TMI Blog2018 (3) TMI 2023X X X X Extracts X X X X X X X X Extracts X X X X ..... ed back to the file of the AO. AO shall examine the earlier record from the assessment year 2001-02 to 2005-06 and the order of this Tribunal for assessment year 2006-07 and thereafter decide the issue afresh in the light of the judgment of M/s Pentasoft Technologies Ltd. [ 2013 (11) TMI 1057 - MADRAS HIGH COURT] after giving a reasonable opportunity to the assessee. Disallowance of depreciation on goodwill - HELD THAT:- This Tribunal by placing reliance on the judgment of Delhi High Court in the assessee's own case for assessment year 2005-06 [ 2012 (4) TMI 79 - DELHI HIGH COURT] allowed depreciation on the goodwill. Since facts are identical, this Tribunal is of the considered opinion that the decision of co-ordinate Bench of this Tribunal for the assessment year 2006-07 is equally applicable for the year under consideration. Therefore, AO directed to allow depreciation on goodwill. TDS u/s 195 - Addition u/s 40(a)(i) - payment made to non-resident without deducting tax at source - assessee is a resident in India and paid testing fee to Kema, Netherlands for the purpose of testing the transformers manufactured by it - claim of the assessee before this Tribunal is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . On a query from the Bench how this provision was made and what is the method? - The Ld.counsel could not explain the expenditure incurred on the earlier years. Therefore, this Tribunal is of the considered opinion that the matter needs to be re-examined by the assessee. Accordingly, the orders of both the authorities below are set aside and the issue with regard to disallowance of provision for warranties is remitted back to the file of the Assessing Officer. Additional depreciation claimed by the assessee - On a query from the Bench, the Ld.counsel submitted that the copy of assessment order for assessment year 2006-07 is not readily available even with the assessee. This Tribunal is of the considered opinion that for claiming additional depreciation, the assessee has to establish that the machinery was purchased and installed. If the depreciation could be allowed in the earlier assessment year, the balance depreciation can be claimed in the subsequent year. This Tribunal is of the considered opinion that the matter needs to be re-examined by the Assessing Officer. Accordingly, orders of both the authorities below are set aside and the issue of additional depreciation is re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is in the nature of commercial right of similar nature such as patents, copyright and trademarks, etc. 7. On the contrary, Shri S. Bharath, the Ld. Departmental Representative, submitted that the non-compete fee does not give any commercial right to the assessee. Therefore, according to the Ld. D.R., it cannot be considered as capital asset for allowing depreciation under Section 32(1) of the Income-tax Act, 1961 (in short 'the Act'). Moreover, the Ld. D.R. submitted that it is not known whether the depreciation was allowed for the assessment years 2001-02 to 2006-07 as claimed by the assessee. This fact was also not brought to the notice of this Bench which heard the case for assessment year 2006-07. Referring to the order of the CIT(Appeals), the Ld. D.R. submitted that the assessee has not claimed the depreciation in the return of income, therefore, there is no question of allowing the claim of depreciation at this stage. 8. We have considered the rival submissions on either side and perused the relevant material available on record. For the assessment year 2006-07, this Tribunal allowed depreciation on non-compete fee by placing reliance on the judgment of Madr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the assessment year 2006-07 is equally applicable for the year under consideration. Therefore, by following the decision of this Tribunal for assessment year 2006-07 and for the reasons stated therein, the orders of both the authorities below are set aside and the Assessing Officer is directed to allow depreciation on goodwill. 12. The next issue arises for consideration is disallowance made by the Assessing Officer under Section 40(a)(i) of the Act in respect of the payment made to non-resident without deducting tax at source. 14. Shri Tushar Jarwal, the Ld.counsel for the assessee, submitted that the assessee has made three payments to the nonresident. According to the Ld. counsel, the first payment was made to Kema, Netherlands towards testing fee to the extent of Rs. 25,48,440/-. The assessee also paid to Areva T D Finance, France towards reimbursement of cost recovery from Syrian customer. In fact, according to the Ld. counsel, the CIT(Appeals) allowed the claim of the assessee, therefore, the Revenue is in appeal before this Tribunal. According to the Ld. counsel, the next payment is made to Converteam, USA towards erection and commissioning charges of Rs. 7,59,050/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord. The assessee is a resident in India and paid testing fee to Kema, Netherlands for the purpose of testing the transformers manufactured by it. The claim of the assessee before this Tribunal is that the technology of testing the transformers was not made available to the assessee, therefore, the payment is not taxable in India. The Ld.counsel placed his reliance on the decision of Delhi Bench of this Tribunal in Romer Labs Singapore Pte. Ltd. v. ADIT (2013) 30 taxmann.com 362. We have gone through this decision of Delhi Bench. In the case before Delhi Bench, the Singapore company tested the components manufactured by the assessee. The test reports were sent to the company in India. The Singapore company was not having any permanent establishment in India. Therefore, this Tribunal found that in view of the Indo-Singapore Treaty, more particularly Article 12(4) of Double Taxation Avoidance Agreement, the income is not taxable in India. A similar agreement for Double Taxation Avoidance Agreement was entered into between the Government of India and Government of Netherlands. As per Article 12(4), fees for technical services means payment to any person for consideration for techn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machinery. However, no material evidence is produced before this Tribunal to indicate that the erection and commissioning charges are integral part of the cost of machinery. No agreement or invoice was produced either before the Assessing Officer or before this Tribunal. However, this Tribunal is of the considered opinion that the matter needs to be reexamined by the Assessing Officer. Accordingly, the orders of both the authorities below are set aside and the issue with regard to Converteam, USA is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter in the light of the material that may be filed by the assessee and thereafter decide the issue afresh in accordance with law, after giving a reasonable opportunity to the assessee. 20. The next issue arises for consideration is disallowance of claim for warranties. 21. We heard both the Ld.counsel for the assessee and the Ld. Departmental Representative. According to the Ld. counsel, the provision was made on the scientific basis. On a query from the Bench how this provision was made and what is the method? The Ld.counsel could not explain the expenditure incurred on the earlier y ..... X X X X Extracts X X X X X X X X Extracts X X X X
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