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TMI Blog2017 (4) TMI 1434X X X X Extracts X X X X X X X X Extracts X X X X ..... a]. Taking a leaf out of the findings of the Co-ordinate Bench in A.Y. 2006-07, in our considered opinion, upward adjustment at LIBOR rate should meet the ends of justice. We, accordingly, direct the A.O. to charge interest at LIBOR rate. This ground is partly allowed. Interest on Optionally Fully Convertible Debentures subscribed to in sun Pharma Global Inc. - HELD THAT:- Isuue to be decided in favour of the assessee and against the revenue in [2016 (2) TMI 924 - ITAT AHMEDABAD] CIT(A) while deleting the addition has noted that as per the agreement, the interest was payable only if the conversion option was not exercised on the expiry of 5 year period. If at any time during the 5 year period conversion option was exercised and the loan was converted into equity, no interest accrued or become payable - funds were provided by the Assessee as per RBI guidelines and in the immediately next year, the entire loan given to subsidiary was converted into equity shares of Zydus International Pvt. Ltd.- since the Assessee has converted the loan into equity in the immediate next year, there was no question of taxing notional interest. Assessee had not granted interest free loan but inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income - HELD THAT:- Reasonable disallowance of expenditure should be made for earning the exempt income so far as the share of profit from the partnership firm SPI is concerned. We are conscious about the fact that Rule 8D is not applicable for the year under consideration but at the same time for the computation of disallowance for administrative expenditures, the formula given under Rule 8D is the most appropriate method for the computation of the disallowance. We accordingly direct the A.O. to compute the disallowance so far as administrative expenditures are concerned as per Rule 8D of the ITAT Rules r.w.s. 14A Foreign Exchange Fluctuation Gain as taxable income - HELD THAT:- Profits accrued to the assessee is not in the course of any trading activity but on account of appreciation on account of hedging in forex even if the same has been held for investment purposes. Therefore, such gains have to be treated as capital receipt. For this proposition, we draw support from the decision of the Hon’ble High Court of Bombay in the case of Homi Mehta Sons Pvt. Ltd. [1994 (3) TMI 2 - BOMBAY HIGH COURT]. We find that the forward contract in respect of investment in Caraco and OFCD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of preserving and maintaining the already existing assets. The expenditures are for the purpose of replacement of defective parts of main machine or they are incurred on repairs and maintenance and have not resulted into creation of any new asset leading to any new advantage. Insofar as the purchase of 206 batteries for UPS is concerned, such batteries are used in the normal course of business and are required to be replaced after regular interval for efficient functioning of the UPS. Therefore, the purchase of batteries cannot be considered as creation of any new asset. - ITA. Nos: 2076 & 2067/AHD/2013 (Assessment Year: 2007-08) - - - Dated:- 27-4-2017 - Shri R.P. Tolani And Shri N.K. Billaiya, JJ. Appellant by: Shri S.N. Soparkar, Parin Shah Vartik Choksi, A.R. Respondent by: Shri Ram Mohan Tiwari, CIT/DR ORDER N.K. Billaiya, 1. ITA Nos. 2076 2067/Ahd/2013 are cross appeals by the assessee and the revenue preferred against the very same order of the Ld. CIT(A)-IV, Ahmedabad dated 20.05.2013 pertaining to A.Y. 2007-08. 2. As both these appeals were heard together, they are disposed of by this common order for the sake of convenien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LIBOR plus rate allowed to AEs ₹ 7,83,82,483/- (2) Interest on 9% OFCD ₹ 21,08,42,301/- Total Rs. ₹ 28,92,24,784/- 5. Assessee was asked to explain why this amount should not be added to the total income. Assessee filed a detailed reply explaining that the assessee had sourced the loans to AE out of the excess funds lying idle out of the issue of FCCBs. Certain portion of the FCCB proceeds were deployed in fixed deposits in overseas banks. It was brought to the notice of the A.O that the assessee has charged interest to the AEs at 3.81% being the 12 month LIBOR rate. The assessee strongly objected to the charge of LIBOR+ rate of interest. In so far as, the money raised through Foreign Currency Convertible Bonds, it was explained that since money raised through FCCB was not permitted to be parked/brought in India unless it was actually deployed for permitted capital expansions/acquisitions, therefore, it was decided to invest money on the wholly owned subsidiary being an Associated Enterprise. 