ADDL CITY RG 8(1), MUMBAI v. CASTROL INDIA LTD, MUMBAI

ITA 8371/MUM/2010 | 2005-2006
Pronouncement Date: 14-11-2014 | Result: Partly Allowed

Appeal Details

RSA Number 837119914 RSA 2010
Assessee PAN AAACC4481E
Bench Mumbai
Appeal Number ITA 8371/MUM/2010
Duration Of Justice 3 year(s) 11 month(s) 12 day(s)
Appellant ADDL CITY RG 8(1), MUMBAI
Respondent CASTROL INDIA LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 14-11-2014
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted K
Tribunal Order Date 14-11-2014
Date Of Final Hearing 28-10-2014
Next Hearing Date 28-10-2014
Assessment Year 2005-2006
Appeal Filed On 02-12-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH MUMBAI BEFORE : SHRI R.C.SHARMA A M & SHRI VIVEK VARMA J M ITA NO. 8191 / MUM/20 1 0 ( ASSESSMENT YEAR : 2005 - 2006 ) M/S CASTROL INDIA LIMITED TECHNOPOLIS KNOWLEDGE PARK MAHAKALI CAVES ROAD CHAKALA MUMBAI - 400 093 VS. DCIT - RANGE - 8(3) MUMBAI - 20 PAN/GIR NO. : A A ACC 4481 E ( APPELLANT ) .. ( RESPONDENT ) AND ITA NO. 8359 / MUM/20 10 ( ASSESSMENT YEAR : 2005 - 2006 ) DCIT - RANGE - 8(3) MUMBAI - 20 VS. M/S CASTROL INDIA LIMITED TECHNOPOLIS KNOWLEDGE PARK MAHAKALI CAVES ROA D CHAKALA MUMBAI - 400 093 PAN/GIR NO. : A AACC 4481 E ( APPELLANT ) .. ( RESPONDENT ) AND ITA NO. 8371 / MUM/20 10 ( ASSESSMENT YEAR : 200 6 - 200 7 ) M/S CASTROL INDIA LIMITED TEC HNOPOLIS KNOWLEDGE PARK MAHAKALI CAVES ROAD CHAKALA MUMBAI - 400 093 VS. A DCIT - RANGE - 8(3) MUMBAI - 20 PAN/GIR NO. : A AACC 4481 E ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : SHRI APURVA SHAH & SHRI DHANESH BAFNA /REVENUE BY : SHRI J.PREMANAND DATE OF HEARING : 28 TH OCT . 201 4 DATE OF PRONOUNCEMENT : 14 TH NOV. 201 4 ITA NO S . 8191 8359&8371 /1 0 2 O R D E R PER R.C.S HARMA ( A .M.) : THE ASSESSEE AND REVENUE HAVE FILED CROSS APPEALS AGAINST THE ORDER OF CIT(A) FOR A.Y. 2005 - 06. THE ASSESSEE HAS ALSO FILED APPEAL AGAINST THE ORDER OF CIT(A) FOR ASSESSMENT YEAR 2006 - 07. 2. SINCE COMMON GROUNDS ARE INVOLVED IN ALL THE YEAR S UNDER CONSIDERATION THEREFORE ALL THESE APPEALS WERE HEARD TOGETHER AND ARE NOW DISPOSED OF BY THIS CONSOLIDATED ORDER. 3. IN THE A.Y.2005 - 06 THE FIRST GRIEVANCE OF THE ASSESSEE RELATES TO ASSESSEES ELIGIBILITY U/S.80IB IN RESPECT OF DIFFERENT NATURE OF INCOME . 3.1 LEARNED AR PLACED ON RECORD ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y. 2002 - 03 & 2003 - 04 WHEREIN THE ISSUE HAS BEEN DECIDED BY THE TRIBUNAL. THE OBSERVATION OF THE TRIBUNAL AT PAGE 17 PARA 25&27 ARE AS UNDER : - 25. THE ISSUE RA ISED IN GROUND NO. 9 RELATES TO THE A SESSEE - COMPANY'S CLAIM FOR DEDUCTION U/S 801B IN RESPECT OF THE FOLLOWING ITEMS OF OTHER INCOME. 1. OTHER INCOME RELATED TO SILVASSA 9 06 872 2. INTEREST RECEIVED 107 25 448 3. MISCELLANEOUS INCOME 2 38 388 4. REVERSA L OF DOUBTFUL DEBTS 21 15 36 5. INSURANCE CLAIM 5 39 41 2 TOTAL 1 45 25 483 26. AT THE TIME OF HEARING THE ID. REPRESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT THIS ISSUE IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL DATE D 14T H SEPTEMBER(SUPRA) PASSED IN ASSESSEE'S OWN CASE FOR A.Y. 2002 - 03 WHEREIN THE DISALLOWANCE MADE ON ACCOUNT OF ASSESSEE'S CLAIM FOR THE DEDUCTION U/S 801B IN RESPECT OF FIRST FOUR ITEMS I.E. OTHER INCOME RELATED TO SILVASA UNIT INTEREST RECEIVED MISCE LLANEOUS INCOME AND REVERSAL OF EXCESS PROVISION OF DOUBTFUL DEBTS WAS CONFIRMED BY TRIBUNAL WHEREAS THE CLAIM OF THE ASSESSEE U/S 801B IN RESPECT OF INSURANCE CLAIM WAS ALLOWED BY THE TRIBUNAL BY OBSERVING AS UNDER: - THE ISSUE RAISED IN GROUND NO. 5 OF T HE ASSESSEE 'S APPEAL RELATES TO THE DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE LEARNED CIT(APPEALS) ON ACCOUNT OF ASSESSEE 'S CLAIM FOR DEDUCTION U/S 801B IN RESPECT OF THE FOLLOWING ITEMS OF OTHER INCOME: 1. OTHER INCOME DIRECTLY LINKED TO SIH'ASSA UN IT RS. 41 67 815 17 ITA NO S . 