Income Tax Appellate Tribunal - Delhi
Ocl India Ltd.,New Delhi vs Dcit, New Delhi on 24 April, 2026
INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "F": NEW DELHI
BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER
AND
SHRI M. BALAGANESH, ACCOUNTANT MEMBER
ITA Nos. 4069 & 4070/Del/2015
(Assessment Years: 2008-09 & 2009-10)
&
ITA Nos. 1291, 3877/Del/2017
(Assessment Years: 2010-11, 2011-12)
&
ITA Nos. 2575/Del/2018
(Assessment Years: 2012-13)
Dalmia Bharat Ltd, Vs. DCIT,
A(successor in the interest of Circle-19(1),
OCL India Ltd), New Delhi
th th
11 and 12 Floor, Hansalaya
Building, 15, Barakhamba Road,
New Delhi
(Appellant) (Respondent)
PAN:AABC08750F
ITA No. 3768, 3815/Del/2015
(Assessment Years: 2008-09 & 2009-10)
&
ITA No. 3110/Del/2018
(Assessment Year: 2012-13)
DCIT, Vs. Dalmia Bharat Ltd,
Circle-19(1), A(successor in the interest
New Delhi of OCL India Ltd),
11th and 12th Floor,
Hansalaya Building, 15,
Barakhamba Road, New
Delhi
(Appellant) (Respondent)
PAN:AABC08750F
Assessee by : Shri Soumen Adak, FCA
MS Alka Arren, FCA
Shri Navin Verma, FCA
Shri Nitesh Agarwal, FCA
Revenue by: Ms. Monika Singh, CIT DR
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Date of Hearing 10/03/2026
Date of pronouncement 24/04/2026
ORDER
PER M. BALAGANESH, A. M.:
1. The appeal in ITA Nos. 4069 & 4070/Del/2015, 1291, 3877/Del/2017, 2575/Del/2018 for AYs 2008-09 to 2012-13 filed by the assessee and ITA Nos. 3768, 3815/Del/2015 and 3110/Del/2018 for AYs 2008-09, 2009-10 & 2012-13 filed by the revenue, arises out of the order of the ld ld. Commissioner of Income Tax (Appeals)-7, New Delhi [hereinafter referred to as 'ld. CIT(A)', in short] dated 30.03.2015 for AYs 2008-09, 2009-10, 19.12.2016 for AY 2010-11, dated 31.03.2017 for AY 2011-12, CIT(A)-44, New Delhi dated 31.01.2018 for AY 2012-13 against the order of assessment passed u/s 143(2) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') dated 30.09.2008 for AY 2008-
09, u/s 143(3) dated 19.12.2011 for AY 2009-10, dated 31.03.2014 for AY 2010-11, u/s 144C r.w.s. 143(3) dated 27.03.2018 for AY 2011-12 and dated 28.0.2016 for AY 2012-13 by the Assessing Officer (hereinafter referred to as 'ld. AO'). Identical issues are involved in these appeals and hence they are taken up together and disposed of by this common order for the sake of convenience.
ITA No. 3768/Del/2015 - Asst Year 2008-09- Revenue Appeal2. The ground No. 3 raised by the Assessee raised by the revenue is general in nature and does not require any specific adjudication.
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3. The ground No. 1 raised by the Assessee is challenging the deletion of disallowance made under section 14A of the Act by the Learned CITA.
3.1. We have heard the rival submissions and perused the materials available on record. During the year under consideration, the Assessee earned dividend income of Rs. 2,93,052 and claimed exemption under Section 10(34) of the Act. The Assessee pleaded that no expenditure was incurred to earn such exempt income and accordingly no suo moto disallowance under Section 14A of the Act was made. The assessment was completed by the Learned AO under Section 143(3) of the Act applying the computation mechanism provided in Rule 8D(2)(ii) and Rule 8D(2)(iii) of the Income Tax Rules, working out the disallowance under Section 14A of the Act at Rs. 2,64,561 under normal provisions of the Act. The Learned CITA deleted the disallowance made under Section Rule 8D(2)(ii) of the Rules in the sum of Rs. 2,09,505 and confirmed the disallowance under Rule 8D(2)(iii) of the Rules in the sum of Rs. 55,506. The Learned CITA deleted the disallowance under Rule 8D(2)(ii) of the Rules on the ground that Assessee is having sufficient own funds to make investments and before us, the Assessee gave the details of availability of own funds which had already been taken cognizance by the Learned CITA. We are convinced that Assessee is having sufficient own funds of Rs. 36794.17 crores in the form of share capital and reserves as on 1-4-2017 which would take care of the investments of Rs. 182.12 crores made by the Assessee. Hence, sufficient own funds were available and there cannot be any Page | 3 disallowance of interest in terms of Rule 8D(2)(ii) of the Rules. Reliance in this regard has been rightly placed by the Learned AR on the decision of Hon'ble Supreme Court in the case of South Indian Bank Limited vs CIT reported in 438 ITR 1 (SC). Accordingly, we hold that disallowance of interest had been rightly deleted by the Learned CITA. The ground number 1 raised by the revenue is dismissed.
4. The ground number 2 raised by the revenue is challenging the deletion of Rs 5,56,70,860 made by the Learned AO on account of slow and non moving inventories.
4.1. We have heard the rival submissions and perused the materials available on record. In respect of slow moving slow and non-moving stock, the Assessee in accordance with Accounting Standard - 2 (AS-2) regarding 'Inventories' issued by The Institute of Chartered Accountants of India (ICAI) valued the stock on the basis of cost or market value whichever is less. The Assessee is a public limited company engaged in the business of manufacture and sale of cement, refractory and sponge iron. The original return of income for the assessment year 2008-09 was filed by the Assessee company on 30-09-2008 declaring total income of Rs 177,17,35,770. The revised return of income was filed on 4-2-2010 declaring total income of Rs 176,31,56,520. The return filed was duly processed under section 143(1) of the Act and the case was selected for scrutiny.