6. The claim of the assessee on both these counts was dismissed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nual rates and payable at maturity that is 5 years from the date of first disbursement. The rupee value of the amount of loan as on 31.03.2008 was ₹ 108.32 crore. It was also noticed that Assessee has not shown any income from the aforesaid loan. In response, Assessee interalia submitted that Assessee had not opted for conversion of the loan during the year and therefore it was loan for the year and as per the terms of agreement, no interest accrued to the Assessee and therefore no income was considered. The TPO did not find the contention of the Assessee acceptable. He considered the Optionally Fully Convertible loan as debt and considering the average six month Euro Libor rate for the year @ 4.48% to which he added the interest rate of 2.90 basis point as per the agreement and thereafter considered the rate of interest to be @ 7.38% and accordingly computed the interest on ₹ 108.32 Crore for 171 days at 7.38%. The aforesaid adjustment made by the TPO was considered by the Assessing Officer and the addition of ₹ 3,99,74,4267- was made to the income. Aggrieved by the order of Assessing Officer, Assessee carried the matter before CIT(A). CIT(A) after considering th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for the assessee in the years to come. The long term commercial benefits will outweigh the smaller interest that the Assessee would have charged to these AEs. It was explained that ultimately it is the assessee which would derive the benefits of growth of subsidiaries in the form of appreciation of its shareholdings particularly since the Associated Enterprises are wholly owned subsidiaries of the assessee. This contention of the assessee was dismissed by the A.O. who proceeded by making addition of ₹ 12,55,719/- on this account. 13. The assessee could not convince the First Appellate Authority and the additions were confirmed. 14. While dismissing the appeal of the assessee, the ld. CIT(A), interalia, observed as under:- 5.4.10 The TPO is of the considered view that the assessee has charged lower interest rate from its subsidiary by charging interest at LIBOR rate or Nil rate whereas prevailing rate at that point of time LIBOR Plus should have been charged. The rate prevailing at that point of time was LIBOR rate i.e. 5.401% + 200 basis point which comes to 7.401%. This rate is almost equal to the prime interest rate or American Bank lending rate. The prime intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f its order has held that Chapter X and Transfer Pricing rules do not permit the Revenue authorities to step into the shoes of the assessee and decide whether or not a transaction should not be entered. It is for the assessee to take commercial decisions and decide how to conduct and carry on its business. Actual business transactions that are legitimate cannot be restructured. A similar view was taken by the Hon ble Delhi High Court in the case of EKL Appliances Ltd. 345 ITR 241. 9. On identical set of facts, the Co-ordinate Bench had the occasion to consider similar issue in the case of Cadila Healthcare Ltd. in ITA No. 2430/Ahd/12 with C.O. No. 242/Ahd/12 in 146 ITR 502 wherein the first ground related to the adjustment made on account of notional interest on Optionally Convertible Debenture to Foreign Subsidiary. The Tribunal considered the following facts:- 4. During the course of assessment proceedings, Assessing Officer noticed that Assessee had subscribed to Optionally Convertible Loan of U.S. $ 27 Million issued by Zydus International Pvt. Ltd., Ireland. Accordingly reference under Section 92CA of the Act for computing of arms length price in relation to the transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verted into equity shares of Zydus International Pvt. Ltd. He has further held that since the Assessee has converted the loan into equity in the immediate next year, there was no question of taxing notional interest. He has further held that Assessee had not granted interest free loan but invested in optionally convertible loan with a clause of interest in case, Conversion option was not exercised and further held the Assessee's transaction with subsidiary was at arms length. Before us, the Revenue could not controvert the findings of CIT(A) by bringing any contrary material on record. In view of these facts, we find no reason to interfere with the order of CIT(A). 11. Respectfully following the findings of the Hon ble High court (supra) and the Co-ordinate Bench (supra), we direct the A.O to delete the impugned additions. Ground no. 2 is accordingly allowed. 20. As the dispute stands settled in favour of the assessee by the decision of the Co-ordinate Bench (supra), respectfully following the same. We direct the A.O. to delete the addition of ₹ 33,16,53,612/-. Ground no. 4 is allowed. 