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TMI Blog2021 (11) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstance of case, the Ld.CIT(A) is erred in deleting the disallowance of depreciation on Foster's brand of Rs. 16.17,97,500/- merely relying in judicial pronouncement of Hon'ble ITAT without discussing the issue on merit? 3. Whether on the facts & circumstances of the case and in law, the Ld.CIT(A) is erred in holding that the provisions of section 40(a)(1) were not applicable in respect of depreciation claimed u/s.32 of the Act on Foster brand for which payment was remitted without deducting tax in accordance with the provisions of Section 195 of the Act. 4. Whether on the facts & in circumstances of the case and in law, the Ld.CIT(A) justified in deleting the addition made by the AO of Rs. 4,97,36,399/- as TDS deducted on account of payment of management fee and interest without examining the fact that whether the TDS amount was actually deposited in the government account or retained or got refund of the same by the assessee?" 3. The issue arising out of grounds no.1, 2 and 3, relates to disallowance of 16,17,97,500, under section 40(a)(i) of the Act on account of Foster's Brand. 4. The assessee had purchased Foster's Brand and Intellectual Property, Foster's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er consideration, the assessee has claimed depreciation of Rs. 16,17,97,5001- on the brought forward WDV of Rs. 64,71,90,000/-. Since the original cost itself has been disallowed in the A.Y 2007-08 and the claim of depreciation on the same has consistently been disallowed in the subsequent years, including A.Y. 2009-10, the claim of depreciation of Rs. 16,19,97,500/- for the year under consideration is hereby disallowed and added to the total income of the assessee. 18. In A.Ys. 2007-08, 2008-09 the Hon. ITAT and 2009-10 the CIT(A) has directed granting of depreciation. The DRP allowed the deduction in AY 11-12 but disallowed in AYs 12-13,13-14 and 14- 15. Further, in WP(C) 6962/2008 dated 25.07.2016 CUB PTY LIMITED (Formerly Known as Foster's Australia Limited) vs UOI & ORS, the Bombay High Court against AAR ruling considered the following question: (i) On the facts and circumstances of the case, whether the receipt arising to the applicant, from the transfer of its right, title and interest in and to the trademarks, Foster's Brand Intellectual Property and grant of exclusive perpetual licence of Foster Brewing Intellectual Property is taxable in India, having regard t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India Ltd. v/s ACIT, for the assessment year 2011-12, vide order dated 18th February 2020, wherein the Tribunal has deleted identical addition by holding that the claim of depreciation under section 32 of the Act is not in respect of the amount paid or payable which is subject to TDS, but is a statutory deduction on an asset which is eligible for deduction of depreciation. Consistent view being maintained by the Co-ordinate Bench of the Tribunal in assessee's own case cited supra, similar directions are issued on this issue also. Consequently, we have no hesitation in upholding the order of the learned CIT(A) by dismissing the grounds no.1 to 3, raised by the Revenue. 10. Ground no.4, relates to disallowance of grossed-up expenses to the extent of taxes withheld therein amounting to 4,97,36,399, under section 195A of the Act. 11. The Assessing Officer during the assessment proceedings, found that in the Profit & Loss Account filed by the assessee, the assessee debited an amount of 46,17,25,791, under the head "Management Fees' and interest of 7,27,79,493, on the external commercial borrowings. In Schedule-8 to notes to accounts, Point no.9 (giving details of expenditure of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A). 14. The learned Departmental Representative relied upon the order of the Assessing Officer. 15. After hearing both the parties, we find that identical issue has been decided by the Co-ordinate Bench of the Tribunal in assessee's own case in ACIT v/s Anheuser Busch InBev India Ltd., ITA no.1205/Mum./2016, and Anheuser Busch InBev India Ltd. v/s ACIT, for the assessment year 2011-12, vide order dated 18th February 2020, wherein the Tribunal has decided the issue in favour of the assessee and against the Revenue by observing as under:- "39. We have considered rival submissions and perused the material on record. As could be seen, the assessee had entered into a borrowing arrangement with Standard Chartered Bank on a net of tax basis. As per the terms of the agreement, the assessee has computed TDS on a net of tax basis and no tax has been separately debited to the Profit & Loss Account. It is also a fact on record that as per the borrowing arrangement, the tax liability, if any, on payment of interest has to be borne by the assessee. Therefore, the tax withheld has to be allowed as expenditure to the assessee. In view of the aforesaid, we do not find any infirmity in the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtaining to Foster's brand by applying the provisions of section 40(a)(1) of the Act read with section 195 and 200 of the Act; 7. erred in not appreciating that the provisions of section 40(a)(i) of the Act do not apply to capital expenditure and depreciation claimed on such expenditure; 8. erred in disregarding that depreciation is a statutory deduction on an asset which is eligible for deduction under section 32 of the Act; 9. erred in disallowing depreciation claim without considering the fact that the Hon'ble ITAT's order in the Appellant's own case for AY 2007-08, AY 2008-09, AY 2009-10 and AY 2011-12 has already decided the issue in favour of the Appellant wherein it was held that depreciation on capital expenditure cannot be disallowed under section 40(a)(i) of the Act. Disallowance of grossed up expenses to the extent of taxes withheld therein - 4,97,36,399 10. erred in disallowing an amount of 4,97,36,399 being tax deducted on payments made after grossing up as per Section 195A of the Act; 11. erred in disregarding the well settled principle of law that TDS withheld on remittance is an allowable expenditure; 12. erred in objecting the CIT(A) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Counsel further brought to the notice of the Bench the details submissions a copy of which is placed at Page no.465 to 470 of Factsheet. The learned Counsel, while concluding, submitted that the issue is fully covered by the decision of the Hon'ble Supreme Court in Director of Income Tax (IT) v/s A.P. Moller Maersk AS, [2017] 392 ITR 186 (SC) and the decision of the Hon'ble Jurisdictional High Court in Krupp Udhe GmbH, [2013] 354 ITR 173 (Bom.). 23. The learned Departmental Representative has objected to the order of the learned CIT(A). 24. We have considered the rival submissions of the learned Counsel appearing for the parties and perused the material on record in the light of the decisions relied upon. As it transpires from the record available before us as well we note it from the submissions of the learned Counsel for the assessee that the assessee during the course of first appellate authority, had filed certain additional evidences in support of its claim which were ignored by the learned CIT(A) consequent to which the order of the learned CIT(A) in the instant case becomes cryptic one which is without deliberating upon the provisions of the Act in disregardi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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