4.2. The Assessee is having its manufacturing facilities at Raj Gangapur in the state of Orissa for manufacturing various types of Page | 4 cement and refractory. In addition, it is also having mines at Langeberna. The Assessee is having the state of art technology for manufacturing cement in its plant where lot of plant and equipments are used on continuous basis. The plant was established way back in 1949. There has been requirement to maintain the plant so that it may run efficiently and continuously without compromising on the quality of the finished product. In order to maintain efficiency of the plant and equipment, the Assessee has to maintain various spare parts in its stores so that in case of any necessity, they can be immediately changed so that the production is not affected. Over the period, the Assessee purchased various spare parts as per the requirement from time to time. The total spare parts maintained in its stores runs into thousands of numbers which are used as per the requirement by the Assessee in its works. In the process, various spare parts remain unused for a long period and therefore have either lost their utility or have become rusted or have become outdated and therefore cannot be used as a spare part and have outlived utility. Due to the above mentioned reasons, the net realizable value of these spare parts had gone down substantially and they cannot fetch the price of which they are recorded in the books of accounts.
4.3. In order to reflect the true and correct value of these inventories, it was decided by the Assessee to value them at the correct net realizable value as far as practical and for that purpose, it identified the slow-moving and non-moving stock of inventories and to value them based upon the period of their non-
Page | 5 movement and physical condition thereof. Accordingly, the Assessee identified 14,554 items as slow-moving and non-moving stock during physical verification based upon the periodicity of their non-movement and physical condition. A note dated 25-02-2008 written by Assistant Manager (Stores) informing the identification of 14,554 items lying in the store and which have not moved since last so many years was submitted before the learned AO during the course of assessment proceedings. He also mentioned in the note that some of the items have lost their life because of long storing, some items have been deformed and cannot be used and some items have been damaged because of environmental condition. He further mentioned in his note that all the items are beyond use. Further, a note dated 2-03-2008 written by Manager (Materials) was submitted before the learned AO during the course of hearing stating therein that as per the list of 14,554 items which have not moved since a very long time and therefore, many of the items have lost their lives because of various reasons like effect of weather condition, shelf life, improper handling etc., he has put up that note for approval of Executive Director to approve for writing off the value from the books as recommended in the statement. The Executive Director advised to form a committee of user department to discuss each item and frame some guidelines for groups of items. The copy of note dated 4-03-2008 written by Manager (Material) informing the advice of Executive Director to form a committee to assess the residual value of items which have not moved for a long time or slow moving was submitted before the learned AO during the course of hearing.
Page | 6 Accordingly, Senior General Manager (Engineering) formed a committee comprising Deputy Chief Manager (Mechanical), Manager (Electrical) and Senior Manager (C&I) vide his note dated 4-03-2008. This note was also submitted before the learned AO during the course of hearing.
4.4. The above said committee physically examined each item and based upon the physical examination came to the conclusion and mentioned the present condition thereof against each item. They also indicated the residual value of each item depending upon the physical condition and life of the items. Note dated 6-03-2008 prepared by the above said committee together with the approval of the Executive Director for write off of the slow moving / non-moving items was submitted before the learned AO during the course of hearing. Complete list of items identified as slow moving and non-moving based upon the life and physical condition of each item showing thereon, the name of item, their unit of measurement , the last date of their receipt by the Assessee , the value of each item as appearing in the books of accounts of the Assessee , the value to be written off on each item as well as the physical condition of each and every item was submitted before the learned AO during the course of hearing. It was submitted that most of the items have either rusted and pitted for moisture contamination while other items have broken. Some of the items have internal damage or have torn. In some of the items, the rubber parts have lost their lives either galvanized of items is eroded and therefore lost their life partially or edges have broken during storing or the corrosion has occurred or moisture or Page | 7 contamination has changed the item or the design of the item has changed or the items rusted and moisture contamination of or rubber of some products has lost its elasticity or certain items have got damaged over the period. In some of the cases of valves, the spool has jammed. In case of some crank shaft, the bearing area is rusted. It was submitted that various abnormalities have developed in various items of inventory over the period of time and therefore either they have lost their utility and therefore they cannot be used for the purpose for which they are intended to. Based on the aforesaid exercise, the Assessee company wrote off the inventory of Rs 5,68,06,778 based upon the period of their non-movement as well as their physical condition. As per Notes to Accounts No. 17 of the Annual Report, it was mentioned that in respect of slow moving of inventory of spares, the value has been written down by Rs 568.07 lacs towards obsolescence loss.
4.5. The learned AO however did not heed to the aforesaid contentions of the Assessee and proceeded to disallow the entire amount of Rs 5,68,07,000 on account of inventory written off on the contention that the Assessee had not adopted such practice in earlier years and it cannot choose the principles which are beneficial to it and results in reduction of overall profits. The learned CITA however appreciated the aforesaid documentary evidences and the methodical approach adopted by the Assessee company for deciding to write off the non-moving and slow moving spares which was made on a scientific basis after duly taking technical opinion and deleted the disallowance made by the learned AO to the extent of Rs 5,56,70,860. We find that the revenue could not place any Page | 8 contrary material on record to controvert the findings of the learned CITA. Further we find that the decision taken by the Assessee Company to write off the slow moving and non moving inventory was in accordance with AS-2 issued by ICAI which is mandatory for the Assessee Company to follow as per the provisions of Companies Act, 1956. The write off of inventory is duly backed by supporting documentary evidences after duly identifying each and every item of non moving and slow moving spares and after considering its utility value backed by technical report. Hence we do not find any infirmity in the action of the learned CITA deleting the addition. Accordingly, the ground number 2 raised by the revenue is dismissed.
5. In the result, the appeal of the revenue for assessment year 2008-09 is dismissed.
ITA No. 4069/Del/2015 - Asst Year 2008-09- Assessee Appeal6. Ground No. 1 raised by the assessee is challenging the confirmation of addition made on account of unsecured loans in the sum of Rs. 65,41,000/-.
