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TMI Blog2021 (4) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... ('the Act) alleging the same to have been incurred for earning exempt dividend income. 1.1 That the CIT (A) erred on facts and in law in affirming the action of the assessing officer in computing disallowance of administrative expenses, by allocating 0.5% of the total investments made by the appellant during the relevant previous year, on the assumption that certain administrative expenses must have been incurred to earn the exempt income without appreciating that only expenses having proximate nexus with the earning of exempt income could have been disallowed under section 14A of the Act. 1.2 That the CIT (A) erred on facts and in law in not deleting the disallowance of interest expenditure of Rs. 78,55,100 made by the assessing officer under section 14A of the Act. 1.3 That the CIT (A) erred on facts and in law in directing the assessing officer to disallow interest expenditure incurred on borrowed funds utilized for making investment in shares/mutual funds on the basis of bank statement under section 14A, without appreciating that the appellant had mixed pool of funds wherein surplus funds were sufficient for making investments in shares/ mutual funds. 2. That the CIT ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 40(a)(i) for alleged failure on the part of appellant in not deducting tax at source therefrom. 5.1 That the CIT (A) erred on facts and in law in holding that the skills/ experience utilized by the consultant for rendering services would amount to 'make available' within the meaning of Article 12(4) of the India-USA DTAA. 6. That the CIT (A) erred on facts and in law in upholding the action of the assessing officer / TPO in making addition to the extent of Rs. 6,57,195/- on account of alleged difference in arm's length price of international transaction of import of components, spare parts etc., applying CUP method instead of TNMM applied by the appellant as the most appropriate method. 6.1 That the CIT (A) erred on facts and in law in not holding that having regard to nature and class of the international transactions of purchase of spare parts and components, TNMM was correctly applied as the most appropriate method, as per section 92C of the Act. 6.2 That the CIT (A) erred on facts and in law in holding that for determining the arm's length Price of international transaction of purchase of spare parts and components, CUP method would be the most appropriate method. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment in Mutual funds 11.78 Total 14.41 3.0.1 It was further submitted that the assessing officer computed disallowance of Rs. 4,04,58,600/- by applying Rule 8D of in the following manner: - Expenditure directly relating to exempt income Nil - Interest expenditure apportioned in the ratio of average investments to average total assets 78,55,100 - 0.5% of average investments 3,26,03,500 Total disallowance 4,04,58,600 3.0.2 It was submitted by the Ld. AR that the Ld. CIT (A) confirmed the disallowance made by the assessing officer under section 14A of the Act to the extent of Rs. 3,26,03,500/- being 0.5% of the total investments on the assumption that certain administrative expenses must have been incurred to earn exempt income. It was pointed out that further, the Ld. CIT (A) remanded the disallowance to the extent of Rs. 78,55,100/- on account of interest expenditure to the assessing officer who, vide set aside order dated 31.03.2017, deleted the disallowance made under section 14A of the Act to the extent of Rs. 78,55,100/-. 3.0.3 The Ld. AR submitted that the disallowance of Rs. 3,26,03,500/- which was sustained by the Ld. CIT (A) deserves to be deleted at the thres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , no expenditure was incurred to earn exempt income. The expenses debited in the profit and loss account pertained to main business activity of manufacturing two wheelers and were unrelated to earning of dividend income. Further, it was submitted that the revenue earned from manufacturing activity during the relevant previous year was Rs. 8,596.81 crores as against dividend income of Rs. 14.41 crores being 0.16% of total revenue. It was also pointed out that out of the total income of Rs. 14.41 crores, a sum of Rs. 12.24 crores was earned from the following two investments that were quite old, requiring no administrative/management effort or any other cost in earning the same: Income from UTI's Unit 64 Rs. 10.75 crores Dividend from Hero Honda Finlease Ltd. Rs. 1.49 crores Rs. 12.24 crores 3.0.7 It was further submitted that even for the balance dividend of Rs. 2.17 crores earned from investment in mutual funds and investment in shares, these treasury activities were looked after by two staff members of the finance department, out of total strength of 70 employees. It was submitted that the treasury function carried out by these two persons comprised of four activitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The ground is allowed for statistical purposes. 