8191 8359&8371 /1 0 3 2. INTEREST RECEIVED (IN RATIO OF SALES VOLUMES) RS. 34 69 135 3. MISCELLANEOUS INCOME (IN RATIO OF SALES VOLUME) RS.2 3 61 499 4. REVERSAL OF EXCESS PROVISION OF DOUBTFUL DEBTS (RATIO OF SALES VOLUME) RS.32 75 948 5. INSURANCE CLAIM (RATIO OF SALES VOLUME) RS.54 02 609 WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS AGREED BY LEARNED REPRESENTATIVES OF BOTH THE SIDES THIS ISSUE TO THE EXTENT OF ASSESSEE 'S CLAIM FOR DEDUCTION U/S 801B IN RESPECT OF FIRST FOUR ITEMS IS CONCERNED THE SAME IS COVERED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE BY THE DECISION OF HON 'BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS. CIT 317 ITR 217 (SC) WHEREIN IT WAS HELD THAT THE PROVISIONS OF SECTION 801B ARE CODE BY THEMSELVES AS THEY CONTAIN BOTH SUBSTANTIVE AS WELL AS PROCEDURAL PROVISIONS. THE WORD 'DERIVED FROM' IS NARROWER IN CONNOTATION AS COMPARED TO THE WORDS 'ATTRIBUTABLE TO'. B Y USING THE EXPRESSION 'DERIVED FROM' PARLIAMENT INTENDED TO COVER SOURCE S NOT BEYOND THE FIRST DEGREE. THE ASSESSEE HAS CLAIMED DEDUCTION U/S 801B IN RESPECT OF RECEIPTS WHICH ARE INCIDENTAL TO THE BUSINESS AND SO BEYOND THE FIRST DEGREE. RESPECTFULLY FOLLOWING THE SAID DECISION OF HON'BLE SUPREME COURT WE UPHOLD THE ORDER OF THE LEARNED CJT(APPEALS) ON THIS ISSUE CONFIRMING THE DISALLOWANCE MADE BY THE A 0 U/S 801B IN RESPECT OF FIRST FOUR ITEMS OF OTHER INCOME.' 27. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL DATED 141H SEPTEMBER 2012(SUPRA) PASSED IN ASSESSEE'S OWN CASE F OR A.Y. 2002 - 03 WE UPHOLD THE IMPUGNED ORDER OF THE ID. CIT(A) CONFIRMING THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF ASSESSEE'S CLAIM FOR DEDUCTION U/S 801B IN RESPECT OF FIRST FOUR ITEMS OF OTHER INCOME AND DELETE THE SAID DISALLOWANCE TO THE EXTENT I T WAS IN RESPECT OF INCOME FROM INSURANCE CLAIM. GROUND NO. 9 IS OF THE ASSESSEE'S APPEAL IS PARTLY ALLOWED. 3.2 WE HAVE CONSIDERED RIVAL CONTENTIONS AND GONE THROUGH THE ORDER OF THE TRIBUNAL. IN ASSESSEES OWN CASE ASSESSEES CLAIM FOR DEDUCTION U/S. 8 0IB IN RESPECT OF INCOME FROM INSURANCE CLAIM WAS ALLOWED WHEREAS IN RESPECT OF OTHER INCOME CLAIM WAS DECLINED. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL WE DIRECT THE AO TO ALLOW DEDUCTION U/S.80IB IN RESPECT OF INCOME FROM INSURANCE CLAIM. 4. T HE NEXT GRIEVANCE OF THE ASSESSEE RELATES TO CLAIM OF DEPRECIATION WHICH HAS BEEN DEALT BY THE AO AT PARA 14 AND BY CIT(A) AT PARA 16. 4.1 LEARNED AR PLACED ON RECORD ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y.2003 - 04 WHEREIN THE ISSUE HAS BEEN DECIDED BY THE ITA NO S . 8191 8359&8371 /1 0 4 TRIBUNAL PARTLY AGAINST THE ASSESSEE. THE PRECISE OBSERVATION S OF THE TRIBUNAL AT PAGE 20 PARA 35 ARE AS UNDER : - 3 5. AS REGARD THE ISSUE RAISED IN GROUND NO. 13 OF THE ASSESSEE'S APPEAL RELATING TO DISALLOWANCE OF DEPRECIATION ON THE ASSE TS OF SILVASA UNIT THE LD. REPRESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT THIS ISSUE IS SQUARELY COVERED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE BY THE ORDER OF THE TRIBUNAL DATED 13TH APRIL 2009 (SUPRA) PASSED IN ASSESSEE'S OWN CASE FOR A.Y . 2001 - 02 WHEREIN THE SIMILAR ISSUE WAS DECIDED AGAINST THE ASSESSEE BY FOLLOWING THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SCOPE INDUSTRIES PVT. LTD. 289 ITR 195 AS WELL AS THAT THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR A.Y. 2000 - 01. RES PECTFULLY FOLLOWING THESE JUDICIAL PRONOUNCEMENT WE DECIDE THIS ISSUE AGAINST THE ASSESSEE AND DISMISSED GROUND NO. 13 OF ITS APPEAL. 4.2 WE HAVE CONSIDERED RIVAL CONTENTIONS. THE ISSUE WITH REGARD TO CLAIM OF DEPRECIATION OF ASSETS OF SILVASA UNIT WAS DE CLINED BY THE TRIBUNAL IN ASSESSES OWN CASE BY FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SCOPE INDUSTRIES PVT. LTD. 289 ITR 195 . RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL WE CONFIRM THE ACTION OF THE LOWER AUTHORITIES FO R DECLINE OF CLAIM OF DEPRECIATION ON ASSETS OF SILVASA UNIT. 5. THE NEXT GRIEVANCE OF THE ASSESSEE RELATES TO CLAIM OF HIGHER RATE DEPRECIATION ON ENERGY SAVING DEVICES WHICH HAS BEEN DEALT BY THE AO AT PARA 9 AND BY CIT(A) AT PARA 14 . 5 .1 LEARNED AR PL ACED ON RECORD ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y.2003 - 04 WHEREIN THE ISSUE HAS BEEN DECIDED BY THE TRIBUNAL PARTLY IN FAVOUR OF ASSESSEE. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL AT PAGE 20 & 21 PARA 38 ARE AS UNDER : - 35 WE HAVE HEAR D THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE MATERIAL ON RECORD. ALTHOUGH THE ID. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE COPY OF CERTIFICATE OF THE ENGINEER OF VENDOR PLACED AT PAGE NO. 291 OF HIS PAPER - BOOK IN ITA NO S . 