6.1 We have heard the rival submissions and perused the material available on record. The assessee had received deposits from general public pursuant to the newspaper advertisement given. The assessee as per the provisions of Companies Act is entitled to receive public deposits. The deposits were received through regular banking channels. The assessee had duly paid interest to the depositors and the deposits were repaid on the respective date of maturity. The assessee was directed to give the list of deposits Page | 9 received during the year. The assessee furnished the same before the ld AO. The complete list of depositors containing the names, address, date of receipt of deposit, date of maturity of deposit, rate of interest paid, amount of deposit, PAN of the depositor wherever applicable, confirmation of depositors, Form No. 60 wherever applicable together with the application forms are enclosed in pages 13 to 16 and pages 21 to 26 of the Paper Book. The list comprises of 3 categories as under:-
(A) Depositors whose PAN is available- 37 depositors - totaling to Rs. 17,60,000/-
(B) Deposits less than Rs. 50,000 whose PAN is not available-
88 depositors - totaling to Rs. 23,59,000/-
(C ) Other deposits - 24 depositors - totaling to Rs. 24,22,000/-
6.2 The assessee pleaded that it is bound to obtain PAN of the depositors who had invested more than Rs. 50,000/-. Hence, in respect of 88 depositors falling in category (B) above for Rs. 23,59,000/-, the assessee is not required to obtain PAN of the depositors as the deposit amounts are less than Rs. 50,000/- per depositor. However, it was pleaded that assessee had duly obtained the entire deposit application form, Form No. 60 wherever applicable and confirmation from each of the depositors.
6.3. With regard to category (A) depositors comprising of 37 persons totaling to Rs. 17,60,000/-, it was submitted that the Page | 10 assessee had duly obtained the PAN, confirmation from depositors and the application form of each depositor.
6.4. In respect of category (C ) depositors comprising of 24 persons totaling to Rs. 24,22,000/-, the assessee furnished confirmation from depositors, Form No. 60 and deposit application form of those depositors. However, PAN could not be furnished by the assessee as the depositors had not mentioned the same in the application form. It was submitted that for these category (C) depositors, Form No. 60 however was obtained from the depositors in the absence of PAN which was also filed before the ld AO.
6.5. The ld AO however simply ignored the aforesaid contentions of the assessee and proceeded to add the deposits received during the year in the sum of Rs. 65,41,000/- as unexplained cash credit u/s 68 of the Act without resorting to make any independent enquiry despite the fact that the address of the depositors were indeed given. Even confirmations were placed on record before the ld AO. This action was upheld by the ld CIT(A).
6.3 We find that assessee is entitled to received public deposits from general public as per the provisions of Companies Act, 1956. The assessee had received the said deposits pursuant to newspaper advertisement given which is in accordance with provisions of Companies Act, 1956. All the deposits were received only through regular banking channels. The interest is duly paid to the depositors. The assessee had bifurcated the list of deposits into 3 categories detailed supra. Wherever PAN of the depositors are not available, the assessee had indeed obtained Form No. 60. However, Page | 11 the name and address of the depositors, confirmation of the depositors and deposit application form were duly obtained and submitted before the ld AO. When these documents are placed on record by the assessee, the primary onus stands discharged from the side of the assessee. Thereafter, the onus shifted to the revenue to dislodge the evidences brought on record which had admittedly not being done by the revenue in the instant case. Hence, there is no case made out of the revenue for making an addition u/s 68 of the Act for the deposits received in the sum of Rs. 65,41,000/-. Accordingly, ground No. 1 raised by the assessee is allowed.
7. Ground Nos. 2 and 3 raised by the assessee are challenging the confirmation of disallowances of technical knowhow fees paid by treating the same as capital expenditure.
7.1 We have heard the rival submissions and perused the material available on record. During the year under consideration, the assessee paid sum of Rs. 71,97,692/- to Mr. Glan Ray Trap, Mr. Guenter Macerker and Prof. Hi Limpu for refractory division to obtain technical assistance in connection with manufacture of continuous casting refractories, which would result in improvement in product quality, cycle time, reduction in cost of manufacturing etc. The entire expenses are claimed as revenue expenditure. The ld AO held that the assessee had acquired intangible asset in the form of technical knowhow and treated the same as capital Page | 12 expenditure and granted depreciation @25% and disallowed the remaining sum. This action was upheld by the ld CIT(A).
7.3 We find that this issue is already covered in favour of the assessee by the order of this Tribunal for AYs 2005-06 and 2006-07 in ITA Nos. 3202 and 3203/Del/2011 respectively dated 29.06.2015 in its own case. Further, it is also covered by the decision of this Tribunal for AY 2007-08 in ITA No. 4068/Del/2015 dated 23.09.2025 in its own case. The ld AR also submitted that from AY 2010-11 onwards, the very same issue had been decided in favour of the assessee by the ld CIT(A) by relying on the order of the Tribunal and the revenue had not preferred any appeal to this Tribunal from AY 2010-11 onwards on the impugned issue.
7.4 In view of the above, ground Nos. 2 and 3 raised by the assessee are hereby allowed.
8. Ground Nos. 4 to 6 raised by the assessee are challenging the disallowance of Rs. 4,75,000/- on account of environmental study expenses.
8.1 We have heard the rival submissions and perused the material available on record. During the year under consideration, a sum of Rs. 4,75,000/- was paid as fees for professional and technical services to M/s. S.S. Environics India Pvt. Ltd for carrying out Environment Impact Assessment (EIA) study and to prepare environment management plan for proposed modernization cum expansion of existing cement plant. This payment was claimed as Page | 13 revenue expenditure. The ld AO disallowed the said expenditure by holding that the environment study was prerequisite for bringing into existence the expanded and modernized plant, which in turn would result into enduring benefit to the assessee and therefore capital in nature. This action of the ld AO was upheld by the ld CIT(A).
8.2 We find that this issue is covered in favour of the assessee by the order of this Tribunal for AYs 2005-06 and 2006-07 in ITA Nos. 3202 and 3203/Del/2011 respectively dated 29.06.2015 in its own case. Further, it is also covered by the decision of this Tribunal for AY 2007-08 in ITA No. 4068/Del/2015 dated 23.09.2025 in its own case. The ld AR also submitted that from AY 2010-11 onwards, the very same issue had been decided in favour of the assessee by the ld CIT(A) by relying on the order of the Tribunal and the revenue had not preferred any appeal to this Tribunal from AY 2010-11 onwards on the impugned issue.
