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TMI Blog2014 (4) TMI 1091X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case and in law, the Ld CIT(A) erred in allowing relief to assessee when AO made disallowance on account of freight Rs. 32,69,97,710/- and insurance Rs. 3,53,49,404/- which was excluded in total turnover by the assessee while calculating deduction u/s. 10B. 02. On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in allowing relief to assessee, when Section 10B provides for excluding freight and insurance from the 'export turnover', however no such provision to exclude the same from 'total turnover'. 3.1 On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in relying on decision in case of Gems Plus Jewellery India Ltd., 330 ITR 175 (Bom.) when the decision was rendered by Hon'ble High Court in the context of provisions of section 10A, and the issue involved in the instant case is related to Section 10B. 3.2 Without prejudice to the above the decision of the High Court as referred in the case of Gems Plus Jewellery India Ltd. has not been accepted and SLP has been filed by the department. 4.1 On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in relying on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery of goods. It is argued that once it is reimbursement of expenses, 'Freight & Insurance received' cannot be the part of Total Turnover' as intended by Sec. 10B for the purpose of working of deduction. The case of the Assessing Officer is that there is a specific provision to exclude freight and insurance from the export turnover under the explanation 2(iii) to sec. -10B but similar exclusion is not provided in the case of 'total turnover'. However, this issue is squarely covered in favour of the appellant by the decision of the Special Bench in the case of Sak Soft Ltd. ( 121 TTJ 865) wherein the Special Bench held that such expenses have to be excluded both from the export turnover and total turnover in the formula provided in sec.10B(4). This view was affirmed by Bombay High Court in the case of Gem Plus Jewellery India Ltd. reported in 330 ITR 175 wherein it is observed as under: The contention of the revenue was that while freight and insurance charges are liable to be excluded in computing export turnover, a similar exclusion has not been provided for in regard to total turnover. The submission of the revenue, however, missed the point that the express ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Bombay High Court and the Special Bench on the issue, the Assessing Officer is directed to exclude the freight of Rs. 32,69,97,710/- and insurance of Rs. 3,53,49,404/- from the total turnover also and re-compute the deduction allowable under sec.10B. 4.1 Since the Ld.CIT(A) while directing the AO to exclude the Freight and Insurance charges from the total turnover has followed the decision of the Hon'ble jurisdictional High Court in the case of Gems Plus Jewellery India Ltd (Supra) and the decision of the Special Bench of the Tribunal in the case of Sak Soft Ltd. (Supra), therefore, respectfully following the above decisions and in absence of any contrary material brought to our notice, we find no infirmity in the order of the CIT(A). Merely because the Revenue has not accepted the above decision of the Hon'ble High Court and has filed appeal against the said decision will not be a ground to take a contrary view than the view taken by the Hon'ble High Court unless and until the same is reversed. In this view of the matter and in view of the detailed reasoning given by the Ld.CIT(A) directing the AO to exclude the Freight and Insurance charges from the total turnov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stools/chairs are used by the personnel for sitting and keeping the material on them, the Assessing Officer concluded that these are in the category of furniture and cannot be classified as plant & machinery. Accordingly, he recasted the depreciation allowance in respect of the DTA unit and disallowed the excess claim of depreciation amounting to Rs. 10,67,069/-. 5.2 In appeal the Ld.CIT(A) following the order of his predecessor in assessee's own case and various other decisions directed the AO to allow depreciation @15% as against 10% determined by the AO. 5.3 Aggrieved with such order of the CIT(A) the Revenue is in appeal before us. 6. After hearing both the sides, we find the above issue stands decided in favour of the assessee by the decision of the Tribunal in assessee's own case for A.Y. 2005-06 and 2006-07. We find the Tribunal in the consolidated order dated 22-02-2013 for A.Y. 2005- 06 and 2006-07 while deciding the issue for A.Y. 2005-06 at Para 5 of the order has observed as under : "5. The next issue relates to disallowance of depreciation amounting to Rs. 54,213/- by classifying certain items of fixed assets located in manufacturing unit as 'Furniture and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear. The