TMI Blog2022 (6) TMI 1460X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to the file of A.O. and we do not find merit in this ground of appeal of the revenue and is dismissed. Depreciation on computer software - HELD THAT:- ITAT in the Assessee own case in A.Y. 2010-11 [ 2020 (1) TMI 1200 - ITAT MUMBAI ] has observed that the computer software is eligible for depreciation @60%. We find there is nothing remains in the ground of appeal as it become in fructuous due to grant of higher depreciation on software and the ground of appeal of the revenue is dismissed. Grant of depreciation on assets transfer in the merger and the said companies have not claimed depreciation on the assets held by them - HELD THAT:- We find the Hon ble Tribunal In [ 2020 (1) TMI 1200 - ITAT MUMBAI ] has considered the facts, provisions of the Act and judicial decisions and directed the A.O. to allow the depreciation. In the present case the facts are identical and CIT(A) has relied on the earlier years decision and granted the relief. We up held the same as decided in favour of the assessee. Addition u/s 145A of the Act with respect to modvat credit - HELD THAT:- The Honble Tribunal in [ 2021 (10) TMI 505 - ITAT MUMBAI ] as perused Tax Audit report of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal has allowed the assessee s ground of appeal in [ 2021 (10) TMI 505 - ITAT MUMBA ] as held that deduction u/s. 80HHE had to be worked out on the basis of adjusted book profit u/s. 115JA of the Act and not on the basis of profits computed under regular provisions of law applicable to computation of profits and gains of business. - Decided against revenue. Allowance of set off of losses /depreciation of tools division on account of demerger - HELD THAT:- As relying on own case [ 2021 (10) TMI 505 - ITAT MUMBAI ] to hold that the ld. CIT(A) had rightly directed the ld. AO to allow set off of losses of amalgamating company in the hands of the assessee - Decided against revenue. Allow depreciation on computer software @ 60% rate after due verification and recomputed the computer and computer software as on block WDV and allow ground of appeal for statistical purpose. Disallowance of interest on loan taken for purchase of a capital asset(Shares of RPIL) - AR submits that if the barrowed funds are used for investment in shares held for controlling interest, interest is allowable U/sec 36(1)(iii) of the Act and such expenditure is incurred out of commercial expediency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs,2,70,60,585/-/-, depreciation of the current year of Rs.45, 10,098/- and depreciation on opening WDV of Rs.5,33,2501- (total Rs. I 1,58,25,986/-) and the assessee had itself admitted that there was a difference in the claim of Research Development expenditure and that the assessee had claimed excess deduction u/s. 35 (2AB) and excess depreciation. 2. On the facts and in the circumstances of the case and in law, the CIT(A) erred in allowing depreciation 60% on the software purchased by the assessee clubbing the same with the computer hardware ignoring the fact that software as an intangible asset was entitled for depreciation only 25% u/s. 32( l)(ii) of the Income-tax Act, 196 1 since software purchased is not a product but only is in nature of a commercial right. 3. On the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the Assessing Officer to allow depreciation in respect of the assets transferred to the assessee as a result of merger of BMIL PHL in the manner computed by the assessee ignoring the fact that the Assessing Officer had correctly worked out the depreciation allowance as it should have been claimed by M/s. P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee company in order to claim the benefits of brought forward losses u/s. 72 A of the Act under the guise of demerger. 9. The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the AO restore the appellant craves leave to amend or alter any ground or add a new ground that may be necessary. 2. The brief facts of the case are that the assessee company is engaged in the business of manufacturing and sale of pharmaceuticals and it deals in both prescription and OTC products as well as bulk drugs, chemicals and skin care products. The assessee has filed the return of income for the A.Y 2004-05 on 28.10.2004 disclosing a total income of Rs. 3,02,91,080/- under the normal provisions of income tax and u/s 115JB of the Act Rs. 181,19,56,123/-. The return of income was processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny and notice u/s 143(2) of the Act was issued. In compliance the Ld. AR of the assessee appeared from time to time and submitted the details and the case was discussed. It was brought to the notice of the Assessing Officer (A.O.) that during the F.Y 2003-04 the assessee company has amalgamated M/s Sar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed sale of assets as against the claim of the assessee that the same was slump sale. As detailed in the assessment order of A.Y 1999-00, the block of assets is reduced by the sale value as recorded in the books of the purchasing company and continuing with the consistent stand of the earlier years, the WDV is reduced and depreciation is reworked, vide annexure-I, as per which the excess depreciation is Rs. 3,87,47,001/-. 