrieved with the above order, revenue preferred the appeal before us with the following grounds:- 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in accepting the assessee's devise of not claiming depreciation in respect of assets taken over on amalgamation of Piramal Holding Ltd and M/s. Boehringer Mannheim India Ltd. (BMIL), ignoring that provisions of Section 34 (1) of the Act. were omitted w.e.f. 1.4.88 and relying on the Supreme court judgement in the case of Mahindra Mills reported in 243 ITR which pertains to the period prior to the omission of the section. 2. On the facts and in the circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the rival submissions and material placed on record. We notice from the record that the identical ground raised in the present appeal has already been decided by the Coordinate Bench of ITAT in ITA 6392/Mum/2003 for AY 2000-01 in assessee's own case on merits. For the sake of clarity, it is reproduced below:- 20. We have perused the aforesaid orders passed in the assesse's own case by the Tribunal in the aforementioned years, and are persuaded to subscribe to the claim of the ld. A.R that the issue as regards the entitlement of the assessee towards claim of depreciation on the assets taken over on amalgamation of BMIL and PHL is squarely covered in favour of the assessee. The Tribunal while disposing off the appeal of the assessee for A.Y 1998-99 had followed its earlier order for A.Y 1997-98, and had observed that the assesse's claim for depreciation on the assets taken over on amalgamation of BMIL and PHL was found to be in order. The Tribunal while concluding as hereinabove had observed as under: "11. Ground No. 3 & 4 raised by the Revenue in its appeal read as under:- 3. Erred in accepting the assessee's devise of not claiming depreciation in respect of assets taken ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assets, it was mandatory that depreciation is charged to arrive at the correct income for any given year. The AO referred to the decision of the Hon'ble Bombay High Court in the case of M/s. Premier Automobiles Ltd. 206 ITR 001(Bom), wherein it was held as follows: "Under section 32 of the Act, the assessee is entitled to allowance of depreciation. It is for him to claim the same. If he does not claim the same or wants to forgo the same, he is free to do so. This judgement does not say anything about carry forward of depreciation which has not been claimed by the assessee in the particular year. So far as the current year's depreciation is concerned, it is for the assessee to claim the same or not to claim the same. If he does not claim it, he loses the depreciation. There is no question of any depreciation allowable for that year and in that event the question of any unabsorbed depreciation of that year will not arise. This decision, however, cannot be carried any further to contend that the assessee is free not to claim depreciation in the year to which it pertains but carry forward the same to the subsequent year or years as it likes." It was further held that: "what sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme Court in Mahendra Mills (supra). If either of the two conditions are not fulfilled the AO cannot force the depreciation allowance on the assessee. It further follows logically that in the absence of a claim by the assessee the allowance cannot be thrust upon him even if the particulars are available to the AO. Therefore, the mere fact that the assessee before us did not make a claim for depreciation places a fetter upon the powers of the AO t allow depreciation. 26. The contention of the Revenue was that after 1st April, 1988, the condition of furnishing the particulars required by sub- sec. (1) and (2) of s. 34 has been done away with and that has altered the effect of the judgment in Mahendra Mills (supra). It is difficult to uphold the contention because not only has the Supreme Court viewed the conditions as cumulative, but more importantly, they have viewed the claim for depreciation as something over which the AO has no control and is the choice of none else than the assessee. It would be proper to understand the judgment as also laying down, impliedly, that if there is no claim of depreciation by the assessee, that should be an end of the matter. Therefore, the j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder s. 29 is to be computed in accordance with the provisions contained in ss. 30 to 43A. The argument that since s. 32 provides for depreciation if has to be allowed in computing the income of the assessee cannot in all circumstances be accepted in view of the bar contained in s. 34. If s. 34 is not satisfied and the particulars are not furnished by the assessee, his claim for depreciation under s. 32 cannot be allowed. Sec. 29 is thus to be read with reference to other provisions of the Act. It is not in itself a complete code.' 27. The Supreme Court has observed that even in the absence of the rule, since the return form itself prescribes particulars to be furnished in support of the claim of depreciation, the allowance can be granted on if the assessee makes a claim and the particulars required in the return form are furnished. The ratio of the observations is that in order to obtain an allowance or deduction, it is necessary for the assessee to make a claim and also support it by necessary particulars or evidence. Therefore, the contention on behalf of the revenue that after the omission of sub- sec. (1) and (2) of s. 34 and r. 5AA w.e.f. 1st April, 1988, depreciation has t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If the assessee has not claimed deduction of depreciation in any past year it cannot be said that it was notionally allowed to him. A thing is "allowed" when it is claimed. A subtle distinction is there when we examine the language used in section 16 and sections 34 and 37 of the Act. It is rightly said that a privilege cannot be to a disadvantage and an option cannot become an obligation. The Assessing Officer cannot grant depreciation allowance when the same is not claimed by the assessee." 28. In the light of the above observations of the Hon'ble Supreme Court, let us see the decision of the Hon'ble Bombay High Court in the case of Premier Automobiles (Supra). The question before the Hon'ble Court and the circumstances under which it arose were as follows: "Whether, on the facts and in the circumstances of the case, the assessee-company could lawfully claim the development rebate in priority to depreciation allowance prescribed under section 32 of the Income-tax Act, 1961, while computing its total income for each of the assessment years 1970-71, 1971-72 and 1972-73?" As is evident from the question, the controversy related to priority in the matter of set off of unabsorbe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ismiss the Ground No.2 raised by the assessee". 