A.O. observed that these sale proceeds were realized on 24.12.2007, which is beyond the time limit and also no extension was obtained from RBI. Before CIT(A) it was argued that the Assessing Officer has not considered the status of 'Export House' accorded to it by the Ministry of Commerce, which confers a privilege of normal repatriation period of 180 to 360 days. However, the Ld.CIT(A) observed that the arguments advanced by the assessee are not legally sustainable. He observed from the invoice that the impugned export was made on 09.05.2006 and proceeds were realized on 24.12,2007, which is beyond the period specified under the section. The assessee has also not furnished any approval from the Competent Authority granting extension of time for realization of export proceeds beyond the specified period i.e. after 30.09.2007. As the export proceeds in respect of the said invoice were realized beyond the prescribed time limit and no extension was granted by the competent authority, the realization in question does not qualify for deduction. In view of the above, the Ld.CIT(A) upheld the action of the AO on the ground that the assessee could not fulfil even the basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble Bombay High Court in the case of CIT Vs. Morgan Stanley Advantage Services Pvt. Ltd. reported in 339 ITR 291 has observed as under (Short notes) : "Export proceeds amounting to Rs. 2.20 crores having not been received by the assessee within six months from the end of the assessment year 2004-05, the assessee submitted an application to the Reserve Bank of India on October 7, 2004, seeking extension of time for realization of the export proceeds. The Reserve Bank of India granted its approval in the context of the provisions of the Foreign Exchange Management Act, 1999, but did not grant any formal approval under section 10A of the Income-tax Act, 1961, even though an application had been made by the assessee in that behalf. The Assessing Officer denied the exemption under section 10A but the Tribunal allowed it. On appeal to the High Court: Held, dismissing the appeal, that the Reserve Bank of India is the competent authority under the 1999 Act. Thus, what section 10A(3) of the Act provides is that the benefits under section 10A(1) would be available if the export proceeds are realised within the time prescribed by the competent authority under the 1999 Act. The Reserve B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it constituted cost of investment. However, the Assessing Officer did not find any merit in the contention of the assessee. He observed that as per sec.48, only such expenses are deductible from the sale consideration of an asset which are wholly and exclusively incurred in connection with the transfer of the asset. According to the Assessing Officer, portfolio management consultants are service intermediaries who carry out the research and analysis about the profitability of the scrips of various companies and keep track on the market conditions and the fees paid by the assessee to such professional managers could not be said to have been incurred wholly and exclusively for the purpose of transfer of the asset. Holding so, the PMS fees claimed by the assessee at Rs. 34,63,969/- from the cost of investment was disallowed by him while computing the capital gains. 11.2 In appeal the Ld.CIT(A) upheld the action of the AO by holding that the expenditure on account of 'PMS' fees is neither cost of acquisition of the shares in question nor cost of improvement there of nor incurred wholly and exclusively in connection with the transfer of assets and therefore the AO is justified in rejec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee. 12. The learned CIT(DR) appearing for the Revenue has not controverted the factual matrix brought out by the learned counsel so however she has relied upon the order of the CIT(A) in support of the case of the Revenue. 13. We have carefully considered the rival submissions and also the precedent in the assessee's own case by way of the order of the Tribunal dated 25.07.2012 (supra). In the said case, the Tribunal considered the allowability of expenditure incurred by way of payment of fees of ENAM Asset Management Company Pvt. Ltd. in terms of the investment agreement dated 01.01.2005, which is precisely the issue before us also. The Tribunal referred to its earlier decision in the assessee's own case for assessment year 2004-05 vide order dated 31st May, 2011 (supra) and noticed that the issue has been decided in favour of the assessee. Thereafter, the Tribunal noted that against the decision of the Tribunal dated 31st May, 2011 (supra), Revenue preferred an appeal before the Hon'ble Supreme Court only on the issue treatment of income from the sale of shares as 'capital gain' or 'business income' and that the Revenue had not preferred any appeal against the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances of the case and in law the Ld.CIT(A) erred in confirming the disallowance of the 'Provision for Leave Encashment' amounting to Rs. 11,40,849/- pertaining to 'DTA' unit ascertained on the basis of actuarial valuation for the eligible employees of the said DTA unit of the Appellant Company.". 