3. The A.O based on the tax audit report dealt (vi) on the of Modvat credit and valuation of closing stock as disclosed in Form No. 3CD. The A.O was not satisfied with the method of treatment of Modvat Credit and discussed elaborately on quantitative details and valuation of closing stock at Para 10.1 to 10.14 of the order and made addition being increase in value of closing stock of Rs. 11,77,76,480/-. (vii) The A.O. find that the assessee has obtained interest bearing loan for purchase of equity and has disallowed the interest on loan of Rs.2,87,00,000/- and observed at Para 11.4 of the order read as under : 11.4 The assessee company's contentions have been considered. However, the same are found to be untenable. The aforesaid interest of Rs.2.87 cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missions made there under may also he considered for the current year as well. The contents of the assessee's letter filed for AY 2003-04, are reproduced here under: Vide para no. 15 of the Order u/ s. 143(3) for A . Y. 200203, while completing the assessment, the A.O. has reduced our claim for depreciation in the block of building - factory / office (10%), by considering the entire value of the agreement for the sale of RP1L House as having been received for the previous year pertaining to A. Y. 2002-03. This has resulted in the entire sale proceeds relating to building out of Rs.84.50 crs which was to be received over a number of years, being reduced from the said block in the previous year relevant to A.Y 2002- 03. This has eventually resulted in. the said block being reduced to NIL. As per the contention of the assessee company, the transfer of RP1L House is intended to be completed in installments over a period of 4 years. Accordingly, in the previous year relevant to the current A. Y. 2003-04, the assessee company had reduced the appropriate portion of the sale proceeds from the said block. Also refer Note no. 2 of the Notes to the Computation of A. Y. 2003-04. Cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no deductions are allowable. Hence the entire rents received of Rs.4,76, 19,394 (including additional compensation received of Rs.71,92,815) is hereby brought to tax under the head income from Other Sources without allowing any deductions / expenses. Addition: Income from other sources Rs. 4,75,19,394/-. 7. The A,O dealt on issue (xi) set off of losses/ depreciation on amalgamation, the AO dealt at Para 17.7 to 17.15 of the order on the provisions of Sec. 72A of the Act, scheme of amalgamation, demerger and notes on Accounts and observed that the entire loss from the tools division is not allowed to set off and denied the claim of brought forward losses of Rs.2,34,54,04,405/-.(Xii) the A.O. dealt on the allowance of depreciation and computation of book profit u/s 115JB of the Act and computing the claim of deduction u/sec. 80HHC of the Act at Para 18.1 to 18.9 and in particular at Para 18.9 read as under: 18.9 A plain reading of the above Explanation (iv) leads to the conclusion that what needs to the reduced from the Book Profits is the amount of profits before deduction/s. 8OHHC. Hence, it is amply clear that only the amount which is deducted u/s. 8OHHC from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Rs.53,2501- on the opening written down value(WDV). In the result this ground of appeal is allowed for statistical purpose. We find the Ld.AR has filed the working of disallowance U/sec. 35(2AB) of the Act which explains the nature of expenditure, actual expenses debited to profit loss account, claim made in the return of income and the assessee claim before the DSIR and the revised claim. The workings tally with the net disallowance restriction directed by the CIT(A) to A.O. The Ld. DR could not controvert the above findings of restoration to the file of A.O. and we do not find merit in this ground of appeal of the revenue and is dismissed. 12. On the claim of depreciation on computer software. We find that the CIT(A) has dealt at Para 2 and observed at page 6 as under and partly allowed the ground of appeal: The submissions of the appellant as well as the contentions of the AO were duly considered. After giving due consideration I am of the opinion the computer software is different from Computer and the rate of depreciation should be 25% as held by the A.O. However, since the appellant had claimed only 17,67,338/- as depreciation, the disallowance should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation was thrust upon the A.O. My learned predecessor had held that the A.O. was not justified to thrust upon the depreciation. In view of this decision of my learned predecessor and the decisions of my learned predecessors in the case of the appellant itself for A. Yrs. 1997- 98, 