8.3 In the result, the Ground Nos. 4 to 6 raised by the assessee are allowed.
9. Ground Nos. 7 to 9 raised by the assessee are challenging the disallowance of expenses u/s 14A of the Act read with Rule 8D(2)(iii) of the Income Tax Rules amounting to Rs. 55,506/-. This ground was stated to be not pressed by the ld AR at the time of hearing. The same is reckoned as a statement made from the bar Page | 14 and accordingly, ground Nos. 7 to 9 raised by the assessee are hereby dismissed as not pressed.
10. Ground No. 10 raised by the assessee is challenging the confirmation of disallowance of inventory of spares written off to the extent of notional scrap realization value of Rs. 11,36,140/-.
10.1 We have heard the rival submissions and perused the material available on record. This ground is part of ground No. 1 adjudicated in revenue's appeal supra for AY 2008-09. We have already held in revenue's appeal qua this issue that the ld CIT(A) had duly appreciated the elaborate documentary evidences submitted by the assessee together with the technical reports justifying the non moving and slow moving inventory of spares being written off in total sum of Rs. 5,68,07,000/-. This entire sum was disallowed by the ld AO in the assessment. The ld CIT(A) granted relief to the assessee only to the extent of Rs. 5,56,70,860/- and sustained the remaining sum of Rs. 11,36,140/- by estimating the scrap value of those spares that were sought to be written off @2%. We find that even though the spares were not eligible to be utilized by the assessee in its business, it would certainly have some realizable value in the form of scrap which had been reasonably estimated by the ld CIT(A) @2%. Hence, we do not find any infirmity in the action ofld CIT(A) estimating the realizable scrape value in the sum of Rs. 11,36,140/- in the facts and circumstances of the instant case. Accordingly, ground No. 10 raised by the assessee is dismissed.
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11. We find that the assessee has raised additional grounds vide letter dated 23.07.2024 before us. These additional grounds are purely legal issues and all facts relevant for its adjudication are already on record. The additional grounds raised by the assessee are as under:-
1.0 That on the facts and in the circumstances of the case, necessary directions may be given to Assessing officer (hereinafter referred to as 'A.O.') to allow Pre-Operative expenses amounting to Rs. 12.85,76,254/-
being revenue in nature, on account of staff costs, rent, rates and taxes, insurance and other miscellaneous expenses u/s 37(1) of the Act as revenue expenditure.
2.0 That on the facts and in the circumstances of the case, necessary directions may be given to A.O. to allow additional depreciation u/s 32(1)(ia) amounting to R 20.81,98,275/-in terms of Sec. 32(1)(iia) on assets acquired on and after 01-04-2005 but before 01-04-2007. 3.0 That on the facts and in the circumstances of the case, and without prejudice to Ground No. 2.0 taken here-in-above, necessary directions may be given to A.D. to allow balance 10% of the additional depreciation amounting to Rs. 91,86,277/-in terms of Sec. 32(1)(iia) in the current assessment year on the assets which were put to use in the preceding assessment year for less than 180 days 4.0 That on the facts and circumstances of the case, necessary directions may be given to A.O. to allow Profit on sale of Fixed Assets and Investments amounting to Rs. 9,67,60,487/, as capital receipts while computing Book Profit u/s 115JB of the Act. 5.0 That on the facts and circumstances of the case, necessary directions may be given to A.O. to allow exclusion of amount transferred to Debenture Redemption Reserve amounting to Rs. 1,52,00,000/-while computing Book Profit u/s 1151B of the Act.
6.0 That the appellant craves leave to add, amend, modify, rescind, supplement, or alter the Ground stated here in above, either before or at the time of hearing of this appeal.
11.1 The aforesaid additional grounds are hereby admitted and taken up for adjudication.
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12. Claim of pre-operative expenses as revenue expenditure [Rs. 12,85,76,254/-
We have heard the rival submissions and perused the material available on record. The assessee had undertook expansion project in the existing cement plant at Rajgangapur Unit and Kapilas Unit. The assessee has incurred various revenue expenditure in the form of salary, insurance, staff cost etc. which had been debited under the head capital work in progress. The details of the same are as under:-
Particulars AY 2008-09
Rajgangpur
Salary & Wages 40,491
Insurance 75,51,594
Site Development Expenses 1,52,16,919
Technical Engineering Fees 1,26,52,423
Others 2,17,31,453
SUB TOTAL (A) 5,71,92,880
Kapilas Cement Works
Salary & Wages 1,83,68,650
Insurance 40,36,414
Site Development Expenses 1,70,22,534
Technical Engineering Fees 27,68,836
Rent 2,56,660
Rates & Taxes 1,84,360
Others , . 3,08,70,525
Sale of Cement arising on Trial Run (21,24,605)
SUB TOTAL (B) 7,13,83,374
Total (A+B) 12,85,76,254
12.2 The ld AR before us submitted that the said claim of preoperative expenses as revenue expenditure had been allowed by the ld CIT(A) from AYs 2011-12 to 2014-15 and the revenue had Page | 17 not preferred any further appeal before the Tribunal qua this issue. He also placed reliance on the decision of the Hon'ble Jurisdictional High Court in the case of CIT Vs. Relaxo Footwears Ltd reported in 293 ITR 231 (Del) and decision of the Hon'ble Supreme Court in the case of DCIT Vs. Core Healthcare Ltd reported in 298 ITR 194 (SC). In our considered opinion, the issue requires verification by the ld AO and accordingly we deem it fit and appropriate to restore this issue to the file of the ld AO for de novo adjudication in accordance with law and in the light of the aforesaid decisions relied upon by the ld AR. Accordingly, additional ground No. 1 raised by the assessee is allowed for statistical purposes.
