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2023 (10) TMI 772 - AT - Income TaxTP Adjustment - Corporate Guarantee addition - HELD THAT - This issue stands covered by the Co-ordinate Bench of ITAT in assessee s own case in 2022 (5) TMI 685 - ITAT DELHI direct that the adjustment in respect of corporate guarantee provided to AEs be determined at date of 0.5% instead of 1.3% determined by the revenue. Provision made for sales incentive under Shahenshah Scheme - Claim disallowed as the provision made by the assessee was not based on any scientific method and there is an element of contingent liability and therefore the sum is not allowable - HELD THAT - This issue stands covered by the Co-ordinate Bench of ITAT in assessee s own case 2022 (5) TMI 685 - ITAT DELHI decided the issue in favour of the assessee by holding that the provision made by the assessee in respect to Shahenshah Scheme to be on scientific basis. Thus we hold that the Revenue was not justified in making the addition. Interest on FDRs/Deduction u/s 80-IC - HELD THAT - As decided in assessee s own case 2022 (5) TMI 685 - ITAT DELHI held that the Revenue was not justified in denying the claim of deduction on such income. Before us, Revenue has not pointed any contrary binding decision in its support. We therefore, hold that AO not justified in denying the claim of deduction u/s 80IC of the Act and thus direct the AO to grant deduction u/s 80IC on the interest income earned by the assessee. Foreign Travel Expenditure - expenses have been incurred in connection with travel to China by the staff of the company - HELD THAT - The details have been mentioned at page no. 137 of the paper book which gives details of starting date, ending date, fair, boarding, lodging, conveyance, telephone and other expenses. In total 15 trips have been made by the employees of the company. Since, the expenses are incurred in connection with business of the assessee, we hold that no disallowance on this account is called for. R D Expenses - Allowability of expenses u/s 35(2) - R D expenses consist of establishment expenses incurred at R D units for which application for approval has not been filed during the year - HELD THAT -The expenses as detailed consists of employee remuneration 42 employees who are engineers and managers different R D units. The expenses are detailed of the paper book which consists of employee remuneration 42 employees who are engineers and managers placed at 7 different R D units. The expenses are not covered u/s 35(2) - The assessee has not claimed the same u/s 35(2) but the expenses are allowable u/s 35(1) @ 100%. Since, the ratio of incurring of expenses per se is not in dispute, we hold that the assessee is eligible to claim expenses u/s 35(1). The approval of the DSIR is not required for claim u/s 35(1)(i). The appeal of the assessee on this ground is allowed. Depreciation u/s 32 - asset put to use on which AY? - date of installation is after the date of the accounting year i.e. 03.04.2011 while the date of installation is 04.03.2011 on account of computerized format.. From examination of the format of the fixed assets installation report, we find that the date of installation and date of put to use is in the format of month, date and year. The page no. 168 of the paper book reflects the date of installation 10/31/2010 which reinforces the month, date and year the format and hence, we hold that the revenue authorities have fallen into error in interpreting the date of installation as April 3rd instead of 4th March. The appeal of the assessee on this ground is allowed.
Issues Involved:
1. Corporate Guarantee 2. Shahenshah Scheme 3. Interest on FDRs/Deduction u/s 80-IC 4. Education cess and TDS 5. Foreign Travel Expenditure 6. R&D Expenses 7. Depreciation Corporate Guarantee: This issue is covered by the Co-ordinate Bench of ITAT in the assessee's own case for A.Y. 2014-15. The Tribunal directed that the adjustment in respect of corporate guarantee provided to AEs be determined at the rate of 0.5% instead of 1.3% as determined by the revenue, relying on judgments of the Hon'ble High Court of Bombay. Shahenshah Scheme: The issue of disallowance of provision made for sales incentive under the "Shahenshah Scheme" was addressed by the Co-ordinate Bench of ITAT in the assessee's own case for A.Y. 2014-15. The Tribunal held that the provision made by the assessee in respect of the scheme is on a scientific basis and thus, the revenue was not justified in making the addition. The appeal on this ground was allowed. Interest on FDRs/Deduction u/s 80-IC: This issue was also covered by the Co-ordinate Bench of ITAT in the assessee's own case for A.Y. 2014-15. The Tribunal held that the interest income earned from fixed deposits, which were required to be maintained as per statutory requirements, is inextricably linked to the main business activity of the assessee and is eligible for deduction u/s 80IC. The appeal on this ground was allowed. Education cess and TDS: These grounds were not pressed by the assessee. Foreign Travel Expenditure: The assessee claimed foreign travel expenses incurred in connection with the business. The Tribunal held that since the expenses are incurred in connection with the business of the assessee, no disallowance on this account is called for. The appeal on this ground was allowed. R&D Expenses: The R&D expenses consisted of establishment expenses incurred at R&D units. The Tribunal held that the expenses are allowable u/s 35(1) @ 100% and that the approval of DSIR is not required for claim u/s 35(1)(i). The appeal on this ground was allowed. Depreciation: The issue of depreciation and additional depreciation on machinery was addressed, where the AO disallowed the claim based on the installation date. The Tribunal, after examining the evidence, held that the installation date was March 4th, 2011, and not April 3rd, 2011, as interpreted by the revenue authorities. The appeal on this ground was allowed. Conclusion: In the result, the appeal of the assessee was allowed. The order was pronounced in the open court on 11/10/2023.
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