8191 8359&8371 /1 0 5 SUPPORT OF THE AS SESSEE'S CLAIM FOR HIGHER DEPRECATION AT THE RATE OF 80% WE AGREE WITH AUTHORITIES BELOW THAT THE SAME IS NOT SUFFICIENT TO ALLOW THE CLAIM OF ASSESSEE AT HIGHER RATE OF 80%. THE ASSESSEE HAS FAILED TO FURNISH THE PRODUCT CATALOGUE AND CERTIFICATE FROM TH E COMPETENT AUTHORITIES TO ESTABLISH THE NATURE AND USE OF THE ASSET TO SHOW THAT IT IS ENERGY SAVING DEVICE ELIGIBLE FOR DEPRECIATION AT HIGHER RATE OF 80%. THE ASSESSEE HAS ALSO NOT PRODUCED ANY EVIDENCE IN SUPPORT OF ITS ALTERNATIVE CONTENTION RAISED BE FORE US CLAIMING DEPRECIATION AT THE RATE OF 60% APPLICABLE TO COMPUTER SYSTEMS. WE THEREFORE FIND NO MERIT IN GROUND NO. 14 RAISED BY THE ASSESSEE IN ITS APPEAL AND DISMISS THE SAME. 5.2 WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT IN ASSESSEES OWN CASE THE CLAIM OF HIGHER RATE OF DEPRECIATION ON ENERGY SAVING DEVICES WERE DECLINED. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y.2003 - 04 WE CONFIRM THE ACTION OF THE LOWER AUTHORITIES . 6. IN THE APPEAL FILED BY THE REVENUE THE REVENUE IS AGGRIEVED FOR DELETING THE DISALLOWANCE IN RELATION TO IT COST . 6.1 THE CIT(A) DELETED THE DISALLOWANCE PARTLY AFTER HAVING THE FOLLOWING OBSERVATION : - 3.10 I HAVE PERUSED THE TPO'S ORDER AND THE WRITTEN SUBMISSION. THE TOTAL AM OUNT RELATING TO COST SHARING WAS RS 2 24 25 081 OUT OF W HICH THE APPELLANT WAS ABLE TO SUBMIT DETAILS OF BASIS OF ALLOCATION AMOUNTING TO RS 2 21 34 295. ON THE BASIS OF THE SAID DETAILS THE COST ALLOCATIONS ERE CONSIDERED TO BE AT ARM'S LENGTH. WITH REGA RDS TO THE DISALLOWANCE OF RS.290 786 THE APPELLANT HAD REQUESTED TO DETERMINE THE ARMS LENGTH PRICE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 92C(1) AND 92C(2) OF THE ACT. SINCE THE GENUINENESS OF THE PAYMENTS IS NOT IN DOUBT AND THE RECEIPT OF SERVI CES AND BENEFITS DERIVED BY CASTROL INDIA HAS ITSELF NOT BEEN CHALLENGED BY THE TPO / AO THE ALP RELATING TO THE SAME CANNOT BE DETERMINED TO BE NIL AND SOME VALUE NEEDS TO BE ATTRIBUTED. IT WOULD BE UNJUST TO THE APPELLANT TO DISALLOW THE ENTIRE AMOUNT OF EXPENDITURE AND DETERMINE THE ARM'S LENGTH PRICE AS NIL. SINCE MOST OF THE DETAILS WERE SUBMITTED EXCEPT THE BASIS OF ALLOCATION THE ALP IS HELD TO BE 50% OF THE TRANSACTION VALUE OF RS. 290 786 I.E RS. 145 393. THE APPELLANT GETS PARTIAL RELIEF. 6 . 2 LEA RNED AR PLACED ON RECORD ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y S .200 2 - 03 2003 - 04 & 2004 - 05 WHEREIN THE MATTER WAS ITA NO S . 8191 8359&8371 /1 0 6 REMANDED BACK TO THE FILE OF THE TPO FOR STATISTICAL PURPOSES. THE PRECISE OBSERVATION S OF THE TRIBUNAL ARE AS UNDER : - 14. AFTER CONSIDERING THE RIVAL SUBMISSIONS & PERUSING THE RELEVANT MATERIAL ON RECORD IT IS OBSERVED THAT SIMILAR ISSUE WAS INVOLVED IN THE CASE OF THE ASSESSEE FOR A.Y. 2002 - 03 AND THE SAME WAS RESTORED BY THE TRIBUNAL TO THE FILE OF THE AO/TPO WITH THE FOLLOWING OBSERVATIONS/ DIRECTIONS AS CONTAINED IN PARAGRAPH NO.7 OF ITS ORDER DATED 14TH SEPTEMBER 2012 PASSED IN ITA NO. 3938/MUM/2010. IN SO FAR AS THE ALLOCATION/REIMBURSEMENT OF COE3 EXPENSES TO THE EXTENT OF RS. 1 68 80 675/ - IS CONCERNED THE LEARNED COUNSE L FOR THE ASSESSEE HAS SUBMITTED BEFORE US THAT THERE IS NO DISPUTE ABOUT THE FACT THAT SIGNIFICANT COSTS WERE INCURRED RELATED TO COE3 PROJECT DEPLOYED BY THE BP GROUP WORLDWIDE AND THE ASSESSEE COMPANY AS A PART OF THE SAID GROUP HAD DERIVED BENEFIT THER EOF. AS SUBMITTED BY HIM THE DISPUTE IS ABOUT THE BASIS OF ALLOCATION AND WANT OF DETAILS IN THIS REGARD. HE HAS SUBMITTED THAT THE COPIES OF INVOICES RAISED IN THIS REGARD BY THE AES WERE FURNISHED BY THE ASSESSEE ALONG WITH RESPECTIVE ALLOCATION KEYS. K EEPING IN VIEW THIS SUBMISSION MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE AS WELL AS ON PERUSAL OF THE RELEVANT DETAILS AVAILABLE ON RECORD WE AGREE WITH THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THERE IS NO JUSTIFICATION IN THE ACTION OF THE TPO IN IGNORING ALL THESE DETAILS AND TAKING THE ALP OF THE RELEVANT TRANSACTIONS AT NIL. IN OUR OPINION IT IS INCUMBENT IMPOMI THE TPO TO WORK OUT THE ALP OF THE RELEVANT TRANSACTIONS B Y FOLLOWING SOME AUTHORIZED METHOD AND THE ENTIRE COST BORNE BY THE ASSESSEE CANNOT HE DISALLOWED BY TAKING THE ALP AT NIL KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE RELEVANT DETAILS FURNISHED BY THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE IN THIS REGARD HAS SUBMITTED THAT IN THE SUBSEQUE NT YEARS I.E. ASSESSMENT YEARS 2005 - 06 AND 2006 - 07 A SIMILAR ISSUE WAS IN I'OLVED IN THE ASSESSEE 'S CASE AND THE LEARNED CIT(APPEALS) HAS ALLOWED THE EXPENSES ALLOCATED TO THE EXTENT OF 50%. WE HAVE