2023 (4) TMI 49 - ITAT DELHI

Disallowance of Excise duty on vehicles and R & D cess on the vehicles - HELD THAT:- We find that the Co-ordinate Bench of the Tribunal in the earlier assessment year AY 2009-10 [2018 (10) TMI 1398 - ITAT DELHI] have considered the identical grounds raised by the assesses in respect of the disallowance in respect of excise duty and R & D Cess on vehicles u/s 43B of the Act and granted relief to the assessee. The Revenue has not brought to our notice any other binding precedents contrary to the decisions of the Tribunal in support of the impugned additions.

Disallowance u/s 43B in respect of Custom duty paid in respect of inputs imported by the assessee company - HELD THAT:- As gone through the orders of the authorities below. The Revenue has not disputed the fact that the identical issue in earlier years has been decided in favour of the assessee by the Co-ordinate Benches of the Tribunal [2009 (5) TMI 1013 - ITAT DELHI], [2012 (10) TMI 1113 - ITAT DELHI], [2013 (8) TMI 594 - ITAT DELHI], [2015 (9) TMI 20 - ITAT DELHI], [2016 (5) TMI 1469 - ITAT DELHI], [2017 (11) TMI 1632 - ITAT DELHI], [2018 (10) TMI 1398 - ITAT DELHI] and the same has been affirmed by the Hon’ble Jurisdictional High Court [2017 (12) TMI 536 - DELHI HIGH COURT], [2017 (12) TMI 634 - DELHI HIGH COURT]. The Revenue has not brought any contrary binding precedents in support of its contention. Therefore we do not see any good reason to affirm the finding of lower authorities, the Ground Nos.3.5 raised by the assessee is thus allowed and the AO is hereby directed to delete the impugned disallowance.

Disallowance in respect of Excise duty actually paid on purchased inputs included in RG 23A Part II - HELD THAT:- We find that under the identical facts, the Co-ordinate Bench of this Tribunal in assessee’s case for the Assessment Year 2009-10 [2018 (10) TMI 1398 - ITAT DELHI] had remanded back the issue to the file of the AO to verify the claim as per direction of the Hon’ble High Court and if found in order deduction be allowed for the amount forming part of RG 23A to the extent, it has been directly paid to custom authorities. The Revenue has not brought to our notice any other contrary binding precedent. Therefore, for the same reasoning, the issue is restored to the file of the AO to verify and give relief of set off of duty forming part of RG 23A balance to the extent duty directly paid to custom authorities in the light of the judgment of Hon’ble High Court. Thus, Ground raised by the assessee are allowed for statistical purposes.

Disallowance in respect of custom duty paid to be adjusted against excise duty payable on finished products and disallowance in respect of custom duty of the goods in transit/under inspection u/s 43B - HELD THAT:- The similar issues were decided for the Assessment Year 2009-10 and also in earlier assessment years. Therefore, respectfully following the binding precedents as relied by the assessee(supra), Ground Nos. 3.8 to 3.9 raised by the assessee are allowed. The AO is hereby directed to delete the impugned disallowance of custom duty.

Disallowance of deduction us 43B - custom duty paid and included in valuation of closing stock - HELD THAT:- Revenue has not disputed the fact that similar issue also arose for consideration of the decision of the Co-ordinate Bench of the Tribunal in assessee’s own case wherein the Tribunal has respectfully following the binding precedents as cited supra had decided the issue in favour of the assessee. The Revenue has not brought any contrary binding precedents to our notice to take a different view. Therefore, we do not see any reason to deviate from the finding of Co-ordinate Bench of the Tribunal. Decided in favour of assessee.

Custom duty and the sales tax paid under protest - whether deduction u/s 43B of the Act, is allowable to the assessee even if the statutory dues related to custom duty and sales tax are paid under protest? - HELD THAT:- Under the identical facts, the Co-ordinate Bench of this Tribunal in the case of Euro RSCG Advertising (P) Ltd. [2012 (7) TMI 525 - ITAT MUMBAI] has held that service tax liability alongwith interest paid on show cause notice issued by Service Tax Authority is allowable deduction u/s 43B of the Act in the year under in which the payment was made irrespective of the fact that such demand was paid under protest and the matter was sub-judiced to the authority. Further, Ld. Counsel for the assessee has pointed out that the Tribunal has decided the issue in favour of the assessee in assessee’s own case - Ground Nos. 3.11 to 3.12 raised by the assessee are allowed.

Disallowing the claim of the assessee for withdrawal of add back as made in the computation of taxable income being the amounts disallowed in earlier years u/s 43B - HELD THAT:- Therefore, taking a consistent view the issue is hereby restored to AO to decide the issue in the light of directions of the Tribunal in AY 2006-07 [2015 (9) TMI 20 - ITAT DELHI] in Asseesse’s own case. The grounds of appeal are allowed for statistical purpose.

