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TMI Blog2013 (12) TMI 1058X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that:- Following assessee's own case for the assessment year 2006-07 - All the relevant debits and credits (purchases, sales etc) in the profit and loss account should be grossed up – The issue was restored for fresh decision. Disallowance under section 14A – Held that:- Following assessee's own case for the assessment year 2006-07 - Rule 8D is not applicable prior to assessment year 2008-09 – The quantum of disallowance should be computed using some reasonable method - The quantum of disallowance was restricted to 2% of dividend income – The issue was restored for fresh decision. Validity of ground for appeal u/s 246A - Credit for TDS not granted – Held that:- Following M. Chockalingam & M. Meyyappan v. CIT [1962 (10) TMI 48 - SU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncluded that use of patent itself constitutes royalty as is evident from clause (iii) of the Explanation. He was therefore of the view that assessee ought to have deducted tax at source and consequently had made addition to income by invoking provisions of section 40(a)(i) of the Income tax Act. 2.2 On appeal, the Ld. CIT(A) held that the purchase consideration paid by the assessee was predominantly payment for use of patents and the purchase price was nothing but payment of royalty requiring assessee to deduct tax at source which had not been done. Consequently, confirmed the disallowance/addition made by the AO. Aggrieved by the decision, the assessee has raised this ground in the appeal before us. 2.3 Before us, the Ld.Counsel for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the payment for purchase of the catalyst includes the payment for the purchase of any of the description mentioned in the explanation to section 9(1)(vi) so as to qualify the consideration as 'royalty' for the purposes of the Act. Thus, the findings of the AO and Ld. CIT(A) on this issue, in our view are based on presumptions and assumptions on which the impugned disallowance/addition have been made. Nor the assessee can be expected to rebut the presumptions and assumptions of the Revenue which are not supported by proper evidence. In view of that matter, we set aside the decision of the Ld. CIT(A) on this count and direct the AO to delete the impugned addition. Accordingly, Ground No. 1 is allowed. 3. Ground No. 2 is related to the is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs, it has been pointed out that this issue is covered by the decision of the ITAT in the assessee's own case for the assessment year 2006-07 wherein it has been held as follows: "We have carefully considered the submissions of the rival parties and perused the material available on record. We find that there is no dispute that following the decision of Hon'ble jurisdictional High Court in Godrej Boyce Mfg. Co. Ltd. (supra), Rule 8D is not applicable prior to assessment year 2008-09, therefore, the AO and the ld. CIT(A) were not justified in making the disallowance under Rule 8D of Rs. 22,11,718/-. However, keeping in view the law laid down by the Hon'ble jurisdictional High Court (supra) that the AO is duty bound to determine the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e set aside the decisions of the AO and Ld. CIT(A) on this count and direct the AO to ascertain the amount of contribution made by the assessee within the grace period and allow the same. Accordingly, Ground No. 4 is treated as allowed for statistical purpose. 6. Since Grounds No. 5 6 are not pressed by the assessee, we are not adjudicating the same. 7. Ground No. 7 is against AO not granting credit for TDS amounting to Rs. 22,980/- and the dismissal of the relevant ground of appeal by the Ld. CIT(A) on the reason that this is not a valid ground of appeal u/s 246A of the Income tax Act. 7.1 It is relevant to point out that the issue raised in this ground is covered by the judgment of the Hon'ble Supreme Court in M. Chockalingam M. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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