6.0.0 With respect to Ground No. 2 to 2.2, the Ld. AR submitted that the same related to disallowance of deduction of Rs. 2,30,53,828/- claimed under section 80IA of the Act in respect of captive power generating unit situated at Gurgaon. At the time of hearing before us, it was submitted by the learned counsel that in view of the power supply constraints in the area of Gurgaon, Haryana, the assessee had set up power plant in order to meet the requirement of power of its manufacturing unit at Gurgaon. The assessee claimed deduction of Rs. 2,30,53,826/- under section 80IA of the Act in respect of the power generated at the aforesaid unit and captively consumed by the assessee. The deduction claimed was duly supported by Chartered Accountant's Report. It was submitted that for the purposes of computing deduction under section 80IA, the assessee adopted transfer price of power, captively consumed, at the cost of generation of power per unit with mark-up of 15%. The cost of generation of power was adopted at Rs. 5.48, which was based on cost certified in the cost audit report. Accordingly, the assessee adopted the rate of transfer of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Years 2010-11 and 2011-12, the Tribunal after considering the aforesaid, held as under: "124. We find that the expression market value 'inter-unit transfer has been defined under Explanation to section 80IA of the Act as follows: "Explanation.-For the purposes of this sub-section, ―market value‖, in relation to any goods or services, means- (i) the price that such goods or services would ordinarily fetch in the open market; or (ii) the arm's length price as defined in clause (ii) of section 92F, where the transfer of such goods or services is a specified domestic transaction referred to in section 92BA." The aforesaid definition endorses the meaning of market price' explained by the Courts in several decisions, i.e., the price that such goods or services would ordinarily fetch in the open market. In the present case, we note that there are two prices available at which buyers are paying price for procurement of power, i.e., the rate at which power is supplied by HSEB and the rate at which power is supplied by the private entity, i.e., Maruti Udyog Ltd. The issue, thus, arises is what should be the market price of power? The market rate (or "going rate") for g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 192 it was held as under :- "12. On perusal of the above, it could be clearly seen that the statute provides that the assessee must adopt 'market value' as the transfer price. In the open market, where a basket of 'market values' [say like, independent third party transactions, grid price (average annual landed cost at which grid has sold power to the assessee), power exchange price for the relevant period etc.] are available, the law does not put any restriction on the assessee as to which 'market value' it has to adopt, it is purely assessee's discretion. So long as the assessee has adopted a 'market value' as the transfer price that is sufficient compliance of law. AO can adopt a different value only where the value adopted by assessee does not correspond to the 'market value'. Even if assessee's cement unit has purchased power also from the grid or that assessee's power unit has also partly sold its power to grid or third parties that by itself, does not compel the assessee or permit the Revenue to adopt only the 'grid price' or the price at which the eligible unit has partly sold its power to grid or third part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t third party trading transactions or as per power exchange (IEX etc.) or any other independent transaction (for the relevant period and which has taken place in the relevant area where the eligible unit is located) constitute 'market value' in terms of Explanation to s. 80-IA(8); (b) the value at which State grid has sold power to the cement unit of the assessee (average annual landed cost) also constitute 'market value' in terms of Explanation to s. 80-IA(8) but the value at which State grid or third party has purchased power from the power unit of the assessee, which represents its power which is sold when not required by the cement unit, does not constitute 'market value' in terms of Explanation to s. 80-IA(8). It is the 'principle' and not the 'quantum' which is deciding factor; (c) where a basket of 'market values' are available for the relevant period and relevant geographical area where the eligible unit is situated, the assessee has discretion to adopt any one of them as market value; and (d) If the value adopted by the assessee is 'market value' as explained above, it is not permissible for Revenue to recompute t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditional depreciation on new plant and machinery acquired and installed during the year is available, subject to condition of increase in installed capacity of the relevant industrial undertaking. It was submitted that the assessee claims to have increased its installed capacity during the year, thereby entitling it to additional depreciation under the aforesaid section, whereas the