1998-99, 1999-200, 2000-01, 2001-02, 200203, and 2003- 04, the A.O. is directed that the depreciation not claimed by BMIL and M/s. PHL should not be considered for the purpose of working out the WDV and consequently allowing depreciation thereon. In the result this ground of appeal is allowed. Further we find in the assessee s own case for the A.Y 1997-98 to 2003-04 2009-10 to 2010-11, the Hon ble Tribunal has decided the issue in favour of the assessee In ITA no1754/Mum/2015 for the A.Y 2010-11 at Para 18 to 20 of the order read as under: 18. The next issue that came up for our consideration from ground No.5 of assessee appeal is disallowances of claim of depreciation pertaining to BMIL and PHL of Rs. 94,43,089/-. The Ld. AR for the assessee submitted that this issue is covered in favour of the assessee by the decision of ITAT for AY 2008-09 and 2009-10, where under identical set of fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the Tribunal for A.Y. 2008-09 and finding no reason to take a different view, respectfully follow the same. Apart there from, we are also in agreement with the ld. A.R that now when the DRP while disposing off the objections filed by the assessee had specifically directed the A.O to allow claim of depreciation as was raised by the assessee in respect of BMIL, therefore, there was no reason for the A.O to have not followed such directions while passing the final assessment order u/s 143(3) r.w.s 144C(13), dated 28.01.2014. In terms of our aforesaid observations, we direct the A.O to allow the assesses claim of depreciation insofar the assets of BMIL are concerned. 19. As regards the claim of depreciation raised by the assessee on the assets of PHL which w.e.f 01.06.1996 were taken over by the assessee under a scheme of arrangement duly sanctioned by the Hon ble High Court of Bombay, vide its order dated 14.08.1997, we find that the assessee subsequent to the takeover had taken the WDV on the basis of the Income Tax records of PHL. As is discernible from the orders of the lower authorities and admitted by the assessee in its objections raised before the DRP, though PHL ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IV raised by the assessee is partly allowed. 20. In this view of the matter and consistent with view taken by the co-ordinate bench, we direct the Ld. AO to allowed depreciation as claimed by the assessee on BMIL and PHL units. We find the Hon ble Tribunal has considered the facts, provisions of the Act and judicial decisions and directed the A.O. to allow the depreciation. In the present case the facts are identical and CIT(A) has relied on the earlier years decision and granted the relief. We rely on the decision of the Hon ble Tribunal and findings of the CIT(A) and up held the same as decided in favour of the assessee. Accordingly we dismiss this ground of appeal of the revenue. 14. The fourth disputed issue being the Addition u/s 145A of the Act with respect to modvat credit. We find that the CIT(A) has granted relief and observed at Para 6 read as under: 6. I have duly examined the issue and have studied the submissions made by the Appellant and am of the view that the new method adopted by the AO is totally illogical and have no basis. This method is not as per any provisions of law or any guidelines provided. This issue of applicability of section 145A is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s own case for A.Y.2009-10 in ITA Nos.1257/Mum/2014 1486/Mum/2014 dated 07/05/2019 wherein it was held as under:- Adjustment of Inventory as per Sec. 145A : Rs. 1,16,08,088 21. We shall now advert to the contention of the ld. A.R that the A.O/DRP had erred in re-computing the value of the closing stock‟ at Rs. 15,982.73 lacs as against Rs. 14,834 lacs and opening stock‟ at Rs. 14,367.65 lacs as against Rs. 13,335 lacs, on the ground that the assessee is following exclusive method of accounting for MODVAT with regards to its inventory. It is the claim of the ld. A.R that irrespective of whether the assessee follows Inclusive or Exclusive method of valuation of stock, the amount of unutilized MODVAT shall have no bearing on the profits of the assessee. We find that the assessee had before the lower authorities objected to the aforesaid addition as was sought to be made by the A.O on three counts viz. (i) that requirement of valuing the purchases, sales and inventories for the purpose of determining the income under the head Profits and gains of business or profession was contrary to the accounting principles laid down by Accounting Standard-2 (for short AS- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VAT/CENVAT issued by the ICAI. Accordingly, the assessee had followed the exclusive method for accounting purposes. However, for the purposes of income tax it had worked out the impact of grossing up of tax, duty, cess etc. by restating the values of purchases and inventories by including inter alia the CENVAT credit. The adjustment required u/s 145A of the I.T Act was reflected in Clause 12(b) of the tax audit report