PERUSED THE ORDERS OF THE LEARNED CIT(APPEALS) PASSED I N THE ASSESSEE 'S CASE FOR ASSESSMENT YEARS 2005 - 06 AND 2006 - 07. IT IS NOTED THAT NO CONVINCING OR SOUND BASIS HAS BEEN GIVEN BY THE LEARNED CIT(APPEALS) THEREIN IN SUPPORT OF THE 50% COST ALLOCATION ACCEPTED BY HIM AND SUCH ESTIMATE HAS BEEN MADE PURELY O N ADHOC BASIS. IN OUR OPINION THE EXERCISE OF ASCERTAINING ALPS HAS TO HE DONE BY THE TPO KEEPING IN VIEW THE WELL LAID DOWN SCHEME IN THE RELEVANT PROVISIONS OF THE ACT AND ADDITION IF ANY ON ACCOUNT OF TP ADJUSTMENT HAS TO BE MADE ONL Y AFTER DOING SU CH EXERCISE. WE THEREFORE RESTORE THIS ISSUE TO THE FILE OF THE AO/TPO WITH A DIRECTION TO DO SUCH EXERCISE AND MAKE ADDITION IF AN ON THIS ISSUE AFTER COMPLETING SUCH EXERCISE IN ACCORDANCE WITH LAW. GROUND N6.2 OF THE ASSESSEE 'S APPEAL IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES.' 16. AS THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDERATION I.E. 2003 - 04 AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO A.Y. 2002 - 03 WE RESPECTFULLY FOLLOW THE ORDER OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL FOR A.Y. 2002 - 03 AND RESTORE THIS ISSUE TO THE ITA NO S . 8191 8359&8371 /1 0 7 FILE OF THE AO/TPO FOR DECIDING THE SAME AFRESH AS PER THE SAME DIRECTIONS AS GIVEN BY THE TRIBUNAL IN A.Y. 2002 - 03. GROUND NO. 5 OF THE ASSESSEE'S APPEAL IS ACCORDINGLY TREATED AS ALLOWED FOR ST ATISTICAL PURPOSES. 6.3 WE HAVE CONSIDERED RIVAL CONTENTIONS. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE SASME RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE WE RESTORE THE MATTER BACK TO THE FILE OF AO FOR DECIDING AFRESH IN TERMS OF OBSERVATION GIVEN BY THE TRIBUNAL IN AFOREMENTIONED ASSESSMENT YEARS ON SIMILAR ISSUE. WE DIRECT ACCORDINGLY. 7 . THE CIT(A) HAS ALSO DELETED THE DISALLOWANCE OF ROYALTY PAYMENT AFTER HAVING THE FOLLOWING OBSERVATION : 2 .20 I HAVE GONE THROUGH THE SUBMISSIONS MADE BY THE APPELLANT. THE QUESTION INVOLVED HERE IS OF INTERPRETING THE SIA APPROVAL. AS PER THE BENCHMARKING ANALYSIS CARRIED OUT BY THE APPELLANT THE ARITHMETICAL MEAN OF ROYALTY RATES OF COMPARABLE TRANSACTIONS WAS 4.75%. THE APPROVAL REQUESTED AND OBTAINED BY THE ASSESSEE FROM THE SIA FOR PAYMENT OF ROYALTY WAS FOR A LOWER RATE (3.5% OF INTERNAL SALES) AS COMPARED TO THE RESULTS OF THE BENCHMARKING ANALYSIS. ACCORDINGLY THE ARMS LENGTH PRICE/ RATE AT WHICH ROYA LTY IS PAID IS NOT IN DISPUTE HERE. THE APPELLANT BEING A PUBLIC LIMITED COMPANY AND TAKING INTO ACCOUNT CORPORATE GOVERNANCE CONSIDERATIONS HAS VOLUNTARILY RESTRICTED THE PAYMENT OF ROYALTY TO 10% OF ITS PROFIT IN THE TCA BETWEEN THE APPELLANT AND CAST ROL LTD. UK. AS PER THE SAID AGREEMENT THE AMOUNT OF ROYALTY PAYABLE SHALL BE 3.5.% OF INTERNAL SALE WHICH WAS FURTHER CAPPED TO 10% OF PROFITS. THE ALTERNATIVE LIMIT OF 10% OF PROFITS IS VOLUANTARY LIMIT THAT HAS BEEN SELF IMPOSED BY THE APPELLANT. THE APPELLANT HIGHLIGHTED THAT THE ROYALTY ACTUALLY PAID BASED ON 10% OF PROFITS IS SUBSTANTIALLY LOWER TH AN WHAT IT WOULD HAVE PAID BASED ON THE SIA APPROVAL. HAD THE APPELLANT PAID ROYALTY @ 3.5% ON INTERNAL SALES. THE PAYMENT OF ROYALTY WOULD BE ALMOST RS. 23.94 CRORES MORE THAN WHAT IT HAS ACTUALLY PAID. THE EFFECTIVE ROYALTY PAID BY THE APPELLANT WORKS OUT TO 1.68% OF SALES AS AGAINST THE APPROVAL OBTAINED OF 3.5% OF SALES. ALSO AS PER THE AGREEMENT THE APPELLANT IS REQUIRED TO PAY ROYALTY ON 'PROFITS' AS LONG AS THE ROYALTY PAYMENT DOES NOT EXCEED 3.5% OF SALES. THE TERM 'PROFITS' AS DEFINED IN THE TCA DOES NOT DISTINGUISH BETWEEN DOMESTIC OR EXPORT PROFITS. 2.21 IN THE APPLICATION MADE TO THE SIA THE APPE L L A NT HAD EXPLICITLY MENTIONED THAT ROYALTY PAY ABLE WOULD BE 3.5% OF SALES AND IT SHALL BE CAPPED TO 10% OF CASTROL INDIA'S PROFIT IN ANY RELEVANT FINANCIAL YEAR. THE APPELLANT HAD ALSO SUBMITTED TO SIA DETAILS OF TOTAL FOREIGN ITA NO S . 8191 8359&8371 /1 0 8 EXCHANGE INFLOW AND OUTFLOW DURING THE PERIOD OF COLLABORATION. IN THE SAI D WORKING THE APPELLANT HAD EVIDENTLY BOUGHT OUT FOREIGN EXCHANGE OUTFLOW ON ACCOUNT OF ROYALTY @ 10% OF PROFITS BEFORE TAXES. ACCORDINGLY THE TPO'S ALLEGATION THAT THERE IS NO QUESTION OF ANY 'IMPLICIT' APPROVAL SEEMS TO BE ERRONEOUS. THE PAYMENTS MAD E BY THE APPELLANT THROUGH THE AUTHORIZED DEALERS (BANKERS) ARE MADE IN ACCORDANCE WITH THE PREVELANT EXCHANGE CONTROL REGULATIONS. HAD THE COMPANY MADE ANY EXCESS PAYMENTS IT WOULD HAVE BEEN OBJECTED TO BY THE AUTHORIZED DEALERS WHO HAVE THE DELEGATED A UTHORITY UNDER THE FOREIGN EXCHANGE MANAGEMENT ACT 1999 TO ADMINISTER COMPLIANCE WITH EXCHANGE CONTROL LAWS IN INDIA. VIEWED IN THE ABOVE BACKGROUND THE TPO'S INTERPRETATION OF THE SIA APPROVAL WAS ERRONEOUS. THE TPO HAS ERRED IN DISALLOWING ROYALTY OF RS.40 25 954. ACCORDINGLY THE APPELLANT'S APPEAL IS ALLOWED AND THE ADJUSTMENT MADE BY THE TPO IS DIRECTED TO BE DELETED. 