claim of the AO is that the relevant plant and machinery installed during the year did not enhance the production of the assessee and, therefore, the same had no nexus/co-relation with the increase in installed capacity. Ld. AR submitted that during the relevant previous year, the assessee invested Rs. 105.8 crores and Rs. 79.57 crores in plant and machinery in Gurgaon and Daruhera units respectively. Due to the said investment, the installed capacity increased by 75% in Gurgaon plant (from 8,00,000 to 14,00,000 units) and by 43.75% in Dharuhera plant (from 8,00,000 units to 11,50,000 units) from 31.03.2002 to 31.03.2005. The Ld. AR submitted that in terms of section 32(1)(iia) of the Act, additional depreciation of Rs. 14.93 crores was claimed by the assessee in respect of plant and machinery installe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and 117000 units in Dharuhera had simultaneously taken place in the month of October 2004. This factor clearly establishes the fact that the machinery acquired by the assessee was more related to the change in the technology for producing a newer engine i.e. core 1 technology rather than addition to the installed capacity. Even in case of Gurgaon plant where an argument could be raised that there has been investment of Rs. 37.57 crores before October and that had resulted due to the increased production. However, that also doesn't appear to be a correct view because in the month of May, 2004 when there has not been large investment the production has been of 103535 units whereas in the month of June and August the production has been of 98273 and 92781 units respectively. Therefore, the correlation between installed capacity and installation of machine is not established and in any case if Dharuhera is an indicator the addition to plant and machinery has been almost neutral so far as installed capacity is concerned. The reason very clearly lies in the fact that the in assessment year 2004-05 i.e. the immediately preceding year there has been a huge addition in plant and machi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egins to manufacture or produce any article or thing on or after the 1st day of April, 2002; or (B)any industrial undertaking existing before the 1st day of April, 2002, during any previous year in which it achieves the substantial expansion by way of increase in installed capacity by not less than ten per cent: Provided further that no deduction shall be allowed in respect of- a) any machinery or plant which, before its installation by the assessee, was used either within or outside India by any other person; or b) any machinery or plant installed in any office premises or any residential accommodation, including accommodation in the nature of a guest house; or c) any office appliances or road transport vehicles; or d) any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or other-wise) in computing the income chargeable under the head "Pro-fits and gains of business or profession" of any one previous year: Provided also that no deduction shall be allowed under clause (A) or, as the case may be, clause (B), of the first proviso unless the assessee furnishes the details of machinery or plant and increase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring was the nexus of increase in production with installation of relevant plant and machinery, whereas the requirement of law was only increase in overall installed capacity of the relevant industrial undertaking. 9.0.6 The Ld. AR, thereafter, invited our attention to the details of the installed capacity at the relevant Gurgaon and Dharuhera plants, which was undisputed by the lower authorities to contend that the relevant plants satisfied the condition of increase in installed capacity of more than 10%, as per the table below: Gurgaon Plant Daruhera Plant Total Installed capacity as on 31.03.2002 8,00,000 8,00,000 16,00,000 Installed capacity as on 31.03.2004 12,50,000 10,00,000 22,50,000 Installed capacity as on 31.03.2005 14,00,000 11,50,000 25,50,000 %age increase in installed capacity on 31.3.2005 vis-àvis 31.3.2002 75.00% 43.75% 59.38% % age increase in installed capacity on 31.3.2005 vis-àvis 31.3.2004 12% 15% 13.33% % age increase of differential of installed capacity for year ending 31.3.2005 (i.e. 31.3.2005 - 31.3.2004) vis-àvis 31.3.2002 18.75% 18.75% 18.75% 9.0.7 The Ld. AR submitted that the claim of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have heard both the parties and find substantial force in the contentions of the assessee company. We find that the language of section 32(1)(iia) reproduced supra, is plain and unambiguous. On a plain and literal reading of the said section, we find no condition requiring nexus of the relevant plant and machinery acquired and installed during the year with the increase in installed capacity of the relevant industrial undertakings during the year. As per our reading, the requirement of the section is that in case of an existing industrial undertaking, additional depreciation shall be available on new plant and machinery acquired and installed during the previous year, if such