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TMI Blog2019 (9) TMI 879X X X X Extracts X X X X X X X X Extracts X X X X ..... ke of convenience. 2. Before proceeding with these appeals, it is pertinent to mention that the cross appeals of the assessee for the A.Y. 2006-07 were simultaneously argued, for which we have passed a separate detailed order. Some of the issues raised in the instant appeals are similar to those of the earlier years including the immediately preceding year. Both the sides are in agreement that facts and circumstances of such similar grounds are mutatis mutandis similar to the earlier years, except where separately argued. A.Y. 2007-08 : 3. Ground No.1 of the assessee's appeal and Ground No.1 of the Revenue's appeal are against the sustenance/deletion of addition on account of revenue recognition in respect of Freight and contract activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penses. Despite that, the AO could not point out any specific defect qua the expense and chose to make an ad hoc addition. Following the view taken by the Tribunal in earlier years deleting such ad hoc additions, except the immediately preceding year for the special reasons as discussed in our order for the A.Y 2006-07, we order to delete the sustenance of ad hoc disallowance out of the Commission expense. 10. Ground No.7 of the assessee's appeal is against the confirmation of addition of Rs. 4.21 crore towards legal and professional fees paid to Baker & Mckinsey LLP and others. The factual scenario of this ground is that the assessee paid a sum of Rs. 8.42 crore towards legal fees paid for Purolite litigation in USA to Baker and Mckinsey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Mckinsey LLP and others, has obviously gone to the assessee in asmuchas it had defended itself. The mere fact that the subsidiary in the USA also got benefitted by the expenditure, cannot come in the way of allowing deduction in the hands of the assessee. Even in the absence of its USA entity being a party to the litigation, the assessee was bound to incur such expenditure to defend itself. The Hon'ble Supreme Court in Sassoon J. David & Company Private Limited Vs. CIT (1979) 118 ITR 261 (SC) has held that deduction has to be allowed for the expenditure incurred wholly and exclusively for the purpose of business even if benefit of such expenditure percolates to someone else also. Respectfully following the precedent, we decide this gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m contract activity. 17. Both the sides agree that similar issue has been decided by the Tribunal in assessee's own case for the A.Y. 2005-06 in the assessee's favour. Relevant discussion has been made in para 8.1 pages 9 to 12 of the order. Following the precedent, we decide this issue in favour of the assessee. The ground of the assessee is allowed and that of the Revenue is dismissed. 18. Ground No.2 of the assessee's appeal is against the denial of deduction on account of Prior period expenses. Here again, both the sides are in agreement that the facts and circumstances of this ground are mutatis mutandis similar to the Ground No.2 for the A.Y. 2005-06 in which such issue has been decided against the assessee. Following the same vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as no liability on account of liquidated damages was finally incurred. The ld. AR contended that the assessee voluntarily credited Rs. 6.98 crore to its Profit and loss account in succeeding year when it claimed deduction of payment of Rs. 6.00 crore. If the assessee had erroneously credited its income in the succeeding year, the same can be reversed subject to the relevant provision. We, therefore, uphold the impugned order on this score. 22. Ground No.4 of the assessee's appeal is against the confirmation of disallowance of depreciation at 80% in respect of certain items of plant and machinery instead of allowing depreciation @25%. 23. Here again, it is found as an admitted position that similar issue has been decided by the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and circumstance of this ground are similar to Ground No.1 of the assessee's appeal for A.Y. 2006-07. In our order for the said earlier year, we have restored the matter to the file of AO with certain directions for deciding the issue afresh. Following the same view, we set-aside the impugned order and remit the matter to the file of AO for deciding this issue afresh in accordance with our directions rendered therein. 27. Ground No.7 of the assessee's appeal is against the confirmation of disallowance on account of legal expenses and fees paid to Baker & Mckinsery LLP amounting to Rs. 9.74 crore in respect of USA litigation. Both the sides agree that the facts and circumstances of this ground are similar to Ground No.7 taken for the A.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X
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