7 .1 WE FOUND THAT THE ISSUE REGARDING DISALLOWANCE OF ROYALTY HAS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF ASSESSEE IN A.Y.2003 - 04 & 2004 - 05 . THE PRECISE OBSERVATIONS OF THE TRIBUNAL AT PARA 11 & 43 ARE AS UNDER : - 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE IMPUGNED ROYALTY WAS PAID BY THE ASSESSEE COMPANY TO I TS AE NAMELY CASTROL LTD. UK AT 3.5 % OF THE NET EX - FACTORY SALE PRICE OF PRODUCTS MANUFACTURED AND SOLD IN INDIA AS PER THE TECHNICAL COLLABORATION AGREEMENT. THIS INTERNATIONAL TRANSACTION INVOLVING PAYMENT OF ROYALTY TO ITS AE WAS BENCH - MARKED BY THE A SSESSEE BY FOLLOWING CUP METHOD IN ITS TP STUDY REPORT AND SINCE AVERAGE RATE OF ROYALTY OF THREE COMPARABLES SELECTED BY IT WAS HIGHER AT 4.67% THAN THE RATE AT WHICH ROYALTY WAS PAID BY THE ASSESSEE TO ITS AE THE TRANSACTION INVOLVING PAYMENT OF ROYALTY WAS CLAIMED TO BE AT ARM'S LENGTH. A PERUSAL OF THE ORDER PASSED BY THE TPO U/S 92CA (3) OF THE ACT SHOWS THAT NEITHER THESE COMPARABLES SELECTED BY THE ASSESSEE IN ITS TP STUDY REPORT WERE REJECTED BY HER NOR ANY NEW COMPARABLES WERE SELECTED BY HER BY M AKING A FRESH SEARCH IN ORDER TO SHOW THAT THE PAYMENT OF ROYALTY BY THE ASSESSEE TO ITS AE WAS NOT AT ARM'S LENGTH. SHE SIMPLY RELIED ON THE APPROVAL OF SIA TO HOLD THAT ANY ROYALTY PAID BY THE ASSESSEE ON EXPORTS AND OTHER INCOME WAS NOT ALLOWABLE AND DI SALLOWED THE ROYALTY PAYMENT TO THE EXTENT OF RS. 40 51 486/ - TREATING THE SAME AS THE ROYALTY PAID BY THE ASSESSEE IN RESPECT OF EXPORTS SALE AND OTHER INCOME. WE ARE UNABLE TO AGREE WITH THIS STRANGE METHOD FOLLOWED BY THE TPO TO MAKE A TP ADJUSTMENT IN RESPECT OF ROYALTY PAYMENT WHICH IS NOT SUSTAINABLE EITHER IN LAW OR ON THE FACTS OF THE CASE. SHE HAS NEITHER REJECTED THE METHOD FOLLOWED BY THE ASSESSEE TO BENCH - MARK THE TRANSACTION IN RESPECT OF PAYMENT OF ROYALTY NOR HAS BEEN ADOPTED ANY RECOGNIZED M ETHOD TO ITA NO S . 8191 8359&8371 /1 0 9 DETERMINE THE ALP OF THE SAID TRANSACTIONS. THE APPROVAL OF SIA ADOPTED BY THE TPO AS BASIS TO MAKE TP ADJUSTMENT IN RESPECT OF ROYALTY PAYMENT WAS UNTENABLE AND EVEN GOING BY THE SAID BASIS WRONGLY ADOPTED BY THE TPO NO TP ADJUSTMENT IN RESPECT OF ROYALTY PAYMENT WAS LIABLE TO BE MADE. AS PER THE SAID BASIS THE NET SALES OF THE ASSESSEE AFTER EXCLUDING EXPORT SALE AND OTHER INCOME WERE TO THE EXTENT OF RS. 1118.70 CRORES AND THE ROYALTY PAID THEREON AT RS. 24.38 CRORE BEING LESS THAN THE RATE OF 3.5% APPROVED BY SIA THERE WAS NO CASE OF ANY EXCESS PAYMENT MADE OF ROYALTY BY ASSESSEE THAN APPROVED BY SIA TO JUSTIFY ITS DISALLOWANCE BY WAY OF TP ADJUSTMENT. IN OUR OPINION THE ID. CIT (A) COULD NOT APPRECIATE THESE INFIRMITIES IN THE ORDER OF THE TPO DESPITE THE SAME WERE SPECIFICALLY BROUGHT TO HIS NOTICE ON BEHALF OF THE ASSESSEE AND CONFIRMED THE TP ADJUSTMENT MADE BY THE TPO IN RESPECT OF ROYALTY PAYMENT WHICH WAS TOTALLY UNJUSTIFIED. WE THEREFORE DELETE THE ADDITION MADE BY THE AO/TPO AND CON FIRMED BY THE ID. CIT ON ACCOUNT OF TP ADJUSTMENT IN RESPECT OF ROYALTY PAYMENT AND ALLOW GROUND NO. 3 OF THE ASSESSEE'S APPEAL. X X X X X X X X X X X X 43 THE FIRST ISSUE RAISED BY THE REVENUE IN ITS APPEAL FOR A.Y. 2004 - 05 RELATING TO DELETION BY THE ID. CIT(A) OF THE ADDITION MADE BY THE AO/TPO ON ACCOUNT OF TP ADJUSTMENT IN RESPECT OF ROYALTY PAYMENT IS SIMILAR TO THE ONE INVOLVED IN GROUND NO. 3 OF THE ASSESSEE'S APPEAL FOR A.Y.2003 - 04 WHICH HAS ALREADY BEEN DECIDED BY US IN FOREGOING PORTION OF THIS O RDER. FOLLOWING OUR CONCLUSION DRAWN IN A.Y. 2003 - 04 ON THE SIMILAR ISSUE WE UPHOLD THE IMPUGNED ORDER OF THE ID. CIT(A) FOR A.Y. 2004 - 05 DELETING THE ADDITION MADE BY THE AO/TPO ON ACCOUNT OF TP ADJUSTMENT IN RESPECT OF ROYALTY PAYMENT AND DISMISS GROUND NO. 1 OF THE REVENUE'S APPEAL. 7.2 WE HAVE CONSIDERED RIVAL CONTENTIONS AND GONE THROUGH THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE AS STATED ABOVE. THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE SAME. RESPECTFULLY FOLLOWING TH E DECISION OF THE TRIBUNAL AS STATED ABOVE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR DELETING THE DISALLOWANCE OF ROYALTY PAYMENT. 