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TMI Blog2022 (1) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the issues raised in Revenue's appeal and the Cross Objection of the assessee are identical in A.Y. 2012-13 & A.Y. 2013-14 and the arguments made would be applicable for both the years. Ld DR did not controvert the aforesaid submissions of Ld AR. In view of the aforesaid submissions of the Counsel, we for the sake of convenience, proceed to dispose of all the appeals by a consolidated order but for the sake of reference, refer to the facts for A.Y. 2013-14 in ITA No.6558/Del/2018. 3. The relevant facts as culled from the material on records are as under : 4. Assessee is a company which is stated to have entered into franchisee agreements with Domino's and Dunkin Donuts Group for operating up of Domino's and Dunkin Donut's store with an exclusive right for sale in India. Assessee electronically filed its return of income for A.Y. 2013-14 on 29.11.2013 declaring total income at Rs. 146,53,33,815/-. The case was taken up for scrutiny and thereafter assessment was framed u/s 143(3) r.w.s 144C of the Act vide order dated 09.02.2017 and the total income was determined at Rs. 232,84,63,600/-. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who vide order d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment of expenditure on account of leasehold improvement considered by AO as capital expenditure. 7. During the course of assessment proceedings and on perusing the computation of income, AO noticed that assessee had claimed deduction u/s 37 of the Act of Rs. 47,37,14,260/- on account of leasehold improvements. Assessee was asked to justify the claim of expenditure as Revenue in nature. Assessee made the submissions which was not found acceptable to AO. AO noted that assessee has done massive level improvements costing a very huge amount resulting into the creation of assets, meeting with the international parameters for obtaining and running the stores of Dominos Pizza and Dunkin Donuts - chain of restaurants and takeaways which according to AO has resulted into creation of asset with the nature of Infrastructure Improvement which materially extend the useful life or increase the value of the infrastructure. He was of the view that the expenditure being in the nature of extensive renovation and beautification of the stores, results into an enduring benefit to the assessee. He therefore held the expenditure incurred to be of capital in nature requiring capitalization. He therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns done in the various lease premises taken by the assessee for the purpose of business did not create any new asset, the expenditure of renovation and repairs of stores assumed a character of revenue in nature and the expenditure incurred by the assessee was necessary for the purpose of business and squarely fall u/s 37(1) of the Act. Before us, no fallacy in the findings of CIT(A) has been pointed out by Revenue. The case law relied upon by Revenue is distinguishable on facts and therefore not applicable to the present facts of the assessee. In such circumstances, we find no reason to interfere with the order of CIT(A) and thus the Ground of Revenue is dismissed. 12. In the result, appeal of the Revenue is dismissed. We now proceed with ITA No.612/Del/2019 for A.Y. 2012-13: 13. Before us, both the parties have submitted that the issue raised in A.Y. 2012-13 is identical to that of A.Y. 2013-14. We have hereinabove while deciding the appeal for A.Y. 2013-14 for the reasons stated therein have dismissed the appeal of the Revenue. We for similar reasons also dismiss the appeal of the Revenue for A.Y. 2012-13. Thus the ground of the Revenue is dismissed. 14. In the result, appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... national Franchising Inc. (DPIF) & Dunkin Donuts Franchising LLC (DDFL). 21. Before us, at the outset, Learned AR submitted that TPO held Dunkin Donuts as Associated Enterprise of the assessee and therefore the transaction of the payment of Franchise fee was subject to reference to Transfer Pricing Officer for determination of Arm's Length Price under Chapter - 10 of the Act. He submitted that when the matter was carried before CIT(A), CIT(A) upheld the order of TPO with respect to the payment of franchise fee to be subject to Transfer Pricing Regulation but however on the quantum of addition made u/s 92CA (3) of the Act, he decided the issue in favour of the assessee against which the Revenue is not in appeal. In view of these facts, he submitted that the issue be decided accordingly. 22. Learned DR on the other hand did not controvert the submissions made by Learned AR but however supported the order of TPO. 23. We have heard the rival submissions and perused the materials available on record. Before us, Learned AR has fairly admitted that though CIT(A) had held the transaction by the assessee with DPOF/DDIF and DDFL to be subject to Transfer Pricing Regulation, but on the qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e nature of employees cost and hence deductible during the vesting period and the allowance of ESOP expenses is to be computed for in the respective financial year's with respect to the market price of shares at the time of grant of options to the employees. Further, ESOP expenses needs to be adjusted in relation to the unvesting/lapsing options at the appropriate time meaning thereby that the amount already claimed as ESOP expenses in earlier years on vesting needs to be reversed in subsequent years in which unvesting/lapsing options occurred in the books of accounts and the claims should be made accordingly for tax purposes. In the case of assessee, as per the prescribed intrinsic value method, no deduction was claimed in the return of income for the year under consideration but however assessee had issued ESOP to various employees. He further submitted that the assessee has duly deducted tax at source on the perquisite value on exercise of such ESOPs in the hands of the employee on the amount of discount being the difference between market price on the date of exercise by the employees and the exercise price at the time of grant in accordance with the provision of Act. He submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Hon'ble Rajasthan High Court in the case of Chambal Fertilizers and Chemicals Ltd. vs. CIT (Appeal No. 52/2018 order dated 03.07.2018) and the decision of Hon'ble Bombay High Court in the case of Sesa Goa Ltd. vs. JCIT (Tax Appeal No.17/2013 and others dated 28.02.2020). Learned AR thus submits that education cess being not in the nature of tax and not being a disallowable expenditure u/s 40A(2) of the Act, the claim of its deduction be allowed. 30. Learned DR on the other hand did not controvert the submissions made by Learned AR. 31. We have heard the rival submissions and perused the relevant materials available on record. The issue in the present ground is with respect to 'education cess' and secondary and higher education cess'. It is assessee's contention that the aforesaid payment of cess was not claimed as deduction while filing the return of income. We find that Hon'ble Bombay High Court in the case of Sesa Goa Ltd. (supra) after considering CBDT Circular No. F. No.91/58/66-ITJ (19) dated 18th May 1967 has held that provision of Section 40a(ii) of the Act does not include "cess" & consequently, "cess" whenever paid in relation to business is allowable as deductible ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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