13.1 The Ld. Counsel for the assessee fairly conceded that the above issue stands decided against the assessee by the decision of the Tribunal in assessee's own case for A.Y.2005-06 and 2006-07. In view of the above submission of the Ld. Counsel for the assessee and in absence of any objection from the Ld. Departmental Representative the above ground by the assessee is dismissed. 14. Grounds of appeal No.4 by the assessee reads as under: "On the facts and in the circumstances of the case and in law the Ld.CIT(A) erred in confirming the disallowance, as capital expenditure, of foreign expenses of employees amounting to Rs. 18,47,548/- who travelled abroad". 14.1 The Ld. Counsel for the assessee fairly conceded that the above ground is decided against the assessee by the decision of the Tribunal in assessee's now case for A.Y. 2006-07. In view of the above submission by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 16.2 In appeal the Ld.CIT(A) upheld the action of the AO in allowing depreciation @15% in respect of SMF Batteries treating the same as capital expenditure and then normal plant and machinery. 16.3 Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 17. We have considered the rival arguments made by both the sides. We find merit in the submission of the Ld. Counsel for the assessee that SMF batteries are designed to offer reliable consistent and low maintenance power for UPS applications. The UPS segments call for the use of a reliable and power battery system such as SMF batteries. Therefore, functions of SMF batteries are integrated with UPS and used with it. We find the Mumbai Bench of the Tribunal in the case of Godfrey Phillips India Ltd. Vs. DCIT vide ITA No.7682/Mum/2010 for A.Y. 2006-07 and ITA No.8549/Mum/2010 for A.Y. 2007-08 order dated 22-10-2012 held that UPS is automatic Voltage Controller and covered under Energy Saving Device eligible for higher rate of depreciation @80%. The relevant observation of the tribunal reads as under : "5. Ground no.1 of assessee's appeal for the Assessment Year 2006-07 and 2007- 08 is regarding depreciat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hpur Bench in the case of Surface Finishing Equipment (supra), As for the decision of Delhi Bench in the case of Nestle India Ltd. (supra) referred by the Ld DR, there the question was whether UPS could be considered as 'computer' for depreciation rate of 60%. There was no issue or question, whether ft could be considered as an Automatic Voltage Controller" and hence in our opinion that case would not help the Revenue here. Therefore we are of the opinion that assessee was eligible for claiming 100% depredation on UPS. Disallowance of Rs. 6,82,443/- therefore stands deleted. Ground number 3 is allowed." For other years the above decision was followed by the Tribunal. 6. After hearing both the parties, respectfully following the above mentioned decisions of the Tribunal in assessee's own case, we decide this issue in favour of the assessee and allow the ground no.1 of both the appeals filed by the assessee." 17.1 Since SMF batteries are integrated with UPS and used with it, therefore, respectfully following the decision of the Mumbai Bench of the Tribunal in the case cited (Supra) and in absence of any contrary material brought to our notice we hold that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowing the excess claim of depreciation amounting to Rs. 10,67,069/-. 18.2 In appeal the Ld.CIT(A) following the order of his predecessor in assessee's own case for earlier years directed the AO to segregate the assets into two categories, i.e. one falling under the head 'Furniture eligible for depreciation @10%, such as tools, tables, racks etc. and the other items which were being used for carrying out products of the assessee from laboratory to store and falling under the head 'Plant and Machinery' eligible for depreciation @15% like Trolleys etc. 18.3 Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 19. We have considered the rival arguments made by both the sides. We find an identical issue had come up before the Tribunal in assessee's own case for A.Y. 2005-06 and 2006-07. We find the Tribunal at Para 10 and 11 has observed as under : "10. The first issue relates to the action of the CIT(A) in directing the Assessing Officer to apply the functional test and to segregate the furniture into two categories one falling under furniture eligible for depreciation at 15% and the other which are used for carrying products from the laboratories to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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