8. THE NEXT GRIEVANCE OF THE REVENUE RELATES TO EXPENDITURE ON ADVERTISEMENT FILMS WHICH HAS BEEN DEALT BY T HE AO AT PARA 13 AND BY CIT(A) AT PARA 15 . THE PRECISE OBSERVATION OF THE CIT(A) ARE AS UNDER : - ITA NO S . 8191 8359&8371 /1 0 10 GROUND NO. 12 OF THE APPELLANT IS REPRODUCED AS UNDER:- 12.IIN TREATING EXPENDITURE ON ADVERTISEMENT FILMS AS CAPITAL EXPENDITURE INSTEAD OF REVENUE AND WI THOUT PREJUDICE IN NOT ALLOWING DEPRECIATION THEREON. 12.1 THE HONBLE ITAT WHILE ADJUDICATING THE REVENUE'S APPEAL FOR ASSESSMENT YEAR 2001 - 02 (!TA NO. 3245/MUM/2005) HAS HELD THAT EXPENDITURE ON ADVERTISEMENT FILMS IS REVENUE EXPENDITURE AND NOT CAPIT AL EXPENDITURE. 12.2 CONSISTENT WITH THIS VIEW AND THE VIEW TAKEN BY ME WHILE DECIDING THE APPEAL FOR ASSESSMENT YEAR 2002 - 03 AND ASSESSMENT YEAR 2004 - 05 DIRECT THE ASSESSING OFFICER TO ALLOW EXPENDITURE ON ADVERTISEMENT FILMS. ACCORDINGLY GROUND NO. 12 IS ALLOWED. 8.1 WE FOUND THAT THE ISSUE IS COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y.2003 - 04. THE PRECISE OBSERVATION OF THE TRIBUNAL FOR A.Y.2003 - 04 ARE AS UNDER : - 41. AS REGARDS THE ISSUE RAISED IN GROUND NO. 2 RELATING T O THE DISALLOWANCE MADE ON ACCOUNT OF ADVERTISEMENT EXPENSES IT IS OBSERVED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL DATED 30T JULY 2009 (SUPRA) FOR A.Y. 2001 - 02 WHEREIN ORDER OF THE ID. CIT(A) DELETING TH E SIMILAR DISALLOWANCE MADE BY THE AO ON ACCOUNT OF ADVERTISEMENT EXPENSES TREATING THE SAME AS CAPITAL EXPENDITURE WAS UPHELD BY THE TRIBUNAL FOLLOWING ITS ORDER IN ASSESSEE'S OWN FOR A.Y. 1998 - 99. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE COORDINAT E BENCH OF THIS TRIBUNAL IN ASSESSEE'S OWN CASE FOR A.Y. 2000 - 01 WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) DELETING THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF ADVERTISEMENT EXPENDITURE AND DISMISS GROUND NO. 2 OF THE REVENUE'S APPEAL. 8.2 AS THE FACTS AND CIRCUMSTANCES OF THE CASE DURING THE YEAR UNDER CONSIDERATION ARE SAME RESPECTFULLY FOLLOWING THE DECISION OF TRIBUNAL FOR A.Y.2003 - 04 WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR DELETING THE DISALLOWANCE OF EXPENDITURE ON ADVERTISE MENT FILMS. 9. NOW WE SHALL TAKE UP THE APPEAL FILED BY THE ASSESSEE (I.E . ITA NO. 8371/MUM/2010 ) FOR A.Y.2006 - 07. ITA NO S . 8191 8359&8371 /1 0 11 10. THE FIRST GRIEVANCE OF THE ASSESSEE RELATES TO DISALLOWANCE OF PAYMENT OF ROYALTY WHICH HAS BEEN DEALT BY THE AO AT PARA 2. 10.1 WE FOU ND THAT THIS ISSUE IS SQUARE COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF TRIBUNAL FOR A.Y.2003 - 04 & 2004 - 05 . RELEVANT OBSERVATION OF THE TRIBUNAL HAS BEEN REPRODUCED ABOVE. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL WE DIRECT THE AO FOR ALLOWI NG ASSESSEES CLAIM IN THE LIGHT OF DECISION OF TRIBUNAL. WE DIRECT ACCORDINGLY. 11. THE NEXT GRIEVANCE OF THE ASSESSEE RELATES TO DISALLOWANCE OF EXPENDITURE IN THE NATURE OF COSTS ALLOCATIONS. 11.1 THIS ISSUE HAS BEEN DEALT BY THE AO AT PARA 2 . WE FOUN D THAT SIMILAR ISSUE HAS BEEN DEALT BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.YS. 2002 - 03 2003 - 04 & 2004 - 05 W HEREIN THE MATTER WAS REMANDED BACK TO THE FILE OF THE TPO FOR STATISTICAL PURPOSES. THE RELEVANT OBSERVATION OF THE TRIBUNAL HAS BEEN REPRODU CED ABOVE. 11.2 AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR ARE SAME RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE WE RESTORE THIS GROUND BACK TO THE FILE OF THE AO FOR DECIDING AFRESH AS PER THE DIRECTION GIVEN BY THE TRIBUN AL IN A.Y. 2002 - 03. WE DIRECT ACCORDINGLY. 12. THE NEXT GRIEVANCE OF THE ASSESSEE RELATES TO EXPENDITURE ON COMPUTERS AT R&D CENTRE. 12.1 THIS ISSUE HAS BEEN DEALT BY THE AO AT PARA 6. WE FOUND THAT SIMILAR ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN ASSES SEES OWN CASE IN FAVOUR OF ASSESSEE IN THE A.Y.1998 - 99. 12.2 AS T HE FACTS AND CIRCUMSTANCES OF THE CASE DURING THE YEAR UNDER CONSIDERATION ARE SAME RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL ITA NO S . 8191 8359&8371 /1 0 12 WE DIRECT THE AO TO ALLOW ASSESSEES CLAIM OF EXPENDITU RE ON COMPUTER AT R&D CENTRE. 