21. Ground no. 5 relates to the addition on account of Corporate Guarantee pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Authority observed that the business prudence or necessity of providing such guarantee to its AEs is not relevant for computing Arm s Length Price in unrelated party transactions. The ld. CIT(A) further observed that since the assessee has not charged any fee from its AE, the transaction has to be tested with a situation, had the assessee provided the guarantee on behalf of an unrelated third party and thereby the income, which would have been earned by the assessee is expected to have been earned from the transaction of providing corporate guarantee on behalf of its AEs. Since the assessee has not bench marked the transactions relating to providing the corporate guarantee on behalf of its AE, the First Appellate Authority confirmed the upward adjustment of ₹ 39,48,000/- made by the TPO/AO by charging 2% guarantee fee on the total amount of guarantee given by the assessee to its AEs. 26. Having heard the rival submissions, we have given a thoughtful consideration to the facts in issues before us. It is true that by Finance Act of 2012, the legislature has inserted explanation to section 92B of the Act giving it a retrospective effect from 01.04.2002. In our considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature and purpose of transfer pricing provision, is it at all a workable idea to enlarge the scope of transfer pricing provisions with retrospective effect There can be little doubt about the legislative competence to amend tax laws with retrospective effect, and, in any case, we are not inclined to be drawn into that controversy either. On the issue of implementing the amendment in transfer pricing law with retrospective effect, in the case of Bharti Airtel Ltd. (supra), a coordinate bench had observed as follows: 34. There is one more aspect of the matter. The Explanation to Section 92B has been brought on the statute by the Finance Act 2012. If one is to proceed on the basis that the provisions of Explanation to Section 92B enlarges the scope of Section 92B itself, even as it is modestly described as 'clarificatory' in nature, it is an issue to be examined whether an enhancement of scope of this anti avoidance provision can be implemented with retrospective effect. Undoubtedly, the scope of a charging provision can be enlarged with retrospective effect, but an antiavoidance measure, that the transfer pricing legislation inherently is, is not primarily a source of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich were amended, post the payment having been made by the assessee, with retrospective effect. All this only shows that even when law is specifically stated to have effect from a particular date, its being implemented in a fair and reasonable manner, within the framework of judge made law, may require that date to be tinkered with. When a proviso is introduced with effect from a particular date specified by the legislature, the judicial forums, including this Tribunal, at times read it as being effect from a date much earlier than that too. One such case, for example, is CIT v. Ansal Landmark Township (P.) Ltd. [2015] 377 ITR 635/234 Taxman 825/61 taxmann.com 45 (Delhi), wherein Hon'ble Delhi High Court confirmed the action of the Tribunal in holding that the provision, though stated to be effective from 1st April 2013 must be held to be effective from 1st April 2005. Whether such an exercise can be done in the present case is, of course, something to be examined and our observations should not be construed as an expression on merits of that aspect of matter. Given the fact that the assessee has succeeded on merits in this case, it would not really be necessary to deal with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in view of the decision a coordinate bench, in the case of JKT Fabrics v. Dy. CIT (2005] 4 SOT 84 (Mum.) and following the Full bench decision of Hon'ble AP High Court in the case of CIT v. BR Constructions [1993] 202 ITR 222 [1994] 73 Taxman 473 (AP), a decision disregarding an earlier binding precedent on the issue is per incurium. Such decisions cannot be basis for sending the matters to special bench since occasion for reference to special bench arises when binding and conflicting judicial precedents from coordinate benches come up for consideration. That was not the case here. All these factors taken together, in our considered view, it was not possible in this case to refer the matter for constitution of a special bench. In any case, whatever we decide is, and shall always remain, subject to the judicial scrutiny by Hon'ble Courts above and our endeavour is to facilitate and expedite, within our inherent limitations, that process of such a judicial scrutiny, if and when occasion comes, by analyzing the issues in a comprehensive and holistic manner. 