of the assessee. As per Clause 12(b) the adjustment u/s 145A worked out at Nil. It is the claim of the assessee that the amount reflected in Clause 12(b) of the tax Audit report shall be treated as the adjustment required u/s 145A, and in support thereof had relied on the order of the ITAT, Mumbai in the case of Hawkins Cookers Ltd. Vs. ITO (2008) 14 DTR 206 (Mum). We have perused Clause 12(b) (Page 61 of APB‟) of the Tax Audit report of the assessee and find that it is the claim of the assessee that the impact of grossing up of tax, duty, cess etc. by restating the values of purchases and inventories by inter alia including the effect of CENVAT credit will be Nil, subject to Sec. 43B that the duty, taxes, cess etc. is paid before the due date‟ of filing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the ld. CIT(A) granting deduction only in respect of 1/5th of the expenditure in respect of payment made to M/s. Accenture by applying the provisions of section 35DD of the Act as against the claim of deduction of the whole expenditure u/s. 37(1) of the Act by the assessee. 13.1. We have heard rival submissions and perused the materials available on record. We find that the very same issue was the subject matter of adjudication by this Tribunal in assessee s own case in ITA No.3927/Mum/2006 dated 20/02/2020 for A.Y.2002-03 wherein it was held that assessee would be eligible for deduction ITA No.4000/Mum/2007 4345/Mum/2007 M/s. Piramal Enterprises Limited 38 u/s. 37(1) of the Act. We find that the ld. CIT(A) had merely placed reliance on the decision of his predecessor in A.Y.2002-03 and directed the ld. AO to allow deduction u/s. 35DD of the Act in respect of the subject mentioned payment. We find that this Tribunal had directed the ld. AO to allow deduction u/s. 37(1) of the Act by observing as under:- 7.1. We have heard rival submissions and materials available on record. We find that under the head legal and professional fees, the assessee had claimed deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said expenditure has to be considered as wholly and exclusively as deduction u/s. 37(1) of the ITA No.4000/Mum/2007 4345/Mum/2007 M/s. Piramal Enterprises Limited 39 Act. We hold that the provisions of Section 35DD of the Act as alleged by the ld. CIT(A) cannot be made applicable in the instant case as admittedly the same only refers to expenses incurred pursuant to amalgamation. Hence, we direct the ld. AO to grant deduction of the said expenditure u/s. 37(1) of the Act. Accordingly, the ground Nos. IV and IV(i) raised by the assessee are allowed and Ground No.4 raised by the revenue is dismissed. 13.2. Respectfully following the same, the ground No.III raised by the assessee is allowed. The Ld.DR fairly accepted the decision of the Honble Tribunal in the earlier years . We find the Ld.AR relied on the order of the ITAT on the claim of consultancy charges as discussed and judicial decisions in support of his submissions. Accordingly, we uphold the decision of the CIT(A) in allowing the claim of the assessee and dismiss this ground of appeal of the revenue. 17. The sixth disputed issue is with respect to treating rental income from RP House and centre point under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom RPIL house as income from other sources. However, with regard to rental income derived from Centre Point, he directed the ld. AO to treat the rental income as income from other house property‟ and grant statutory deduction in terms of Section 24(a) of the Act. Against this direction, the revenue is not in appeal before us. We find that the ownership of the RPIL House vests with the assessee for four years and hence, assessee continued to be the owner of the part premises of RPIL House and hence, the rental income thereon should be assessed only under the head income from house property‟ and assessee would be entitled for statutory deduction @30% u/s. 24(a) of the Act for the same. Accordingly, the ground No. IX raised by the assessee is allowed. We find the Honble Tribunal has held that the transfer of ownership has to be completed over a period of 4 years and therefore the assessee continues to remain the owner of part property of the RP House. Further it was decided that the income from RP House and Centre Point is assessable as Income From House Property. The Cit(A) has considered the factual aspects and made a reasonable observations and granted the relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in the case of CIT vs. Bhari Information Technology Systems (P) Ltd., reported in 340 ITR 593 (SC) wherein the decision of the Mumbai Tribunal Special Bench in the case of Syncom Formulations India Pvt. Ltd., referred to supra had been duly approved by the Hon ble Apex Court. Though this decision was rendered by the Hon ble Apex Court in the context of claiming deduction u/s. 80HHE of the Act vis- -vis computation of book profits u/s. 115JA of the Act, the same analogy would apply to the issue in dispute before us. We find that the Hon ble Apex Court