13. THE NEXT GRIEVANCE OF THE ASSESSEE RELATES TO CLAIM OF CENVAT U/S. 145A. 13.1 WE FOUND THAT EXACTLY SIMILAR ISSUE HAS BEEN DEALT BY THE TRIBUNAL IN ITS ORDER FOR A.Y.2003 - 04. THE RELEVANT OBSERVATION OF THE TRIBUNAL AT PAR A 16 PAGE 24 IS AS UNDER : - 24 AS REGARDS THE ISSUE RAISED IN GROUND NO. 8 RELATING TO ADDITION MADE ON ACCOUNT OF MODVAT CREDIT BY INCLUDING THE SAME IN THE VALUE OF CLOSING STOCK THE ID. REPRESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT A SIMILAR ISSU E HAS ALREADY BEEN DECIDED IN ASSESSEE'S OWN CASE FOR A.Y. 2001 - 02 WHEREIN THE SAME WAS RESTORED BY THE TRIBUNAL TO THE FILE OF AO VIDE ORDER DATED 30TH JULY 2009 PASSED IN ITA NO. 2363/MUM/2005 WITH A DIRECTION TO MAKE THE ADJUSTMENT ON ACCOUNT OF EXCISE DUTY ALSO TO THE VALUE OF OPENING STOCK AS WELL AS SALES AND PURCHASE IN ACCORDANCE WITH SECTION 145A. RESPECTFULLY FOLLOWING THE SAID ORDER OF THE TRIBUNAL WE RESTORE THIS ISSUE TO THE FILE OF AO FOR DECIDING THE SAME AFRESH AS PER SAME DIRECTIONS AS GIV EN BY THE TRIBUNAL IN A.Y. 2001 - 02. GROUND NO. 8 OF THE ASSESSEE'S APPEAL IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 13.2 WE HAVE CONSIDERED RIVAL CONTENTIONS AND GONE THROUGH THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y.2003 - 04 AS REPRODUCED ABOVE. AS THE FACTS AND CIRCUMSTANCES OF THE CASE DURING THE YEAR UNDER CONSIDERATION ARE SAME WE RESTORE THIS ISSUE BACK TO THE FILE OF AO WITH REGARD TO CLAIM OF CENVAT U/S.145A FOR DECIDING AFRESH IN TERMS OF DIRECTION GIVEN BY THE TR IBUNAL IN AFOREMENTIONED ORDER. WE DIRECT ACCORDINGLY. 14. THE NEXT GRIEVANCE OF THE ASSESSEE RELATES TO DISALLOWANCE OF ASSESSEES CLAIM U/S.80IB IN RESPECT OF ITS INCOME FROM INSURANCE CLAIMS/REVERSAL OF DOUBTFUL DEBTS. 14.1 THE ISSUE HAS BEEN DEALT BY THE AO AT PARA 8. WE FOUND THAT SIMILAR ISSUE HAS BEEN DEALT BY THE TRIBUNAL IN THE ASSESSMENT YEAR 2003 - 04 IN ITA NO S . 8191 8359&8371 /1 0 13 FAVOUR OF ASSESSEE IN RESPECT OF INSURANCE CLAIM . THE RELEVANT OBSERVATION OF THE TRIBUNAL AT PAGE 18 PARA 27 IS AS UNDER : - 27. RESPECTFULLY FO LLOWING THE ORDER OF THE TRIBUNAL DATED 141H SEPTEMBER 2012(SUPRA) PASSED IN ASSESSEE'S OWN CASE FOR A.Y. 2002 - 03 WE UPHOLD THE IMPUGNED ORDER OF THE ID. CIT(A) CONFIRMING THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF ASSESSEE'S CLAIM FOR DEDUCTION U/S 80 1B IN RESPECT OF FIRST FOUR ITEMS OF OTHER INCOME AND DELETE THE SAID DISALLOWANCE TO THE EXTENT IT WAS IN RESPECT OF INCOME FROM INSURANCE CLAIM. GROUND NO. 9 IS OF THE ASSESSEE'S APPEAL IS PARTLY ALLOWED. 14.1 THIS ISSUE HAS BEEN DEALT BY US IN ASSESS MENT YEAR 2006 - 07 VIDE PARA 3 WHEREIN ASSESSEES CLAIM FOR DEDUCTION U/S.80IB WAS ALLOWED WITH RESPECT OF INSURANCE CLAIM. FOLLOWING THE SAME REASONING WE DIRECT THE AO TO ALLOW CLAIM OF DEDUCTION IN RESPECT OF DEDUCTION FROM INSURANCE CLAIM WHILE COMPUTI NG DEDUCTION U/S.80IB. 15. THE NEXT GRIEVANCE OF THE ASSESSEE RELATES TO DISALLOWANCE OF BAD DEBTS. 15.1 THE ISSUE HAS BEEN DEALT BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y.2003 - 04 AT PARA 31 IN FAVOUR OF ASSESSEE. THE RELEVANT OBSERVATION OF THE TRIB UNAL IS AS UNDER : - 31 . AS REGARDS GROUND NO. 11 IT IS OBSERVED THAT THE ISSUE INVOLVED THEREIN RELATING TO THE DISALLOWANCE OF ASSESSEE'S CLAIM FOR BAD DEBTS ON THE GROUND THAT THE RELEVANT DEBTS HAD NOT ACTUALLY BECOME BAD IN THE YEAR UNDER CONSIDERATI ON IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF TRF LTD. 323 ITR 397 (SC) AS AGREED BY THE ID. REPRESENTATIVES OF BOTH THE SIDES. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE HON'BLE SUPREME COURT WE DELETE THE DISALLOWANCE MADE ON ACCOUNT OF ASSESSEE'S CLAIM FOR BAD DEBTS WRITTEN OFF AND ALLOW GROUND NO. 11 OF THE ASSESSEE'S APPEAL. 15.2 WE HAVE CONSIDERED RIVAL CONTENTIONS. IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF TRF LIMITED 323 ITR 397(SC) WE ITA NO S . 8191 8359&8371 /1 0 14 DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR DIRECTING TO ALLOW CLAIM OF BAD DEBTS. 16. THE NEXT GRIEVANCE OF THE ASSESSEE RELATES TO DISALLOWANCE OF LONG SERVICE AWARDS. 16.1 THIS HAS BEEN DEALT BY THE AO AT PA RA 11. THE TRIBUNAL IN A.Y.2001 - 02 (ITA NO. 2363/MUM/2005 DATED 30 - 7 - 2009) HAS DEALT THIS ISSUE IN FAVOUR OF ASSESSEE. THE PRECISE OBSERVATION OF THE TRIBUNAL IS AS UNDER : - 14 . GROUND (III) OF THE REVENUE IS AGAINST THE DELETION OF DISALLOWANCE OF RS.21 4 5 832/ - ON ACCOUNT OF LONG SERVICE AWARD. THIS ISSUE IS ALSO COVERED BY THE DECISION OF THIS BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEAR WHEREIN AT PARAGRAPH 2 ON PAGE 2 THE TRIBUNAL HAS FOLLOWED THE DECISION TAKEN BY THE CO - ORDINATE BENCH FOR THE ASSESSMENT YEAR 1999 - 2000 AND 1998 - 99 AND UPHELD THE DELETION OF THE ADDITION BY THE CIT(A). CONSISTENT WITH THE VIEW TAKEN THEREIN WE UPHOLD THE DECISION OF THE CIT(A) AND REJECT THIS GROUND TAKEN BY THE REVENUE. 