13. Claim of additional depreciation in second and subsequent years u/s 32(1)(iia) of the Act for assets acquired after 01.04.2005 but before 01.04.2007- Rs. 20,81,98,275/-.
We have heard the rival submissions and perused the material available on record. The assessee is entitled to claim additional depreciation @20% on all eligible new asset required on or after 01.04.2005 but before 01.04.2007. It is not in dispute that the assessee had duly fulfilled all the conditions prescribed in Section 32(1)(iia) of the Act. This issue, in our considered opinion, requires verification by the ld AO with regard to the computation of figures and hence we deem it fit and appropriate, to restore this issue to the file of the ld AO for de novo adjudication in accordance with law. Accordingly, the additional ground No. 2 raised by the assessee is allowed for statistical purposes.
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14. Claim of balance additional depreciation on assets put to use for less than 180 years in the preceding financial year -91,86,277/-
This issue is only consequential to additional ground No. 2 raised by the assessee which has already been restored to the file of the ld AO.
15. The additional ground No. 4 was stated to be not pressed by the ld AR at the time of hearing. The same is reckoned as a statement made from the Bar and accordingly dismissed as not pressed.
16. Exclusion of debentures, redemption reserve while computing book profit u/s 115JB of the Act - Rs. 1.52 crores We have heard the rival submissions and perused the material available on record. During the year under consideration, the assessee had transferred an amount of Rs. 1.52 crores to Debenture Redemption Reserve. The assessee vide this additional ground is seeking direction to allow exclusion of amount transferred to Debenture Redemption Reserve while computing book profits u/s 115JB of the Act. This matter requires verification by the ld AO and accordingly we deem it fit and appropriate to restore this issue to the file of the ld AO for de novo adjudication in accordance with allow. Accordingly, the additional ground No. 5 raised by the assessee is allowed for statistical purposes.
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17. Additional ground No. 6 raised by the assessee is general in nature and does not require any specific adjudication.
18. In the result, the appeal of the assessee for AY 2008-09 is partly allowed for statistical purposes.
ITA No. 3815/Del/2015 for AY 2009-10- Revenue Appeal19. All the grounds of revenue herein are identical to grounds raised by revenue for AY 2008-09. The decision rendered by us for AY 2008-09 in appeal of the revenue shall apply mutatis mutandis for revenue appeal for AY 2009-10 except with variance in figures.
ITA NO 4070/Del/2015 for AY 2009-10 - Assessee Appeal ITA No 4070/Del/2015 Identical to AY 2008-09 Assessee Appeal Ground No. 1 Ground No. 1 Ground Nos. 2-3 Ground Nos. 2-3 Ground Nos. 4-6 Ground Nos. 4-6 Ground Nos. 7-8 Ground Nos. 7-8 Ground No. 9 Ground No. 10 Additional Ground No. 1 Additional Ground No. 2 Additional Ground No. 2 Additional Ground No. 3 Additional Ground No. 4 Additional Ground No. 4 Additional Ground No. 5 Additional Ground No. 5 Additional Ground No. 6 Additional Ground No. 6
20. Additional Ground No. 3 raised by the assessee for AY 2009- 10 is seeking deduction on account of provision for doubtful debts under normal provisions of the Act- 8,25,54,143/-
Page | 20 20.1 We have heard the rival submission and perused the material available on record. During the year under consideration, the assessee made provision for doubtful debts by debiting the same in the profit and loss account and reducing the said provision from the total value of sundry debtors in the balance sheet. The same was voluntarily added back in the computation of income under normal provisions of the Act by the assessee. Now the assessee seeks to withdraw the said voluntary disallowance and claim the deduction on account of provision for doubtful debts by placing reliance on the decision of the Hon'ble Supreme Court in the case of Vijaya Bank Vs. CIT reported in 323 ITR 166 and based on coordinate bench decision of Delhi Tribunal in the case of Religare Finvest Ltd Vs DCIT in ITA No. 4796/Del/2017 dated 13.07.2023.
20.2 It is a fact that assessee while making the provision for doubtful debts had not credited the concerned debtor's account. This fact is evident from the disclosure made in the balance sheet for the year ended 31.03.2009 under Schedule 8 wherein, the gross value of sundry debtors have been reflected and the provision for doubtful debts were merely reduced thereon and the net debtors had been disclosed in the balance sheet. Hence, there is no actual bad debts written off by the assessee. The provisions of Section 36(1)(vii) of the Act clearly mandate debt to be written off in the books of accounts which means the debt should be credited in the account of the debtors as bad debts, thereby reducing the value of gross value of debtors per se. This is not the fact in the instant case. There is no bad debt written off that is being claimed as deduction on account of Rs. 825, 54,143. Even the disclosure made Page | 21 in schedule 14 under the head of "other expenses" in the audited financial statements clearly reflect provision for doubtful debts amounting to Rs. 825.54 lakhs and bad debts written off of Rs.16.71 lakhs. The claim of deduction of bad debts written off of Rs. 16.71 lakhs is not in dispute before us. The dispute is only with regard to allowability for provision for doubtful debts of Rs. 825.54 lakhs. In this regard, the Explanation 1 to section 36(1)(vii) of the Act inserted by Finance Act 2001 with retrospective effect from 01.04.1989 would be relevant and hence reproduced below:-
"Explanation 1. For the purpose of this clause, any bad debt are part thereof written off as irrecoverable in the accounts of the assessee shall not include any provision for bad and doubtful debts made in the accounts of the assessee 20.3 In view of clear provisions in the Act, the additional ground No. 3 raised by the assessee is hereby dismissed.
21. The original ground No. 12 raised by the assessee is with regard to claim of deduction u/s 43B of the Act for bonus paid amounting to Rs. 93180/-. This ground is not pressed by the ld AR at the time of hearing. The same is reckoned as a statement made from the Bar and accordingly dismissed as not pressed.
