Income Tax Appellate Tribunal - Mumbai
Castrol India Ltd, Mumbai vs Assessee on 14 November, 2014
„ ,
IN THE INCOME TAX APPELLATE TRIBUNAL "K", BENCH MUMBAI
,
BEFORE : SHRI R.C.SHARMA, AM
&
SHRI VIVEK VARMA, JM
ITA No.8191/Mum/2010
( Assessment Year : 2005-2006)
M/s Castrol India Limited, Vs. DCIT-Range-8(3), Mumbai-20
Technopolis Knowledge Park,
Mahakali Caves Road, Chakala,
Mumbai-400 093
PAN/GIR No. : AAACC 4481 E
( Appellant) .. ( Respondent)
AND
ITA No.8359/Mum/2010
( Assessment Year : 2005-2006)
DCIT-Range-8(3), Mumbai-20 Vs. M/s Castrol India Limited,
Technopolis Knowledge Park,
Mahakali Caves Road, Chakala,
Mumbai-400 093
PAN/GIR No. : AAACC 4481 E
( Appellant) .. ( Respondent)
AND
ITA No.8371/Mum/2010
( Assessment Year : 200 6-2007)
M/s Castrol India Limited, Vs. ADCIT-Range-8(3), Mumbai-20
Technopolis Knowledge Park,
Mahakali Caves Road, Chakala,
Mumbai-400 093
PAN/GIR No. : AAACC 4481 E
( Appellant) .. ( Respondent)
/Assessee by : Shri Apurva Shah &
Shri Dhanesh Bafna
/Revenue by : Shri J.Premanand
Date of Hearing : 28th Oct. 2014
Date of Pronouncement : 14th Nov., 2014
2 ITA Nos.8191,8359&8371/10
ORDER
PER R.C.SHARMA (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 years 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 assessee's eligibility u/s.80IB in respect of different nature of income. 3.1 Learned AR placed on record order of Tribunal in assessee's 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 raised in Ground no. 9 relates to the asessee- 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. Reversal of doubtful debts 21,15,36
5. Insurance claim 5,39,412 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 dated 14th 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, miscellaneous 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 the 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 Unit Rs. 41,67,815 17 3 ITA Nos.8191,8359&8371/10
2. Interest received (in ratio of sales volumes) Rs. 34,69,135
3. Miscellaneous Income (in ratio of sales volume) Rs.23,61,499
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 sources 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 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 801B 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."
3.2 We have considered rival contentions and gone through the order of the Tribunal. In assessee's own case, assessee's claim for deduction u/s.80IB 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. The 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 assessee's own case for the A.Y.2003-04, wherein the issue has been decided by the 4 ITA Nos.8191,8359&8371/10 Tribunal partly against the assessee. The precise observations of the Tribunal at page 20 para 35 are 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 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. Respectfully 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 declined by the Tribunal in assesse's own case by following the decision of Hon'ble 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 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 placed on record order of Tribunal in assessee's 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 heard 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 5 ITA Nos.8191,8359&8371/10 support of the assessee'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 the 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 before 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 assessee's own case the claim of higher rate of depreciation on energy saving devices were declined. Respectfully following the order of the Tribunal in assessee's 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 amount relating to cost sharing was Rs 2,24,25,081 out of which 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 regards 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 services 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 Learned AR placed on record order of Tribunal in assessee's own case for the A.Ys.2002-03, 2003-04 & 2004-05, wherein the matter was 6 ITA Nos.8191,8359&8371/10 remanded back to the file of the TPO for statistical purposes. The precise observations 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 counsel 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 thereof. 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. Keeping 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 subsequent 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 in 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 on 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 only after doing such 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 7 ITA Nos.8191,8359&8371/10 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 statistical 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 assessee's 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 royalty 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 Castrol 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 than 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 Appellant had explicitly mentioned that royalty payable 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 8 ITA Nos.8191,8359&8371/10 exchange inflow and outflow during the period of collaboration. In the said 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 made 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 authority 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 its 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 assessee 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 making 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 disallowed 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 method to 9 ITA Nos.8191,8359&8371/10 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 confirmed 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 order. 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 assessee's own case as stated above. The facts and circumstances during the year under consideration are same.
Respectfully following the 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 the AO at para 13 and by CIT(A) at para 15. The precise observation of the CIT(A) are as under :-10 ITA Nos.8191,8359&8371/10
"Ground no. 12 of the appellant is reproduced as under:-
"12.Iin treating expenditure on advertisement films as capital expenditure Instead of revenue and without prejudice, in not allowing depreciation thereon.
12.1 The Hon'ble 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 capital 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 assessee's 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 the 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 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."
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 advertisement 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.
11 ITA Nos.8191,8359&8371/10
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 found 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 allowing assessee's 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 found that similar issue has been dealt by the Tribunal in assessee's own case for A.Ys. 2002-03, 2003-04 & 2004-05, wherein the matter was remanded back to the file of the TPO for statistical purposes. The relevant observation of the Tribunal has been reproduced above. 11.2 As the facts and circumstances during the year are same, respectfully following the order of the Tribunal in assessee's own case, we restore this ground back to the file of the AO for deciding afresh as per the direction given by the Tribunal 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 assessee's own case in favour of assessee in the A.Y.1998-99.
12.2 As the facts and circumstances of the case during the year under consideration are same, respectfully following the order of the Tribunal, 12 ITA Nos.8191,8359&8371/10 we direct the AO to allow assessee's claim of expenditure 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 para 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 issue 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 given 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 assessee's 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 Tribunal in aforementioned order. We direct accordingly.
14. The next grievance of the assessee relates to disallowance of assessee's 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 13 ITA Nos.8191,8359&8371/10 favour of assessee in respect of insurance claim. The relevant observation of the Tribunal at page 18 para 27 is as under :-
"27. Respectfully following 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 801B 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 assessment year 2006-07 vide para 3, wherein assessee's 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 computing 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 assessee's own case for A.Y.2003-04 at para 31 in favour of assessee. The relevant observation of the Tribunal 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 consideration, 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 Hon'ble Supreme Court in the case of TRF Limited, 323 ITR 397(SC), we 14 ITA Nos.8191,8359&8371/10 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 para 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.21,45,832/- on account of long service award.
This issue is also covered by the decision of this bench of the Tribunal in assessee's 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, resulting 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:-
15 ITA Nos.8191,8359&8371/10
"41. As regards the issue raised in ground no. 2 relating to 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 the 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 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 considered rival contentions and perused the order of the Tribunal in assessee's 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 grievance 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 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. Respectfully following these judicial pronouncement we decide this issue against the assessee and dismissed ground no. 13 of its appeal.
18.2 We have considered rival contentions and perused the order of the Tribunal in assessee's own case for A.Y.2001-02. The issue with regard 16 ITA Nos.8191,8359&8371/10 to claim of depreciation of assets of Silvasa unit was declined by the Tribunal in assesse's own case by following the decision of Hon'ble 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 depreciation on assets of Silvasa unit.
19. In the result, appeals of the assessee (i.e. ITA Nos. 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 court on this 14/11/2014.
/11/2014
Sd/- Sd/-
( ) ( )
(VIVEK VARMA) (R.C.SHARMA)
/ JUDICIAL MEMBER / ACCOUNTANT MEMBER
Mumbai; Dated 14/11/2014
/pkm, PS
Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent.
3. / The CIT(A), Mumbai.
4. / CIT
5. / DR, ITAT, Mumbai
6. Guard file.
//True Copy//
/ BY ORDER,
(Asstt. Registrar)
/ ITAT, Mumbai