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2024 (6) TMI 1133 - AT - Income TaxIssues Involved: 1. Disallowance of depreciation on unverified purchases and other expenses. 2. Disallowance of depreciation on goodwill on amalgamation. 3. Transfer Pricing Adjustment on letter of comfort. 4. Initiation of penalty proceedings u/s 271(1)(c). 5. Allowability of mark to market loss as deduction u/s 37(1). 6. Disallowance of sales promotion expenses. 7. Allowability of ESOP expenses. 8. Weighted deduction u/s 35(2AB). 9. Deduction u/s 10AA. 10. Deduction of Education Cess. 11. Pre-commencement expenses. Summary: 1. Disallowance of Depreciation on Unverified Purchases and Other Expenses: The assessee's appeal on this ground was partly allowed for statistical purposes. The ITAT directed the AO to delete the disallowance of consequential depreciation on unverified expenses and remitted the issue of consequential depreciation on unverified purchases back to the AO for fresh examination, following the decision of the Co-ordinate Bench in the assessee's own case for AY 2009-10. 2. Disallowance of Depreciation on Goodwill on Amalgamation: The ITAT remitted the issue back to the AO with directions similar to those given for AY 2010-11. The depreciation on goodwill claimed during the year under consideration was consequential and covered by the earlier decision. 3. Transfer Pricing Adjustment on Letter of Comfort: The ITAT deleted the TP adjustment made by the TPO, holding that the letter of comfort given by the assessee did not constitute a financial guarantee warranting a TP adjustment. The ITAT relied on the terms of the letter of comfort and the decision of the Co-ordinate Bench in the case of Tata International Ltd. Vs. ACIT. 4. Initiation of Penalty Proceedings u/s 271(1)(c): This issue was deemed consequential and did not warrant separate adjudication. 5. Allowability of Mark to Market Loss as Deduction u/s 37(1): The ITAT restored this issue to the AO with directions similar to those given in the assessee's own case for AY 2012-13, following the decision of the Hon'ble Bombay High Court in the case of CIT vs. M/s D Chetan & Co. 6. Disallowance of Sales Promotion Expenses: The ITAT upheld the AO's disallowance of sales promotion expenses, as conceded by the assessee's AR. 7. Allowability of ESOP Expenses: The ITAT upheld the CIT(A)'s decision allowing the deduction towards ESOP expenses claimed by the assessee, following the decision of the Co-ordinate Bench in the assessee's own case for AY 2009-10 and AY 2010-11. 8. Weighted Deduction u/s 35(2AB): The ITAT upheld the CIT(A)'s decision allowing weighted deduction towards clinical trial expenses outside the in-house facility, following the decision of the Co-ordinate Bench in the assessee's own case for AY 2010-11. 9. Deduction u/s 10AA: The ITAT remitted the issue back to the AO for examination, directing the AO to decide in accordance with the decision of the Co-ordinate Bench in the case of Reliance Industries Ltd. 10. Deduction of Education Cess: The assessee withdrew the additional ground regarding the deduction of education cess, and hence it was dismissed as withdrawn. 11. Pre-commencement Expenses: The ITAT upheld the CIT(A)'s decision allowing the pre-commencement revenue expenses incurred at Pithampur SEZ Plant II and Nagpur SEZ Plant, following the decision of the Co-ordinate Bench in the assessee's own case for AY 2010-11. Conclusion: The appeals were disposed of with directions for fresh examination or upholding of CIT(A)'s decisions on various grounds, following precedents set in the assessee's own case or similar cases.
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