2023 (6) TMI 527 - HC - Income Tax

Disallowance of license fee - HELD THAT - This issue is covered by the judgment of this Court in M/s Nestle India Ltd 2011 (5) TMI 566 - DELHI HIGH COURT . Addition u/s 14A - Tribunal sustaining the view of the CIT (Appeals) in reducing disallowance - HELD THAT - The view taken by the Tribunal cannot be found fault with. The Tribunal accepted the suo motu disallowance made under Section 14A by the respondent/assessee to the extent of Rs. 20,13,989/- (for AY 2013-14). We are in agreement with the view taken by the Tribunal, having regard to the judgment of Coordinate Bench in Coforge Ltd s case 2021 (7) TMI 346 - DELHI HIGH COURT . Disallowance of depreciation on account of energy saving and pollution control devices - HELD THAT - According to us, the statutory conditions which are provided in Section 32 of the Act are such that they require the assessee claiming depreciation to establish that the concerned asset has been purchased by the assessee and the same has been put to use. The first aspect is not dispute. The other aspect, clearly, gets demonstrated, as the AO has not disputed the fact that the devices were installed. The level of performance of devices is not a measure based on which the AO could have denied depreciation to the respondent/assessee. Asking the assessee to place on record the comparative chart, in our view, was not imperative, for arriving at a decision whether the assessee should be entitled to depreciation u/s 32 of the Act. We are informed that this view has been affirmed in favour of the respondent/assessee (i.e., concerning the sustainability of claim of depreciation) in AYs 2009-10, 2010-11 and 2011-12, as well.

Summary

Issues:
The appeal concerns Assessment Year (AY) 2013-14 and impugns a common order dated 31.07.2020 passed by the Income Tax Appellate Tribunal. The issues for consideration are:
1. Whether the Tribunal was correct in sustaining the deletion of addition made on account of disallowance of license fee.
2. Whether the Tribunal was right in sustaining the view of the Commissioner of Income Tax in reducing disallowance under Section 14A of the Act.
3. Whether the Tribunal was right in sustaining the deletion made by CIT(A) concerning addition of depreciation on energy saving and pollution control devices.

Disallowed License Fee:
The first issue was found to be covered by a previous judgment of the Court. The Tribunal's decision on this matter was upheld.

Disallowance under Section 14A:
Regarding the second issue, the Tribunal's view was supported by judgments of Coordinate Benches of the Court. The Tribunal accepted the suo motu disallowance made by the assessee, and this decision was found to be in line with legal precedents.

Depreciation on Energy Saving and Pollution Control Devices:
For the third issue, the appellant argued that the Tribunal's conclusion required interference. The AO had disallowed depreciation on pollution control equipment in previous years. However, the Court found that the AO's reasoning was flawed as the assets had been purchased and put to use. The Tribunal's decision on this issue was upheld, stating that no interference was necessary.

Conclusion:
The Court found that the Tribunal had correctly addressed all the issues raised in the appeal. It was concluded that no substantial question of law arose for consideration, and the appeal was consequently disposed of.