50. In the light of the detailed discussions above, and for the detailed reasons set out above, we uphold the griev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issue in totality in the light of the admission of the appeal before the Hon ble High Court of Gujarat, in all fairness, in our considered view and understanding of the law, we restore this issue to the files of the A.O. with a direction that the same must be considered afresh after the decision from the Hon ble Jurisdictional High Court of Gujarat and after giving a fresh opportunity of being heard to the assessee. Ground no. 5 is treated as allowed for statistical purpose. 33. The next ground relates to the disallowance of the weighted deduction claimed u/s. 35(2AB) on Trade Mark Charges and Overseas Product Registration Charges. 34. We find that an identical issue was considered by the Co-ordinate Bench in assessee s own case in ITA No. 1589/Ahd/2011 qua ground no. 3 wherein the Bench has followed its earlier decision in ITA No. 2430/Ahd/2009. The findings thereon read as under:- Ground no. 4 relates to the disallowance of trade mark registration and overseas product registration charges u/s. 35(2AB). 11. On perusing the details of R D expenditure, the A.O found that the assessee has claimed weighted deduction @ 150% on (a) Trade Mark Registration Charges : 2,4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llow the impugned weighted deduction. Ground no. 3 is accordingly allowed. 35. We direct accordingly. Ground no. 6 is allowed. 36. Ground no. 7 relates to the non allowance of weighted deduction u/s. 35(2AB) on expenses incurred on Corporate Advertisement amounting to ₹ 27,000/-. 37. Without going into the merits of this issue, the ld. Senior Counsel fairly conceded that due to the smallness of the amount involved he is not pressing this grievance. Therefore the same is dismissed as not pressed. 38. Ground no. 8 relates to the disallowance of ₹ 27,55,18,784/- u/s. 14A of expenses incurred on behalf of Sun Pharmaceutical Industries. 39. During the course of the scrutiny assessment proceedings and on perusal of the copy of partnership deed between the assessee and Sun Pharmaceuticals Industries (SPI) along with a copy of supplementary partnership deed dated 15.04.2003, the A.O. noticed that as per the impugned deeds, the assessee was liable to perform the following functions on behalf of SPI: SPI will provide the technical assistance in the manufacturing activities carried out and/or to be carried out at the firm s plants and advice on the products sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the ratio of total turnover of both the concerns and came to the conclusion that ₹ 47,18,93,873/- has to be disallowed u/s. 37 of the Act. 45. Assessee assailed the assessment before the ld. CIT(A). It was strongly contended that in respect of marketing and distribution of the products manufactured by the firm, the assessee has not incurred any expenses for the partnership firm nor for discharging the said role since the entire activity was already well established for its own business. It was brought to the notice of the ld. CIT(A) that the assessee merely facilitated the business of the firm in its capacity as a working partner of the firm. In other words, the main contention of the assessee was that it has not incurred any expenditure for the firm since the entire marketing activity was already part of its pre existing set up. 46. After considering the facts and the submissions and considering the allowability of deduction u/s. 37(1) of the Act, the ld. CIT(A) was convinced that the expenditure incurred by the assessee as a partner on behalf of its firm for looking after the business of the firm is for the purpose of business and is therefore an allowable expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. Insofar as the share of profit is concerned, the ld. counsel reiterated that the assessee had sufficient own funds for making the investment in the partnership firm. Therefore, the disallowance made by the ld. CIT(A) u/s. 14A of the Act is uncalled for. 49. Per contra, the ld. D.R. strongly supported the findings of the A.O. In alternative, the ld. D.R. claimed that the alternative disallowance made by the First Appellate Authority is correct in law. 50. After giving a thoughtful consideration to the orders of the authorities below, in our considered opinion, so far as the disallowance made by the Assessing Officer is concerned, we find that this issue has been decided in favour of the assessee and against the revenue by the Co-ordinate Bench in assessee s own case in ITA No. 2430 2400/Ahd/2009 wherein the bench has followed the decision of the Tribunal in earlier assessment years in ITA No. 1193/Ahd/2008. The relevant part in ITA No. 1193/Ahd/2008 is as under:- Ground no. 13 relates to the disallowance of expenses incurred on behalf of Sun Pharmaceutical Industries. 