had held that deduction u/s. 80HHE had to be worked out on the basis of adjusted book profit u/s. 115JA of the Act and not on the basis of profits computed under regular provisions of law applicable to computation of profits and gains of business. Respectfully following the same, we do not find any infirmity in the order passed by the ld. CIT(A). Accordingly, the ground No.1(b) raised by the Revenue is dismissed. The Ld.AR supported the submissions relying on the decision of the Honble ITAT and judicial decisions. We find the CIT(A) has relied on the Special Bench decision, facts and provisions and directed the A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is not in dispute that pursuant to such amalgamation, all the assets and liabilities of GBDFC as on the date of amalgamation got vested with the assessee company with effect from the appointed date. Hence on the date of amalgamation, what is to be seen is whether GBDFC had accumulated losses in its kitty or not, along with other assets and liabilities. It is not in dispute that GBDFC had accumulated losses in the form of unabsorbed business losses and unabsorbed depreciation on the date of amalgamation with assessee. It could not be brushed aside that the assets and liabilities on the date of amalgamation together with the details of losses available thereon in the hands of GBDFC was duly placed before the Hon ble Bombay High Court along with the scheme of amalgamation while seeking approval. We hold that once the scheme of merger was duly approved by the Hon ble High Court having in mind the larger public interest, the same cannot be disturbed by the Revenue by merely alleging that the merger was done only to buy losses and it was done only as a measure of colourable device. It is also pertinent to note that scheme of amalgamation when it goes for approval before the Hon ble B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 19/03/2015. 7.2 Further, we also find that the Hon ble Supreme Court in the case of J.K.(Bombay) P. Ltd., vs. New Kaiser-I- Hind Spinning Weaving Company reported in AIR 1970 AIR 1041 had held as under:- The principle is that a scheme sanctioned by the court does not operate as a mere agreement between the parties; it becomes binding on the company, the creditors and the shareholders and has statutory force, and therefore, the joint-debtor could not invoke the principle of accord and satisfaction. By virtue of the provisions of sec. 391 of the Act, a scheme is statutorily binding even on creditors, and shareholders who dissented from or opposed to its being sanctioned. It has statutory force in that sense and therefore cannot be altered except with the sanction of the Court even if the shareholders and the creditors acquiesce in such alteration. 7.3. We find that the aforesaid observations of Hon ble Supreme Court had been followed in yet another decision by the Hon ble Bombay High Court in the case of Sadanand Varde vs. State of Maharashtra reported in 247 ITR 609 wherein it was held that Once a scheme becomes sanctioned by the court, it ceases to operate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired in a scheme of amalgamation; (ii) continues the business of the amalgamating company for a minimum period of five years from the date of amalgamation; (iii) fulfils such other conditions as may be prescribed to ensure the revival of the business of the amalgamating company or to ensure that the amalgamation is for genuine business purpose. 7.7. There is absolutely no dispute that assessee in the instant case had fulfilled all the three conditions cumulatively. There is absolutely no dispute that assessee has also fulfilled the requirement stipulated in Rule 9C of the rules by using minimum 50% of installed capacity of amalgamating company within a period of four years and which fact should also be supported by a certificate from a Chartered Accountant in Form No.62. A certificate from an Accountant in the Form No.62 is enclosed in page 76 of the factual paper book. We also find that assessee in the instant case had duly specified the commercial rationale beyond doubt which goes to prove the complete revival of GBDFC. This fact is also reiterated in the FINANCIAL EXPRESS newspaper on 29/11/2002 Mumbai edition which date happens to be prior to the date of amalgamation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) - XIX ( the CIT (A) ) erred in upholding the action of the Additional Commissioner of Income Tax, Circle 7(1), Mumbai ( the AO ) in recalculating depreciation on computer software @ 25% instead of @ 60% as claimed by the Appellant and thereby disallowing depreciation to the extent of Rs. 17,57,338/- on the alleged ground that computer software is different from computers. 