22. In the result, the appeal of the assessee is partly allowed for statistical purposes.
Page | 22 ITA No. 1291/Del/2017 for AY 2010-11 - Assessee's appeal ITA NO. 1291/Del/2017 Identical to AY 2008-09 Ground No. 1 Ground No. 1 Ground Nos. 2-4 Ground Nos. 7-9 Ground No. 9 Additional Ground No. 1 Ground No. 12 Additional Ground No. 2 Ground No. 13 Additional Ground No. 3 Ground No.14 Additional Ground No. 4 Ground No. 15 Additional Ground No. 6
23. Ground No. 5 raised by the assessee is challenging the confirmation of disallowance of claim of Rs. 25 lakhs in respect of expenditure on account of payment to retired Director.
23.1 We have heard the rival submissions and perused the material available on record. During the year under consideration, the assessee paid Rs. 25 lakhs to one retired Director as retrial reward as per the policy of the assessee and the same was also approved by the Board of Directors. This payment was claimed as revenue expenditure. The ld AO disallowed the said payment on the alleged ground that the assessee had rewarded an employee by making payment absolutely independent of the gratuity and without any restriction regarding the monetary limit. The case of the revenue is that the said expenditure is not wholly and exclusively incurred for the purpose of business of the assessee. This action of the ld AO was upheld by the ld CIT(A).
Page | 23 23.2. The ld AR before us relied on the decision of Hon'ble Madras High Court in the case of CIT Vs. Chandrie and Co Private Limited reported in 212 ITR 63 (Mad). This was a case wherein gratuity was paid to ex working Director being ex gratia payment based on the policy of the company supported by resolution passed by the Board of Directors. The Hon'ble High Court upheld the order of Tribunal granting deduction for the said payment as wholly and exclusively incurred for the purpose of business. The facts of that case and the decision rendered thereon shall apply mutatis mutandis to assessee's case before us and accordingly the ground No. 5 raised by the assessee is hereby allowed.
24. The ground No. 6 raised by the assessee is challenging the confirmation of disallowance of additional depreciation u/s 32(12)(iia) on dumpers amounting to Rs. 159,79,836.
24.1 We have heard the rival submissions. During the year under consideration, the assessee has claimed additional depreciation at the rate of 20 % u/s 32(1)(iia) of the Act on dumpers acquired and put to use during the year in the return of income. The ld AO disallowed the claim on the ground that schedule of depreciation does not mention dumpers under the plant and machinery block. He observed that dumpers are nothing but bigger truck. The ld AO also rejected the claim of the assessee that the said claim was not made in the return and hence based on the decision of Hon'ble Supreme Court in the case of Goetze India limited reported in 284 ITR 323 (SC), the assessing officer does not have power to Page | 24 entertain a claim made by filing a submission otherwise than by filing a revised return of income.
24.2. The learned CIT(A) at para 9.2 of his order held that additional depreciation on dumpers had been duly claimed by the assessee in the return itself and not during assessment proceedings. However, he upheld the action of the ld AO stating that dumper is a road transport vehicle and not plant and machinery and hence not eligible for additional depreciation.
24.3. The ld AR before us by placing reliance on the decision of Hon'ble Rajasthan High Court in the case of CIT Vs. Abdul Karim Stone Contractor reported in 225 ITR 1032 (Raj) , wherein it was held that dumpers would be eligible for extra depreciation and investment allowance and they would be part of the machinery. Further, the ld AR placed reliance on the CBDT Instruction F. No. 202/34/72-IT(A II) dated 15.03.1975 wherein, it had directed that the test as to whether a particular vehicle was a road transport vehicle or not would be the test of the use to which the vehicle was ordinarily put and not merely the fact that it is capable of moving on the roads. The board expressed the views the dumpers and tippers could not be treated as road transport vehicle within the meaning section 33(1) of the Act. The ld AR also placed reliance on the decision of the Hon'ble Madras High Court in the case of CIT Vs. Bajrang Enterprises reported in 258 ITR 448 (Mad). For the sake of convenience, the said order is reproduced below:-
"The question referred to us at the instance of the Revenue is:
Page | 25 "Whether, the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the assessee is entitled to allowance under section 32A in respect of dumpers used in the business of mining operation on contract?"
The assessment 1980-81.
2. The assessee which owned dumpers was, during the relevant assessment year, using the terms of a contract for the purpose of mining, the contract being with the owner of the mine, Dalmia Magnesite Corporation Ltd. The claim for investment allowance on those dumpers by the assessee was negatived by the Assessing Officer, but was allowed by the Commissioner and the Commissioner's order was upheld by the Tribunal. The Commissioner, in the course of his order, has referred to a circular issued by the Central Board of Direct Taxes and this is what the Commissioner has observed in relation to that circular:
"I find that the Central Board of Direct Taxes had occasion to consider the question of allowance of development rebate to dumpers and tippers though they were registered under the Motor Vehicles Act. In the Board's Instruction F. No. 202/34/72-IT(A-II), dated March 15, 1975, the Board had directed that the test as to whether a particular vehicle was a road transport vehicle or not would be the test of the use to which the vehicle is ordinarily put and not merely the fact that it is capable of moving on the roads. The Board expressed the view that dumpers and tippers could not be treated as road transport vehicles within the meaning of section 33(1) of the Act."
3. By the standard laid down by the Board itself, it is clear that the dumpers in this case, which were being used for mining purposes and not merely for carrying goods on the roads were not required to be treated as motor transport vehicles. The investment in the dumpers having been made by the assessee and the dumpers having been used for the purpose of mining, investment allowance was clearly allowable and had rightly been allowed by the Commissioner and the Tribunal.
4. We therefore answer the question referred to us in favour of the assessee and against the Revenue."
24.4. Respectfully following the same, we hold that the assessee would be eligible of additional depreciation on dumpers u/s 32(1)(iia) of the Act in the sum of Rs. 1,59,79,836/-. Accordingly, ground No. 6 is allowed.
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25. Ground No. 7 is consequential to ground No. 6.
26. Ground No. 8 is only challenging the action of the ld CIT(A) who had refused to admit the additional grounds raised before him on the contention that the new claims cannot be made otherwise than by way of revised return. This is completely contrary to the last paragraph of the Hon'ble Supreme Court decision in the case of Goetze India Ltd reported in 284 ITR 323. Hence, ground No. 8 is allowed.