88. This issue has been discussed by the A.O at para 13 of his order wherein he has mentioned t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance. 91. Aggrieved by this finding of the ld.CIT(A) both assessee and the revenue are in appeal before us. The ld. D.R. strongly stated that since the assessee has not shown any income from remuneration from the partnership firm. The assessee was not entitled for the claim of deduction. The ld. D.R. further stated that no bifurcation have been provided by the assessee to show the expenses incurred for the purpose of the business of the partnership firm and for the assessee company. The D.R. concluded by saying that there is no error in the findings of the A.O. Per contra, the ld. counsel for the assessee reiterated the claim and stated that there is no basis for allocating the expenses pro rata. The ld. counsel further stated that the First Appellate Authority further erred in disallowing the expenditure on pro rata basis only on incremental expenses. It is the say of the ld. counsel that the disallowance is unjustifiable. 92. We have carefully perused the orders of the authorities below. We have also given a thoughtful consideration to the rival submissions. There is no denying that the partnership deed has a provision for the payment of remuneration to the whole tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on from the partnership firm. However, it is equally true that a reasonable disallowance of expenditure should be made for earning the exempt income so far as the share of profit from the partnership firm SPI is concerned. We are conscious about the fact that Rule 8D is not applicable for the year under consideration but at the same time for the computation of disallowance for administrative expenditures, the formula given under Rule 8D is the most appropriate method for the computation of the disallowance. We accordingly direct the A.O. to compute the disallowance so far as administrative expenditures are concerned as per Rule 8D of the ITAT Rules r.w.s. 14A of the Act. We accordingly set aside the disallowance of ₹ 27,55,18,783/- made by the First Appellate Authority and direct the A.O. to re-compute the disallowance as directed hereinabove. Ground no. 8 is allowed in part for statistical purpose. 53. Ground no. 9 relates to the Foreign Exchange Fluctuation Gain as taxable income amounting to ₹ 14,33,80,289/-. 54. While scrutinizing the revised computation of normal business income, the A.O. noticed that the assessee has treated exchange rate gain of ₹ 30, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Global 14,33,80,289/- (ii) Reinstatement of FCCB and Exchange gain on conversion of FCCB into equity shares 29,62,23,740/- (iii) Repayment of ECB 13,78,089/- The other particulars relating to foreign exchange loss are on account of reinstatement of bank balance/bank deposit out of FCCB proceeds and reinstatement of loan given to subsidiaries out of FCCB proceeds/reinstatement of investment in mutual funds out of FCCB proceeds. The appellant has treated the forex loss in respect of the above also as capital loss. Thus, the net forex gain treated as Capital receipt is reported at ₹ 31,03,51,524/-. 61. In our considered opinion profits accrued to the assessee is not in the course of any trading activity but on account of appreciation on account of hedging in forex even if the same has been held for investment purposes. Therefore, such gains have to be treated as capital receipt. For this proposition, we draw support from the decision of the Hon ble High Court of Bombay in the case of Homi Mehta Sons Pvt. Ltd. 222 ITR 528. We find that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 1,83,33,509/-. 67. Once again both sides conceded that the Hon ble Supreme Court is seized with an identical issue in the case of Exide Industries Ltd. Therefore, it would be appropriate to restore this issue to the files of the A.O. The A.O. is directed to decide this issue afresh after the decision of the Hon ble Supreme Court and after giving a reasonable opportunity of being heard to the assessee. Ground no. 11 is allowed for statistical purpose. 68. In the result, the appeal filed by the Assessee is partly allowed. ITA No. 2067/Ahd/2013 Revenue s appeal 69. Ground no.1 relates to the deletion of the disallowance of ₹ 67,620/- claimed as weighted deduction u/s. 35(2AB) of the Act on gift expenses incurred for R D employees. 70. This issue has been decided in favour of the assessee and against the revenue by the Co-ordinate Bench in ITA No. 1592/Ahd/2011 qua ground no. 2 of that appeal. The relevant part reads as under:- Ground no. 2 relates to the weighted deduction u/s. 35(2AB) on account of gifts to R D employees on occasion of marriage. 44. We find that an identical issues has been decided in favour of the assessee and against the revenue in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) accordingly directed the A.O. to allow higher rate of depreciation. 