16.2 WE HAVE CONSIDERED RIVAL CONTENTIONS AND GONE THROUGH THE ORDER OF THE TRIBUNAL FOR A.Y.2001 - 02 WHEREIN THE TRIBUNAL FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL REJECTED THE GROUND TAKEN BY THE REVENUE IN REGARD TO LONG SERVICE AWARD RESULTIN G IN FAVOUR OF ASSESSEE. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL WE DELETE THE ADDITION MADE BY THE AO AND CONFIRMED BY THE CIT(A) . 17. THE NEXT ISSUE RELATES TO DISALLOWANCE OF EXPENDITURE ON ADVERTISEMENT FILMS. 17.1 THIS ISSUE HAS BEEN DEALT BY THE AO AT PARA 12 OF THE ASSESSMENT ORDER. THE TRIBUNAL IN A.Y.2003 - 04 HAS DEALT THIS ISSUE IN FAVOUR OF THE ASSESSEE AT PARA 41. THE RELEVANT OBSERVATION OF THE TRIBUNAL IS AS UNDER: - ITA NO S . 8191 8359&8371 /1 0 15 41. AS REGARDS THE ISSUE RAISED IN GROUND NO. 2 RELATING TO THE DI SALLOWANCE MADE ON ACCOUNT OF ADVERTISEMENT EXPENSES IT IS OBSERVED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL DATED 30T JULY 2009 (SUPRA) FOR A.Y. 2001 - 02 WHEREIN ORDER OF THE ID. CIT(A) DELETING THE SIMILA R DISALLOWANCE MADE BY THE AO ON ACCOUNT OF ADVERTISEMENT EXPENSES TREATING THE SAME AS CAPITAL EXPENDITURE WAS UPHELD BY THE TRIBUNAL FOLLOWING ITS ORDER IN ASSESSEE'S OWN FOR A.Y. 1998 - 99. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEE'S OWN CASE FOR A.Y. 2000 - 01 WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) DELETING THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF ADVERTISEMENT EXPENDITURE AND DISMISS GROUND NO. 2 OF THE REVENUE'S APPEAL. 17.2 WE HAVE CONSI DERED RIVAL CONTENTIONS AND PERUSED THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y.2001 - 02 . RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL WE ALLOW THE GROUND TAKEN BY THE ASSESSEE IN REGARD TO ADVERTISEMENT EXPENDITURE. 18. THE NEXT GRIEVANC E OF THE ASSESSEE RELATES TO DEPRECIATION ON SILVASSA ASSETS. 18.1 THIS ISSUE HAS BEEN DEALT BY THE AO AT PARA 13 OF THE ASSESSMENT ORDER. THE TRIBUNAL IN A.Y.2003 - 04 HAS DEALT THIS ISSUE IN FAVOUR OF THE ASSESSEE AT PARA 35 . THE RELEVANT OBSERVATION OF THE TRIBUNAL IS AS UNDER: - 35. AS REGARD THE ISSUE RAISED IN GROUND NO. 13 OF THE ASSESSEE'S APPEAL RELATING TO DISALLOWANCE OF DEPRECIATION ON THE ASSETS OF SILVASA UNIT THE LD. REPRESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT THIS ISSUE IS SQUARELY C OVERED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE BY THE ORDER OF THE TRIBUNAL DATED 13TH APRIL 2009 (SUPRA) PASSED IN ASSESSEE'S OWN CASE FOR A.Y. 2001 - 02 WHEREIN THE SIMILAR ISSUE WAS DECIDED AGAINST THE ASSESSEE BY FOLLOWING THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SCOPE INDUSTRIES PVT. LTD. 289 ITR 195 AS WELL AS THAT THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR A.Y. 2000 - 01. RESPECTFULLY FOLLOWING THESE JUDICIAL PRONOUNCEMENT WE DECIDE THIS ISSUE AGAINST THE ASSESSEE AND DISMISSE D GROUND NO. 13 OF ITS APPEAL. 18.2 WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSED THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y.2001 - 02 . THE ISSUE WITH REGARD ITA NO S . 8191 8359&8371 /1 0 16 TO CLAIM OF DEPRECIATION OF ASSETS OF SILVASA UNIT WAS DECLINED BY THE TRIBUNAL IN ASSESSES OWN CASE BY FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SCOPE INDUSTRIES PVT. LTD. 289 ITR 195 . RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL WE CONFIRM THE ACTION OF THE LOWER AUTHORITIES FOR DECLINE OF CLAIM OF D EPRECIATION ON ASSETS OF SILVASA UNIT . 19 . IN THE RESULT APPEAL S OF THE ASSESSEE (I.E. ITA NO S . 8191&8371/MUM/2010) AND APPEAL OF THE REVENUE (I.E. ITA NO. 8359/MUM/2010) ARE ALLOWED IN PART IN TERMS INDICATED HEREINABOVE. ORDER PRONOUNCED IN THE OPEN CO URT ON THIS 14 / 1 1 / 201 4 . / 1 1 / 2014 SD/ - SD/ - ( ) ( VIVEK VARMA ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT M EMBER MUMBAI ; DATED 14 / 1 1 /2014 /PKM PS COPY OF THE ORDER FORWARDED TO : / BY ORDER ( ASSTT. REGISTRAR) / ITAT MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) MUMBAI. 4. / CIT 5. / DR ITAT MUMBAI 6. GUARD FILE. //TRUE COPY//