13. As the issues involved in the year under consideration as raised in ground No. 3 & 4 of the Revenue's appeal as well as all the material facts relevant thereto are similar to that of A.Y. 1997-98, we respectfully follow the order of the co-ordinate Bench of this Tribunal for A.Y. 1997-98 and uphold the impugned order of the ld. CIT(A) giving relief to the assessee on these issues. Ground No. 3 & 4 of the Revenue's appeal are accordingly dismissed." As the issue involved in the present appeal of the revenue i.e allowability of the assesse's claim of depreciation on the assets taken over on amalgamation of BMIL and PHL is squarely covered by the aforesaid orders of the co-ordinate benches of the Tribunal in the assesse's own case for A.Y 1997-98, A.Y 1998-99, A.Y. 1999-2000 and A.Y 2009-10, we therefore respectfully follow the same. Accordingly, finding no infirmity in the order of the CIT(A) who had directed the A.O to allow depreciation on the assets taken over on amalgamation of BMIL and PHL, as claimed by the asseseee company, we uphold the same to the said extent. The Ground of appeal No. 1 raised by the revenue is dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, finding no infirmity in the order of the CIT(A) who had directed the A.O to delete the aforesaid disallowance of Rs. 28,92,000/-, we uphold the same to the said extent. The Ground of appeal No. 2 raised by the revenue is dismissed. 12. Therefore, respectfully following the above decision of Coordinate Bench of ITAT in assessee's own case which is applicable mutatis mutandis in the present case, we are inclined to accept the submission of Ld. AR. Accordingly, the ground raised by the revenue stands dismissed. 13. With regard to ground no. 3, Ld. DR submitted before us that Ld. CIT(A) erred in directing the AO to grant depreciation @ 60% as against 25% granted by the AO. ignoring the fact that there was no specific mention in the schedule to allow depreciation @ 60% in the year under consideration and supported the findings of AO. 14. On the other hand, Ld. AR brought to our notice para 7 of CIT(A)'s order and submitted that this ground is squarely covered by the order of Coordinate Bench of Hon'ble ITAT in ITA 6392/Mum/2003 for AY 2000-01 in assessee's own case, wherein Hon'ble ITAT has decided this issue in favour of assessee. 15. Considered the rival submissions and materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making apparatus and only facilitated carrying its business more efficiently, therefore, the same was rightly claimed by it as a revenue expenditure. We thus in terms of our aforesaid observations direct the A.O to allow the software expenses of Rs. 14,00,800/- as claimed by the assessee. The Ground of Appeal No. 1 is allowed." As the issue involved in the present appeal is squarely covered by the aforesaid order of the Tribunal in the assesse's own case for A.Y 2009-10, therefore, we respectfully follow the same. Accordingly, finding no infirmity in the order of the CIT(A), who had directed the A.O to delete the disallowance of Rs. 1,16,79,995/-, we uphold the same to the said extent. Before parting, we may herein observe that consequent to our aforesaid observation the depreciation of Rs. 29,19,999/- that was allowed by the A.O by treating the aforesaid 'computer software expenses' as a 'capital expenditure' shall resultantly be withdrawn. The Ground of appeal No. 3 raised by the revenue is dismissed. 16. Therefore, respectfully following the above decision of Coordinate Bench of ITAT in assessee's own case which is applicable mutatis mutandis in the present case, we are incli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions and material placed on record. We notice that assessee has incurred consultancy charges to list the 'ADR' in 'NYSE' and later dropped this project. The AO treated the expenditure as capital and disallowed the same and simultaneously, invoked provision of section 40(a)(i) and 195 of the Act. We notice that in the similar situation, the Hon'ble Bombay High Court in the case of Nimbus Communications Ltd.(supra) has treated the capital expenditure of share issue expenses, which ultimately aborted public issue. The expenditure does not have enduring benefit to the assessee and allowed these expenses as revenue expenditure by relying on CIT vrs. Essar Oil Ltd. case (ITA No. 921 of 2006) dated 16.10.2008 since the issue before is similar. Therefore, the ground raised by revenue is accordingly dismissed. 23. With regard to invoking provision of section 40(a)(i), we are in agreement with the submission of the Ld. AR that these services were rendered outside India and none of the income earned by M/s Brown & Wood is taxable in India and there is no obligation on the assessee to deduct tax. 24. With regard to ground no. 5, Ld. DR submitted before us that Ld. CIT(A) erred in dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt appeal also relating to AY 2001-02, the amendment took place in the year 2012. Respectfully following the above decision of Hon'ble High Court which is applicable mutatis mutandis in the present case, we are inclined to accept the submission of Ld. AR. Accordingly, the ground raised by the revenue stands dismissed. 28. With regard to ground no. 6, Ld. DR submitted before us that Ld. CIT(A) erred in directing the A.O to allow relief of Rs. 5,61,25,000/- being the amount transferred to Debenture Redemption Reserve ignoring the fact that the assessee made the reserve after determining the net profit as per the company's Act. There is no provision in Sec. 115J to reduce such amount from the net profit and relied upon the order of AO. 29. On the other hand, Ld. AR brought to our notice para 11 of CIT(A)'s order and submitted that this ground is squarely covered by the order of Coordinate Bench of Hon'ble ITAT in assessee's own case for AY 1997-98 reported in (2013) 32 taxmann.com 283 (Mum Trib), wherein Hon'ble ITAT has decided this issue in favour of assessee. 30. Considered the rival submissions and material placed on record. We notice from the record that the identical grou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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