industrial undertaking achieves substantial expansion by way of increase in installed capacity by not less than 10%. Accordingly, if there is an increase in installed capacity of the relevant industrial undertaking, the new plant and machinery acquired and installed during such year shall be eligible for additional depreciation at the rate prescribed in that section. There is no further condition of drawing operational nexus of such plant and machinery with increase in installed capacity. We also find that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Tribunal should be interfered with. It cannot also be said that setting up of a windmill will not fall within the expression setting up of a new machinery or plant. We do not find any error in the conclusion of the Tribunal in confirming the order of the Commissioner of Income-tax (Appeals). We, therefore, do not find any question of law much less substantial question of law to entertain this appeal. The appeal fails and the same is dismissed. No costs." * CIT v. Hindustan Newsprint Ltd.: 183 Taxman 257 (Ker): "The above provision was later modified dispensing with the requirement of increase in installed capacity as a condition for eligibility for additional depreciation. In this case the contention of the revenue is that the installed capacity of the final product of the company viz., newsprint remains unaltered even after installation of the de-inking machinery in respect of which additional depreciation was claimed. However the assessee's case as is clear from the orders of the authorities below including the Income-tax Tribunal is that there is increase in installed capacity of pulp and pulp though an intermediary product also is marketable and hence assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduced supra. In view of the above, we delete the disallowance made by the AO and hence the ground of appeal is allowed. 13.0.0 The Ld. AR submitted that Grounds of Appeal Nos. 4 - 4.1 relate to disallowance of portfolio management expenditure of Rs. 27,68,039/- claimed by the assessee as deduction against business income. It was submitted that during the relevant previous year, the assessee had incurred expenditure of Rs. 27,68,039/- towards portfolio management fee and that the assessing officer had disallowed the same on the ground that the same related to the investment activity of the assessee and therefore not an allowable deduction against business income. It was further submitted that on further appeal, the disallowance was sustained by the Ld. CIT (A) by holding that the issue is decided against the assessee by the Tribunal in the assessment year 2008-09. It was submitted by the Ld. AR that before the Ld. CIT (A), the assessee had raised without prejudice and an alternate condition, that if the aforesaid expenditure was to be considered as having nexus with investment activity, the same may be directed to be allowed as deduction under section 48 against income from capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure is related to earning of exempt income, the Ld. Counsel argued that the expenditure was incurred to make investment and earn capital appreciation there from, but not dividend income and, therefore, the said expenditure cannot be attributed to earing of exempt income. 13.0.5 Without prejudice, it was submitted that if at all disallowance is to be made for nexus with exempt income, then only proportionate expenditure in the ratio of dividend income to capital gains should be made. 14.0 The Ld. DR defended the findings in the assessment order. It was argued that when the assessee is claiming income from investments under the head capital gains and not business income, then such expenditure cannot be allowed as deduction against business income. The Ld. DR relied upon the order of Delhi Bench of Tribunal in the assessee's own case for the assessment year 2008-09 for the aforesaid proposition. As regards the alternate plea of the assessee regarding allowance of deduction under section 48, the Ld. DR contended that the aforesaid expenditure is to be considered as having relation with exempt income and for that reason should not be allowed as deduction. 15.0.0 We have heard th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness deduction, then the same ought to be allowed as deduction under either clause (i) or clause (ii) of section 48 of the Act while computing income arising from investments under the head capital gains. The Tribunal in the aforesaid order has also accepted the aforesaid alternate plea of the assessee. We, however, further find that the nexus of the aforesaid expenditure with earning of exempt dividend cannot be completely ruled out. Accordingly, we accept the alternate contention of the assessee and direct the assessing officer to disallow part of the aforesaid expenditure in the ratio of dividend income to capital gains under section 14A and the balance expenditure to be allowed as deduction under section 48 from income declared by the assessee under the head capital gains. Such expenditure can be further apportioned by the assessing officer in the ratio of short term or long term capital gain declared by the assessee. 