27. Ground No. 11 raised by the assessee is claiming deduction on account of education cess was stated to be not pressed by the ld AR at the time of hearing. The same is reckoned as a statement made from the Bar and accordingly dismissed as not pressed.
28. The ground No. 10 raised by the assessee is seeking directions to the ld AO for allowing the claim of expenditure on account of provision for leave encashment in the sum of Rs. 26,14,499/-. This matter requires factual verification by the ld AO and hence we deem it fit and appropriate to restore this to the file of the ld AO for de novo adjudication in accordance with law. The ld AO shall consider the provision of Section 43B(f) of the Act and also the decision of the Hon'ble Supreme Court in the case of Union of India Vs. Exide Industries ltd reported in 315 CTR 62 (SC) while deciding the issue.
29. In the result, the appeal of the assessee is partly allowed for statistical purposes.
Page | 27 ITANo. 3877/Del/2017 for AY 2011-12- Assessee appeal ITA NO 3877/Del/2017 Corresponding to AY 2010-11 of Assessee Appeal Ground No. 1 Ground No. 1 Ground No. 2 Ground No. 11 Ground No. 3 Ground No. 8 Ground No. 4 Ground No. 12 Ground No. 5 Ground No. 13 Ground No. 6 Ground No. 10 Ground No. 9 Ground No. 15
30. Ground No. 7 raised by the assessee for AY 2011-12 is identical to additional ground No. 3 raised for AY 2009-10 supra. The decision rendered by us hereinabove for additional Ground No. 3 in AY 2009-10 shall apply mutatis mutandis for ground No. 7 of assessee appeal in AY 2011-12 except with variance in figures.
31. Ground No. 8 raised by the assessee for AY 2011-12 is identical to additional ground No. 5 raised for AY 2009-10 supra. The decision rendered by us hereinabove for additional Ground No. 3 in AY 2009-10 shall apply mutatis mutandis for ground No. 8 of assessee appeal in AY 2011-12 except with variance in figures.
32. In the result, the appeal of the assessee is partly allowed for statistical purposes.
ITA No. 2575/Del/2018 AY 2012-13- Assessee appeal33. Ground No. 1 raised by the assessee for AY 2012-13 is identical to ground No. 10 for AY 2010-11 supra. The decision Page | 28 rendered thereon shall apply with equal force for Ground No. 1 in AY 2012-13 except with variance in figures.
34. Ground No. 2 raised by the assessee for AY 2012-13 is identical to ground No. 11 for AY 2010-11 supra. The decision rendered thereon shall apply with equal force for Ground No. 2 in AY 2012-13 except with variance in figures.
35. Ground Nos. 3 to 6 raised by the assessee are challenging the transfer pricing adjustment made with respect to corporate guarantee furnished by the assessee to its Associated Enterprises (AEs). As per the statement of facts filed before the ld CIT(A), the assessee had provided corporate guarantee for various Associated Enterprises (AEs) as under:-
A. For OCL Global Ltd to Indian Ocean International Bank Ltd (O/s-Rs. 3,02,99,640) and SBI Mauritius Ltd (O/s- Rs. 5,15,30,000) for part financing the acquisition of 90% of equity shares of OCL China and for capital expenditure respectively.
B. For OCL China Ltd to State Bank of India, Shanghai Branch (O/s- Rs. 7,72,95,000) for working capital purposes.
35.1. The assessee pleaded that the furnishing of corporate guarantee is not an international transaction u/s 92B of the Act and the same being in the nature of shareholder's activity, no charges are warranted to be recovered from the AEs. The ld TPO however disregarded the contentions and determined the Arm's Length Price (ALP) of issuance of corporate guarantee @1.15 % of the corporate Page | 29 guarantee amount and made a transfer pricing adjustment of Rs.
18,29,934/-. The ld CIT(A) by placing reliance on the decision of the Hon'ble Bombay High court in the case of CIT Vs. Everest Canto Cylinder Ltd reported in 378 ITR 57 (Bom) determined the ALP of corporate guarantee @0.5% per annum and granted partial relief to the assessee.
35.2. We find that the ld CIT(A) had followed the decision of Hon'ble Bombay High court in the case of CIT Vs. Everest Canto Cylinder Ltd referred supra wherein the ALP of corporate guarantee had been determined at 0.5% of value of guarantee and hence, we do not find any infirmity in the said order. However, the other arguments of the assessee that furnishing of corporate guarantee per se is not an international transaction and is merely only a shareholder's activity not warranting any recovery of fees from the AEs had to be decided against the assessee as it is impliedly an international transaction and need to be benchmarked separately. It is well settled that as per the jurisprudence of the Chapter X of the Income Tax Act, the assessee would not have extended the corporate guarantee to a third party in similar circumstances. Hence, issuance of corporate guarantee had to be construed as a separate international transaction within the meaning of Section 92B of the Act and need to be benchmarked separately by determining the Arm's Length Price thereon. Hence, the contentions of the assessee are hereby dismissed and we hold that the ld CIT(A) had rightly directed the benchmarking of corporate guarantee @0.5% as ALP. Accordingly, the ground Nos. 3 to 6 are partly allowed.
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36. Ground Nos. 7 and 8 are challenging the confirmation of disallowance of Rs. 1.75 crores u/s 35(1)(ii) of the Act in respect of contribution to Herbicure Healthcare Bio Herbal Research Foundation.
36.1 We have heard the rival submissions and perused the material available on record. During the year under consideration, the assessee contributed Rs. 1 crore to Herbicure Healthcare Bio Herbal Research Foundation and claimed weighted deduction @175% of the amount contributed u/s 35(1)(ii) of the Act. The ld AO based on the information received from Investigation Wing contended that the said organization was merely an entry provider and a bogus entity. Accordingly, contribution made to such bogus entity would not be eligible for any deduction much less weighted deduction u/s 35(1)(ii) of the Act. This action of the ld AO was upheld by the ld CIT(A).