Disallowance u/s 14A r.w.r. 8D - HELD THAT:- We do not agree to this submission of assessee regarding disallowance of administrative expenses as per Rule 8D. Looking to the volume of investment made by the assessee company, the assessee company was required to give justification for the suo-moto disallowance made in this regard as to why the disallowance as per Rule 8D of the Rules, should not be made. The contention of the assessee is that for making investment the surplus interest free fund was utilized and no separate infrastructure is required to maintain for overseeing the transaction made out of surplus fund. We are of the considered view that the assessee was required to justify the suo-moto disallowance as to why the provision of Rule 8D of the Rules should not be made applicable on the facts of the present case. Therefore, we restore this issue to the file of AO for a limited purpose to verify the claim of the assessee regarding administrative expenses incurred for maintaining such huge investment. Thereafter, AO would make disallowance as per law. Thus, Ground Nos. 5 to 5.6 raised by the assessee are partly allowed for statistical purposes.

Nature of expenses - expenditure incurred on account of royalty holding same to be capital expenditure - HELD THAT:- The Tribunal in [2018 (10) TMI 1398 - ITAT DELHI] was pleased to decide the issue in favour of the assessee.

Disallowance of R&D cess on royalty holding that the cess also partake character of the royalty without appreciating that royalty was paid to SMC wherein R&D cess was paid to the Indian Government - HELD THAT:- We find that identical ground was raised by the assessee in the earlier AY in [2018 (10) TMI 1398 - ITAT DELHI] decided the issue in favour of the assessee.

Disallowance of excise duty paid by the assessee during the relevant previous year - HELD THAT:- As we direct the Assessing Officer to allow the deduction representing the excise duty paid by the appellant during the relevant previous year.

Disallowance being the expenditure provided on estimated basis on account of Foreseen Price Increase (“FPI”) - HELD THAT:- We find that identical ground was raised by the assessee in the earlier AY in [2018 (10) TMI 1398 - ITAT DELHI] for AY 2009-10. The Co-ordinate Bench decided the issue in favour of the assessee.

Disallowance of expenditure incurred on account of discharging Corporate Social Responsibility (“CSR”) - HELD THAT:- As decided in assessee own case the expenditure has to be allowed because ultimately the assessee was publicizing its product at the prominent places by maintaining them such as parks and this has direct impact on the sales promotions of the assessee company.

Allowance of club expenditure confirmed.

Treating gains from sale and purchase of mutual funds as “business income” as against the same being declared under the head “capital gains” by the assessee - HELD THAT:- Law is well settled now that intent is required to be examined whether it is for investment or otherwise for business of course to arrive at any conclusion certain factors need to be kept in mind. If such factors point towards business activity certainly then any surplus arising would partake character of business profit however, if it for parking surplus fund or is mandatorily made under government policy or otherwise then it will fall in category of investment. Therefore, Considering the totality of the facts, to verify the claim of the assessee that the transaction in question are pure investments by the assessee, the impugned disallowance is hereby set aside and the issue is restored back to the file of AO for decision afresh. The AO would consider all the objections of the assessee in the light of binding precedents.

Disallowance of provision for warranty - HELD THAT:- We respectfully following the judgement of Hon’ble Jurisdictional High Court in assessee’s own case [2011 (9) TMI 1240 - DELHI HIGH COURT] for the AYs 1998-99 and 1997-98. Therefore, we hereby, direct the AO to allow the claim of the assessee and delete the addition.

TDS u/s 195 - disallowance of purchases on account of non-deduction of tax from payment made to SMC by invoking the provision of section 40(a)(i) - HELD THAT:- After considering the totality of facts and in the light of the judicial pronouncements we find merit in the contention of the assessee even if it is assumed that there was PE even then correct attribution of profit is required to be made. To meet the ends of justice we hereby set aside the issue to the file of AO. The impugned disallowance is hereby set aside. The AO is hereby directed to decide the issue afresh after adjudicating all the objections of the assessee. The Ground are allowed for statistical purpose only.

Transfer pricing adjustment - international transaction of payment of royalty entered into by the appellant - HELD THAT:- Respectfully following the decision of the Co-ordinate Bench of the Tribunal in AY 2009-10 [2018 (10) TMI 1398 - ITAT DELHI] in assessee’s own case, we hold that the AO was not justified in making transfer pricing adjustment. We hereby, direct the AO to delete the same.

Not allowing credit of TDS certificates - HELD THAT:- AO is directed to verify the claim of the assessee regarding additional TDS certificate and give credit of the same in accordance with law. Thus ground of appeal raised by the assessee is hereby, allowed.

Deduction of claim made u/s 35(2AB) - HELD THAT:- We find that Ld. DRP followed the decision of Co-ordinate Bench of the Tribunal [2014 (4) TMI 531 - ITAT MUMBAI] wherein Co-ordinate Bench of the Tribunal was pleased to direct the AO to verify the fact and to examine whether any order of approval for in house in R&D facility was issued for the relevant Assessment Year. The assessee was also directed to provide all necessary evidences if such an order is available and even if it is signed by the Scientist “G” on behalf of the Secretary, DSIR, has been issued by the prescribed authority. We do not see any reason to deviate from the view of the Coordinate Bench (supra). Moreover, the Revenue has not brought any other binding precedents to our notice therefore, we do not see any reason to interfere in the finding of Ld.DRP, the same is hereby affirmed. Thus, grounds raised by the Revenue are rejected.