15.0.2 As a result the aforesaid ground of appeal is partly allowed. 16.0.0 Grounds of Appeal Nos.5-5.1 are against the disallowance of professional fee of Rs. 14.74 lacs paid to resident of USA for want of TDS or alternatively as capital expenditure. It was s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Treaty, then the payer-assessee is not liable to deduct tax at source under section 195 of the Act. It was argued that the aforesaid payment was not taxable in India as per Article 12 of Indo-USA DTAA which was applicable to income earned by non-resident in the nature of "fees for included services". The Ld. AR submitted that, as per the said definition, income is taxable in India only if the recipient "makes available" its technical knowledge, experience, skill, know-how to the resident payer which enables the latter to apply the technology contained therein. If the recipient only enjoy the services, but is unable to apply know-how behind the service, then the income would not satisfy the test of "make available". Reliance for the aforesaid meaning was placed on the following decisions: * CIT vs. De Beers India Minerals (P) Ltd: 346 ITR 467 (Karnataka) * DIT vs. Guy Carpenter & Co Ltd: 346 ITR 504 (Del-HC) * Raymond Ltd v. DCIT: 86 ITD 791 (Mumbai) * Ernst & Young India: 323 ITR 184 (AAR) * ICICI Bank Ltd. v. DCIT: (2008) 20 SOT 453 (Mum) * Bharti AXA: 326 ITR 477 (AAR) * Worley Parsons Services Pty Ltd (AAR No. 750 of 2007) 16.0.2 It was argued that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e alternate ground of being capital expenditure also deserves to be deleted. 17.0 The Ld. CIT (DR) heavily relied upon by the orders passed by the AO and the Ld. CIT (A). 18.0.0 We have heard the rival contentions. We agree with the contentions of the Ld. Counsel of the assessee that the impugned payment did not "make available" technical know-how/ knowledge of the foreign national to the assessee in India. The foreign national had only made available its findings of the scenario planning exercises conducted by him as a professional, but did not make available his knowledge, which was used for conducting the aforesaid exercise.The legal position in this regard is no longer res integra and is settled by catena of decisions referred to by the Ld. Counsel of the assessee supra with regard to the meaning of expression "make available" used in the Treaty. Useful reference can be made to the decision of the Hon'ble Delhi High Court in the case of DIT vs Guy Carpenter & Co Ltd: 346 ITR 504 (Del) referred supra. Accordingly, the impugned payment made was not taxable in India. Accordingly, the assessee did not commit any error in not deducting tax at source while making the remittance and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice paid to the local vendor(s), cannot, in such circumstances, be regarded as benchmark to determine the arm's length price for products imported from the associated enterprise. It was submitted that it needs to be appreciated that the domestic vendor(s) had limited capacity to supply products/components, which fell short of the assessee's requirements. The associated enterprise, on the other hand, was in a position to cater to the assessee's complete requirement of such products/components. The price paid to the local vendor(s) for part supply (for want of domestic vendor(s) not being able to supply the complete quantity) could not be compared with the price paid to the associated enterprise for the balance quantity secured. It was also pointed out by the Ld. AR that the aforesaid issue is covered in favour of the assessee by the decision of the Tribunal in the assessment year 2006-07. It was submitted that the Tribunal had held that if the goods were not available indigenously, then naturally the rate of indigenous goods cannot be applied for determining the ALP and had restored back the matter back to assessing officer to re-adjudicate the issue in the light of the evidence to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds delete the same. 22.0 In the result, the appeal of the assessee stands partly allowed. 6302/Del/2015 (Departmental appeal): 23.0.0 We now take up the appeal filed by the Revenue. Ground no. 1 relates to disallowance of net expenditure of Rs. 12507.73 lacs on account of Royalty and Technical Guidance Fee by holding the same to be capital in nature after allowing depreciation @ 25%. The Ld. AR submitted that the assessee has been manufacturing two wheelers in India since 1985 on the basis of technology provided by M/s Honda Motors Co. Ltd., Japan ("Honda") and pursuant to the agreement dated 2.06.2004 paid Royalty and Technical guidance fee aggregating to Rs. 16676.98 lacs to Honda. The assessing officer held the same to be capital in nature and made net disallowance of Royalty and Technical Guidance fee of Rs. 12507.73 lacs after allowing depreciation @ 25%. It was further submitted that on appeal, the Ld. CIT (A) deleted the same following the appellate orders for the earlier assessment years. 