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TMI Blog2011 (2) TMI 703X X X X Extracts X X X X X X X X Extracts X X X X ..... tails showing that there were regular transaction with those concerns including purchases made or advances given against purchases including bill discounting and reimbursement of expenditure - The appellant has further drawn my attention to the Supreme Court decision in the case of S.A. Builders (2006 -TMI - 3364 - SUPREME COURT) - Decided in favour of assessee. Disallowance u/s. 40(a)(i)- no material is brought on record by the revenue to contradict the factual observations made by the Assessing Officer. It is neither the ground of the revenue that the factual recordings by the CIT(A) were wrong and the issue should be set aside to the Assessing Officer for fresh adjudication on these facts - The only ground of disallowance seems to be that the assessee company has given loans and advances to its subsidiaries and related parties without charging any interest - The test laid down by the Hon'ble Supreme Court in the case of SA Builders has been correctly applied by the first appellate authority - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount as deferred revenue expenditure and claimed Rs. 2.5 crores in each of the assessment years from AY 2002- 2003 to AY 2005-2006. The Assessing Officer examined the claim and was of the opinion that the assessee obtained an enduring benefit and so the amount is of capital in nature and cannot be allowed as deduction. The Assessing Officer relied on following decisions: (i) Chelpark Company Ltd. vs. CIT 191 ITR 249 (Guj) (HC) (ii) CIT vs. Saroj Kumar Poddar 279 ITR 573 (Cal) (HC) (iii) CIT vs. Coal Shipments P. Ltd. 82 ITR 902 (SC) The Assessing Officer held that the payment of Rs. 10 crores made to Rallis India Ltd. is of capital nature. An amount of Rs. 2.50 crores debited by the assessee was added back to the total income of the assessee. 3.2. Before the CIT(A), the assessee made detailed submissions which are extracted in para 4.3 of the CIT(A) order. It was contended that the assessee had not derived any enduring benefit and further the Assessing Officer in earlier two assessment years allowed the claim after scrutiny and rule of consistency should be followed. Accepting the contention of the assessee, the CIT(A) vide para 4.4 held that the benefit was only for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer did not make it an issue in earlier years and allowed the claim. However, in this year the Assessing Officer examined and held that there is an enduring benefit and the expenditure is in the nature of capital expenditure. The facts are similar to the facts considered by the Special Bench of the ITAT, Delhi in the case of Tecumseh India (P.) Ltd. vs. Addl. CIT (2010) 127 ITD 1 (S.B.) (Del.). As per the head note the issue was decided as under: "Assessee was a wholly owned subsidiary of 'Tecumseh- USA'. Tecumseh-USA being a global compressor manufacturer was interested in entering into Indian compressor market. In said process, Tecumseh-USA entered into Memorandum of Understanding (Mou) with Whirlpool India Ltd. through which Whirlpool-India had decided to sell compressors and related operations owned by it at Faridabad and Ballabgarh facilities. In accordance with terms of MoU, both parties entered into an 'asset purchase agreement', whereby Tecumseh-USA through assessee-company agreed to purchase all compressor machineries, equipments and tooling located at Whirlpool- India's Faridabad facility as well as related compressor component assets located at Whirlpool-India's B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s legal principles are concerned, both the parties relied on the orders of the ITAT for the respective claims. In the case of AB Mauria India p Ltd(supra) relied on by the Revenue the issue was with reference to the jurisdiction under Section 263 to revise the order of AO, who without examination allowed the depreciation claimed. In that context the Bench noted that there is no discussion about claim of depreciation on payment of non-compete fee which can not be an asset so as to allow with out examination. The Special Bench in the above referred case of Teecumseh(supra) has also held that it is not necessary that non-compete fees paid has to create monopoly rights. Reliance on the decision of the Hon'ble Supreme Court in the case of Techno Shares and Stocks Ltd (supra) is also not correct as the said decision was rendered in the context of BSE membership rules and the Hon'ble Supreme Court is categorical in stating that "our judgement should not be understood to mean that every business or commercial right would constitute a 'licence' or 'Franchise' in terms of Section 32(1)(ii) of the 1961 Act.". However in the case of ACIT vs Real Image Tech P Ltd 120 TTJ 983 it was held that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluding bill discounting and reimbursement of expenditure. The appellant has further drawn my attention to the Supreme Court decision in the case of S.A. Builders 288 ITR 1. In my considered opinion, as the facts of the case is covered by Supreme Court decision in the above referred case and therefore, this ground is allowed. 5.1. At the outset it was submitted that similar issue came up in earlier year on same facts and the findings of the CIT(A) were upheld by the ITAT in ITA. No. 4011/Mum/2007 dated 3-2-2009 vide para 4.7 as under: "The learned CIT(A) thus allowed the claim of interest u/s. 36(1) (iii) of the Act. As on the issue of disallowance u/s. 40(a)(i) the learned Commissioner-DRs argument is based on the ground that the facts as narrated by the CIT(A) were not before the Assessing Officer and thus, the issue should be set aside to the file of the Assessing Officer. By making this submission, no material is brought on record by the revenue to contradict the factual observations made by the Assessing Officer. It is neither the ground of the revenue that the factual recordings by the CIT(A) were wrong and the issue should be set aside to the Assessing Officer for fresh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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