79. Before us, the ld. D.R. supported the assessment order and the ld. Senior Counsel reiterated what has been stated before the First Appellate Authority. It is true that the main business of the assessee is manufacturing of bulk drugs as well as formulation products. It is equally true that the assessee is also in the business of leasing and finance activity. There is no dispute that the Hire charges have been assessed as business income. Therefore, we do not find any reason why the higher rate of depreciation should not be allowed. In our considered opinion, once the basic conditions are duly satisfied, there is no bar for claiming higher depreciation. Moreover, this issue is now well settled in favour of the assessee and against the revenue by the Hon ble Supreme Court in the case of ICDS Ltd. 350 ITR 527. We decline to interfere. Ground no. 4 is dismissed. 80. Ground no. 5 relates to the allowance of deduction of FBT provision of ₹ 1,09,77,278/- while calculating book profit u/s. 115JB of the Act. 81. We find that in identical issue was considered by the Co-ordinate Bench in assessee s own ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth sides agreed that a similar issue was considered by the Co-ordinate Bench in assessee s own case in ITA No. 1589/Ahd/2011. We find that the Co-ordinate Bench in ITA No. 1589/Ahd/2011 has followed the findings given in ITA No. 2430/Ahd/2009, the relevant part reads as under:- 25. While scrutinizing the return of income, the A.O found that the assessee has sold raw materials/products to sister concern at lower rates. Assessee was asked to explain the transactions with its sister concern, Sun Pharmaceutical Industries. Assessee filed a detailed reply giving exhaustive list of all the raw materials/products being sold to its sister concern vis- -vis third parties along with the rates and quantity sold. The A.O was of the firm belief that the assessee has been selling products to its sister concern at a rate lower than sold to third parties. The A.O observed that since the assessee is holding 95% share in its sister concern and the sister concern is claiming 100% deduction u/s. 80IB on its profits. Therefore, in effect the assessee is indulged in diversion of profit and avoidance of tax by suppressing the sale price. The A.O accordingly made an addition of ₹ 21,25,278/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payments made to related parties mentioned therein. But the transaction before us is of credit in nature i.e. sales so provisions of section 40A(2) are not at all applicable. 27. Respectfully following the findings of the Tribunal (supra), we direct the A.O to delete the addition of ₹ 21,25,278/-. Ground no. 9 is allowed. 89. Respectfully following the findings of the Co-ordinate Bench (supra), we do not find any reason to interfere with the findings of the ld. CIT(A). Ground no. 7 is dismissed. 90. Ground no. 8 relates to restricting of the addition to the extent of ₹ 27,55,18,783/- made on account of selling distribution expenses on basis of ratio of turnover of assessee and Sun Pharma Industries. 91. A similar issue was considered by the Co-ordinate Bench in ITA No. 1589/Ahd/2011 wherein the Bench has followed its earlier decision in ITA No. 2430/Ahd/2009. A related issue has been considered by us in assessee s appeal in ITA No. 2076/Ahd/2013 (supra) qua ground no. 8 of that appeal. For our detailed discussion therein, this ground is dismissed. 92. Ground no.9 relates to the deletion of the addition of ₹ 29,76,01,829/- made on account of forei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not find any favour with the A.O. who was of the opinion that out of total repairing expenses, amount of ₹ 28,51,291/- has to be disallowed as capital expenditure. The A.O. allowed depreciation as per the provisions of the law and made disallowance of ₹ 23,68,918/-. 100. Assessee strongly agitated the issue before the ld. CIT(A). After considering the facts and the submissions, the ld. CIT(A) was of the opinion that the A.O. has merely given the finding in respect of various expenditures for purchase of various items that the items purchased are capital assets. The ld. CIT(A) found that the A.O. has not given any reasons as to how the purchase of various items made by the assessee has resulted into bringing any new asset into existence or obtain a new advantage. The ld. CIT(A) accordingly deleted the disallowance of ₹ 23,68,918/-. 101. Before us, the ld. D.R. strongly supported the assessment order. The ld. Senior Counsel drew our attention to the details of the relevant expenditures and strongly contended that the expenditures are of revenue in nature. 102. We have carefully perused the factual matrix. We have also gone through carefully the details of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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