2. He failed to appreciate and ought to have held that software purchases are for upgrading the computers and for using computers with latest technology and hence the purchases are wholly and exclusively related to use of the computers and hence are correctly shown as additions under the head computers and depreciation @ 60% is allowable on the same. 3. The Appellant, therefore prays that, depreciation on computer software be allowed 60% as correctly claimed by the Appellant. GROUND II: Short term capital gain on sale of computers: 1. On the facts and in the circumstances of the case and in law, CIT (A) erred in confirming the action of the AO of calculating short term capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GROUND V: Capital Gain on sale of RP House property: Rs.2,45,44,7681- On the facts and circumstances of the case and in law, the CIT(A) erred in upholding the action of the AO of not reducing Long Term Capital Gain of Rs.2,45,44,768/- arising on proportionate sale of Rhone Poulenc ( RP ) House Property being land from the Return of Income on the protective basis. 2. The Appellant prays that A.O be directed to reduce Long term Capital Gain of Rs.2,45,44,768/- from the Return of Income. GROUND VI: Depreciation on RP House Property building: On the facts and circumstances of the case and in law, the CIT(A) erred in upholding the action of the AO in not allowing depreciation on proportionate sale of Building by reducing entire sale proceeds related to Building and thereby reducing the said block to NIL in the previous year 2001-02. 2. The Appellant prays that A.O be directed to allow depreciation on Building by reducing only appropriate portion of sale proceeds from the said block. GROUND VII: Treating Rental Income from RPIL House as Income form other sources Rs.4,76,1 9,394/- On the facts and circumstances of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee referred at Page 13 Para 14 to 17 read as under: 14. The next issue that came up for our consideration from ground No. 4 of assessee appeal is disallowances of claim of depreciation on additions to computer software of Rs. 2,82,05,985/-. The facts with regard to the impugned disputes are that during the course of assessment proceedings, the Ld. AO noticed that the assesee had incurred software expenses on up gradation of its existing software namely MFGPRO, MS-office, etc and claimed depreciation @ 60% as applicable to computer software. The Ld. AO was of the opinion that as per Rule 5 of the I.T. Rules, 1962 only computers, including software were eligible for depreciation @ 60%, when the computers were purchased along with software. In case, the software is purchased separately, then the same would be an acquisition of intangible assets as envisaged in part- B of depreciation schedule and such intangible asset is entitled for depreciation @ 25%. Accordingly, disallowed excess depreciation claimed by the assessee. 15. The Ld. AR for the assessee submitted that this issue is also squarely covered in favour of the assessee by the decision of ITAT, Mumbai bench in asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). ACIT Vs. Zydus Infrastructure (P) Ltd. (72 taxmann.com 199) (AhdTrib) 16. We are persuaded to subscribe to the view taken by the aforesaid coordinate benches of the Tribunal and respectfully follow the same. Further, as observed hereinabove, the assesses claim of depreciation on software expense @ 60% which was allowed by the CIT(A) had also been accepted by the revenue and the same had also not been carried any further in appeal before the Tribunal. In terms of our aforesaid observations, we are of the considered view that the assessee had rightly claimed depreciation on computer software @ 60%. We thus set aside the order of the CIT(A) in context of the issue under consideration and vacate the disallowance of Rs.17,63,425/- made by the A.O on the said count. The Ground of appeal No. III is allowed. Disallowance of claim of depreciation on assets of BMIL and PHL : Rs. 68,75,396/- : 17. In this view of the matter and consistent with view taken by the co-ordinate bench, we direct the Ld. AO to allow depreciation as claimed by the assesse. We found that the facts of the present case are similar to the above decision, therefore applying decision of the Hon b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order read as under: 22. We have heard both the parties, perused the material available on record and gone through orders of the authorities below. We find that a similar issue has been considered by the co-ordinate bench for AY 2009-10 and after considering relevant facts has restored the matter back to the file of the Ld. AO to verify the claim of the assessee that impact of grossing up of tax, duty, cess, etc by revaluing the purchases and inventories by inter alia including the effect of CENVAT credit would be nill. The relevant findings of the Tribunal are as under:- 22. We have deliberated at length on the issue under consideration and find that the assessee for the purpose of its statutory accounts had followed the AS-2 on Valuation of Inventories, and the Guidance Note on Accounting Treatment of MODVAT/CENVAT issued by the ICAI. Accordingly, the assessee had followed the exclusive method for accounting purposes. However, for the purposes of income-tax it had worked