23.0.1 The Ld Counsel for the assessee brought to our notice that coordinate bench of this Tribunal decided the issue in favour of the assessee for the AYs 2000-01 to 2003-04, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but the Hon'ble Delhi High Court declined to entertain the appeal. The decision of the Hon'ble High Court was accepted by the Department and has become final, as no SLP has been filed there against. The Ld. Counsel further pointed out that in the assessee's own case for A.Y.1996-97, the Tribunal was pleased to allow model fee paid to Honda under section 37(1) of the Act as revenue expenditure. The said decision is reported as Hero Honda Motors Ltd. v. JCIT: 95 TTJ 782 (Del). The Hon'ble Delhi High Court did not entertain the appeal filed by the department on the said issue. The decision of the High Court was accepted by the Department and has become final, as no SLP has been filed there against. It was further submitted that the Tribunal in the assessment years 1997-98 and 1999-2000 allowed similar expenditure on payment of model fee, following the decision of the Tribunal for assessment year 1996-97. The Revenue's appeal against the said orders has been dismissed by the High Court. It was also submitted that in assessment year 1999-2000, appeal filed by the Revenue against the order of the High Court has been dismissed by the Hon'ble Supreme Court. It was further submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where Honda had exclusive privilege to operate. The license was for a longer period of time and, therefore, it constitutes an intangible asset. Accordingly, the expenditure was held to be a capital expenditure. 29.0.1 On appeal, the Ld. CIT (A) deleted the disallowance made by the AO by relying on the orders passed by the Tribunal in assessee's own case for assessment years 2006-07 to 2008-09. 29.0.2 The Ld. Counsel for the assessee submitted that issue is squarely covered in favour of the assessee by the order passed by the Tribunal in assessee's own case in AY 2006-07 wherein the Tribunal had held that by way of export agreement, Honda had only permitted the assessee to export the specified goods to the specified countries and the that assessee did not acquire any asset/intangible right in the nature of a capital asset. Further, the Tribunal held that no managerial, technical or consultancy services had been provided which were taxable in India and, therefore, no TDS was liable to be deducted. The Ld. AR submitted that the aforesaid order of the Tribunal has been affirmed by the Hon'ble High Court vide order dated 08.05.2017, passed in ITA No. 923/2015. The Ld. Counsel also po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after Section 9(1)(vii) of the Income-tax Act. From a plain reading of the above definitions of 'royalty' as well as 'fee for technical services', it would be evident that the payment of export commission would not fall in any of the above definitions. By way of technical agreement, the assessee received the technical know-how to manufacture, assemble, sell and distribute the two wheelers within the territory of India. The payment made in pursuance to such agreement was royalty and has been treated by the assessee itself as royalty. By way of second agreement i.e. export agreement, HMCL permitted the assessee to export the specified two wheelers to the specified countries. Therefore, by export agreement, the assessee has not been transferred or permitted to use any patent, invention, model, design or secret formula. Similarly, HMCL, by way of export agreement, has not rendered any managerial, technical or consultancy services. In view of the above, we hold that export commission was neither royalty nor fee for technical services and, therefore, the assessee was not required to deduct tax at source on the payment of export fee. Once the assessee was not required to deduct the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed by the Tribunal in AY 2006-07 has further been affirmed by the Hon'ble Delhi High Court in ITA No. 923/2015. Considering the aforesaid, we find that the order passed by the Ld. CIT (A) is correct in law. We accordingly uphold the order of the Ld. CIT (A) and dismiss the ground of appeal raised by the Revenue. 32.0.0 Ground no. 4 relates to disallowance of Rs. 5,18,00,000/- being provision for warranty made in respect of sales made during the year. The Ld. AR submitted that during the year, the assessee had claimed the deduction of Rs. 5.18 crores on account of provision for warranty on motorcycles sold by the assessee during the year and such deduction had been claimed on mercantile basis, on the basis weighted average cost of the actual claims received in the past years. It was further submitted that based on the order for AY 2004-05, the AO disallowed the aforesaid provision holding the same to be an unascertained liability. The Ld. Ar further submitted that on appeal, the Ld. CIT (A), vide the impugned order, deleted the same holding that the issue is squarely covered in favour of the assessee by order passed by the Tribunal in assessee's own case for various assessment ye ..... 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