36.2. The ld AR before us submitted that the issue in dispute is squarely covered in favour of the assessee by the following decision of various Tribunals:-
a) Crescent Organics Pvt Ltd vs DCIT in ITA No. 1252/Mum/2019 dated 14-12-2020
b) Riddhi Buildcon Pvt Ltd vs DCIT in ITA No. 124/Ahd/28 dated 09-04-2021
c) Surendra Kumar Kapur vs DCIT in ITA No 1354/Kol/2023 dated 14-08-2024 Page | 31
d) DCIT vs Desmet Reagent Pvt Ltd in ITA No. 15/Kol/2017 dated 10-10-2018 36.3. The assessee case is that it had made contribution to an institution which is duly recognized as Scientific and Industrial Research Organization by Department of Science and Industrial Research (DSIR), Ministry of Science and Technology, Govt of India.
The said institution is duly registered u/s 12AA of the Act with DIT(Exemptions), Kolkata and had been duly notified for approval as an approved institution for the purposes Section 35(1)(ii) of the Act in the Gazette of India dated 14.03.2008. Contribution to the said institution had been made by the assessee through RTGS. The assessee had not received any communication either from the institution or from the Income Tax Department stating that the approval granted to the said institution had been withdrawn. None of these facts could be controverted by the lower authorities except drawing an adverse inference by placing reliance on the report of the Investigation Wing which is also not provided to the assessee for rebuttal. Hence, we are constrained to follow the decision of various Tribunals referred supra wherein it was held that weighted deduction u/s 35(1)(ii) of the Act would be admissible to the donor on contributions made to Herbicure Healthcare Bio Herbal Research Foundation. Respectfully following the same, the ground Nos. 7 and 8 raised by the assessee are allowed.
37. Ground No. 9 raised by the assessee is challenging the confirmation of disallowance of provision for doubtful debts Page | 32 amounting to Rs. 74,28,835/- while computing book profit u/s 115JB of the Act.
37.1 We have heard the rival submissions and perused the material available on record. The assessee claimed deduction on account of provision for bad and doubtful debts both under the normal provision as well as in the computation of book profits u/s 115JB of the Act. However, with regard to allowability of same while computing the book profit u/s 115JB of the Act, we find that the said item squarely falls in Explanation 1(i) of Section 115JB(2) of the Act wherein, the subject mentioned item need to be added back to the book profit u/s 115JB of the Act. For the sake of convenience, the clause 1(i) is reproduced herein below:-
"The amount or amounts set aside as provision for diminution in the value of any assets"
37.2 This clause has been inserted by Finance No. 2 Act 2009 with retrospective effect from 01.04.2001 and hence, the claim of the assessee is contrary to the aforesaid provision of the Act. Accordingly, the ground No. 9 raised by the assessee is dismissed.
38. Ground No. 10 is general in nature and does not require any specific adjudication.
39. In the result, the appeal of the assessee is partly allowed for statistical purposes.
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ITA No. 3110/Del/2018 for AY 2012-13- Revenue Appeal
ITA NO 3110/Del/2018 Covered by ground of different
AY 2012-13 (Revenue) AYs
Ground No. 1 Additional Ground No. 1 of
assessee for AY 2009-10
Ground No. 2 Ground Nos. 4 to 6 of
assessee for AY 2009-10
Ground No. 3 Ground No. 2 and 3 of
assessee in AY 2009-10
Ground No. 4 Ground No. 1 of revenue
appeal in AY 2008-09
Ground No. 5 Additional Ground No. 3 of
assessee for AY 2009-10
Ground No. 6 Additional Ground No. 5 of
assessee for AY 2009-10
Ground No. 7 Ground Nos. 3 to 6 of
assessee for AY 2012-13
adjudicated hereinabove.
40. Ground No. 8 raised by the revenue is only challenging the action of the ld CIT(A) in allowing additional TDS credit of Rs. 1,34,532/-. We find that the ld CIT(A) had merely directed the ld AO to examine the TDS credit and decide as per law. Either way, this matter requires factual verification of the ld AO and hence, we find that the ld CIT(A) had rightly restored this issue to the file of the ld AO. Further, the additional claim made by the assessee could be entertained by the appellate authority which is very clearly evident from the last paragraph of the decision of the Hon'ble Supreme Court in the case of Goetze India Ltd reported in 284 ITR 323 (SC). Hence, the ground No. 8 raised by the revenue is dismissed.
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41. Ground No. 9 raised by the revenue is to be allowed in view of the decision of the Hon'ble Supreme Court in case of Checkmate Services Pvt. Ltd Vs. CIT reported in 448 ITR 518 (SC) wherein, it was held that the employees' contribution to PF/ESI which was remitted after the due date prescribed under the respective legislation would not be allowed as deduction u/s 36(1)(va) of the Act.
42. Ground no. 10 raised by the revenue is general in nature and does not require any specific adjudication.
43. In the result, the appeal of the revenue is partly allowed for statistical purposes.
44. To sum up Sl ITA AY Filed by Result No.
1. 4069/Del/2015 2008-09 Assessee Partly Allowed for statistical purposes
2. 4070/Del/2015 2009-10 Assessee Partly Allowed for statistical purposes
3. 1291/Del/2017 2010-11 Assessee Partly Allowed for statistical purposes
4. 3877/Del/2017 2011-12 Assessee Partly Allowed for statistical purposes
5. 2575/Del/2018 2012-13 Assessee Partly Allowed for statistical purposes
6. 3768/Del/2015 2008-09 Revenue Dismissed
7. 3815/Del/2015 2009-10 Revenue Dismissed Page | 35
8. 3110/Del/2018 2012-13 Revenue Partly allowed for statistical purposes Order pronounced in the open court on 24/04/2026.
-Sd/- -Sd/-
(SATBEER SINGH GODARA) (M BALAGANESH)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 24/04/2026
A K Keot
Copy forwarded to
1. Applicant
2. Respondent
3. CIT
4. CIT (A)
5. DR:ITAT
ASSISTANT REGISTRAR
ITAT, New Delhi
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