out the impact of grossing up of tax, duty, cess etc. by restating the values of purchases and inventories by including inter alia the CENVAT credit. The adjustment required u/s 145A of the I.T Act was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uity Rs 2,87,00,000/- In this ground, the Appellant has contended that the AO has erred in disallowing interst expenditure amounting to RS. 2.87 crores paid to various banks on the ground that the payment was made for a loan which was utilized for acquiring a capital asset and accordingly, amount expended was capital in nature. This issue has come up for decision in the case of Appellant for A.Y. 2002-03 and 2003-04 wherein my predecessor had confirmed the disallowance. Accordingly, following the decision of the earlier year, I confirm the disallowance for this year also. In the result this ground of appeal is dismissed. 34. Further at the time of hearing it was brought to the knowledge of the Bench, by the Ld.AR that that in the assessee s own case for the A.Y 2003-04 in ITA no.4000/Mum/2007 others dated 5-10-2021, the ITAT has observed at page 35 Para 12 12.1 as under: 12. The ground No. II raised by the assessee is challenging the disallowance of interest expenditure paid to various banks u/s. 36(1)(iii) of the Act on the ground that payment was made for the loan which was utilized for acquiring the capital asset and an amount expended in the sum of Rs.9.47 Cror ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purpose of business . It has been consistently held in the decisions relating to section 37 that the expression for the purpose of business includes expenditure voluntarily incurred for commercial expediency, and it is immaterial if a third party also benefits thereby. Thus in Atherton Vs. British Insulated and Helsby Cables Ltd. [1925] 10 TC 155, it was held by the House of Lords that in order to claim a deduction, it is enough to show that the money is expended, not necessity and grounds of commercial expediency and in order to indirectly to facilitate the carrying on the business. The above test in Atherton's case [1925] 10 TC 155 (HL) has been approved by this court in several decisions, e.g. Eastern Investments Ltd. Vs. CIT [1951] 20 ITR 1, CIT Vs. Chandulal Keshavlal and Co. [1960] 38 ITR 2 601 etc. 26. The expression Commercial expediency is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation but yet it is allowable as a business expenditure if it was incurred on grounds of commercial expediency. [Emphasis Suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal for the A.Y 2003-04 in ITA no.4000/Mum/2007 others dated 5-10-2021 has observed at page 42 Para 15 as under: . 15. The ground No. V was stated by the ld. AR as infructuous in view of the decision rendered by this Tribunal in assessee s own case in ITA No.3927/Mum/2006 dated 20/02/2020 for A.Y.2002-03 vide ground No.7. We find that for A.Y.2002-03, the Tribunal had held that capital gain is taxable over the period of four years in respect of capital gains arising on sale of Rhone Poulenc house property. In view of our decision taken for A.Y.2002-03 on this issue, the ground No. V raised by the assessee is hereby dismissed as infructuous. 38. The Ld.AR submitted that the assessee offered the sale consideration to be taxed over a period of four assesseement years relevant to previous year in which the consideration is received , but the A.O. has taxed entire sale consideration as capital gains in the first year being A.Y.2002-03. But the Honble Tribunal on appeal has directed that the capital gains is taxable over a period of 4 years. In view of the decision of the ITAT applicable to the present case, the ground of appeal becomes infructuous and is dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. Following the same for the year under consideration, this ground is dismissed. Further, as regard to Centre point my predecessor had held that income is chargeable under the head Income form House property and had directed the A.O. to grant appropriate deduction u/s 24 (a) in accordance with law. Following the same, this ground of Appeal is partly allowed. 43. We find in the assessee s own case the Honble Tribunal for A.Y.2003-04 in ITA no.4000/Mum/2007 others dated 5-10-2021 has observed at page 45 Para 19.2 as under: 19.2. The Ld.CIT(A) upheld the action of the Ld.AO in respect of treatment of rental income from RPIL house as income from other sources. How ever with regard to rental income derived from centere point , he directed the Ld.AO to treat the rental income as income from other house property and grant statutory deduction in terms of section 24(a) of the Act. Against the direction, the revenue is not in appeal before us. We find that the ownership of the RPIL House Vests with the assessee for four years and hence assessee continued to be the owner of the part premises of RPIL House and hence, the rental income thereon should be as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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