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TMI Blog2022 (5) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... f expenditure - amount paid by the assessee to M/s Vilter Manufacturing Corporation, USA as fee for user of know-how - capital expenditure or revenue expenditure - HELD THAT:- As in the assessee s own case for the assessment year 2004-05 and 2005-06, [ 2022 (1) TMI 44 - ITAT DELHI] not finding favour with the view taken by the lower authorities wherein they had rejected the assessee's claim for deduction of the payment made for the technical know-how to M/s Vilter Manufacturing Corporation, USA as a revenue expenditure, and had dubbed the same as a capital expenditure, set- aside the.order of the CIT(A) and direct the' A.O to allow the assessee's claim for deduction of the aforesaid amount of payment as a revenue expenditure - Decided in favour of assessee. Depreciation @ 60% on UPS - AO restricted the claim of depreciation @ 15% only on the UPS and disallowed the excess 45% - HELD THAT:- UPS is integral part of the computer and the depreciation upon same should be one given upon the computers @ 60%. Accordingly the ground is decided in favour of assessee and the ld. AO shall reassess the depreciation @ 60%- Decided in favour of assessee. - ITA No.5996/Del/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.1 That without prejudice, on the facts and circumstances of the case and in law, the CIT(A) erred in not allowing depreciation by written down value method on the entire amount of consideration payable under the agreement. Ground No.3 3. That on the facts and circumstances of the case and in law the CIT(A) erred in restricting the depreciation on UPS to 15% instead of 60% allowable on the same. 4. That the order passed is bad in law and void ab initio. The Appellant prays for leave to add, alter, amend and/or vary the ground(s) of appeal at or before the time of hearing. 3. Heard the counsel for the assessee and Ld. Sr. DR and perused the record. The ground wise determination is as below. Ground no. 1 4. The Appellant had declared gross income of Rs. 1,04,00,712/- and claimed exemption under Section 10(34) and (35). In the revised return sum of Rs 1,49,036/- was added back by the appellant as expenditure disallowable u/s 14A. The AO however did not accept the disallowance as worked out by the Appellant and instead invoked Rule 8D of the IT Rules, 1962. He worked disallowance of Rs.20,41,367/- and taking into consideration that the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/Del/2012 respectively, by judgment dated 30.12.2021 it was held as under : 3.6 We have heard the Ld. Authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record qua the aforesaid issue in question. Admittedly, it is a matter of fact borne from the record that the tribunal had vide its order passed in ITA No. 4106/Del/2004, dated 31.01.2007 r.w its order passed while disposing of M.A. No. 23/Del/2008, dated 14.03.2008 had directed that the disallowance u/s 14A be sustained to the extent of 10% of the amount of the dividend income earned by the assessee company. Also, we find that the aforesaid order of the tribunal had thereafter been followed by it while disposing off the assessee s appeal for A.Y. 2005-06 in ITA No. 4902/Del/2010 and 4662/D/2010, dated 03.02.2012, wherein the tribunal after taking cognizance of the fact that the CIT(A) had restricted the disallowance to 10 % of the amount of dividend income, therein, restored the matter to the file of the AO for passing a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. As the facts of the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngible assets. Hence the lump sum amount paid by the assessee for technical know how has to be capitalized and depreciation will be allowed accordingly as per law. 5.2 The Ld. CIT(A) observed that I have considered the submissions made. Identical issue has been adjudicated upon by my predecessor CIT (A) in case of the appellant for AY 2004-05. In para 4 to 4.4.2 the said appellate order dated 17.03.2008 he has upon a consideration of the various case laws relied upon as also the terms clauses of the agreement between VILTER the appellant on payment of technical know-how held that the appellant company has obtained an enduring advantage and benefit as the technical knowledge is available to the appellant for its manufacturing process therefore the said expense is capital in nature, on which depreciation is allowable in terms of section 32(l)(ii) of the Act. Respectfully following the reasoning given by my predecessor CIT(A), to which I agree, this ground of appeal is dismissed. So far as the claim of depreciation on entire amount of consideration is concerned it is observed that depreciation can only be given on the actual payment made for acquisition of technical know- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's claim for deduction of the aforesaid amount of payment of Rs. 82,73,814/- as a revenue expenditure. The Grounds of appeal Nos. 2 to 2.2 are allowed in terms of our aforesaid observations. 5.5 Ld. DR could not distinguish the facts or site any other legal proposition to the contradictory. Thus, there is no reason to distinguish and this ground is allowed in favour of assessee. Ground no. 3 6. Assessee had made a claim of depreciation of Rs 60% on UPS but the AO restricted the claim of depreciation @ 15% only on the UPS and disallowed the excess 45% namely, Rs.50,320/-. 6.1 The Ld FAA held that The Appellant referred to certain judgments to contend that the claim should have been allowed @ 60%. I have considered the submissions and agree that depreciation @ 60% is allowable on Printers in terms of the decision in. However, depreciation of 15% only is admissible on UPS in terms of the decision in. The expenditure incurred on UPS was Rs.55,120/- whereas expenditure on Printers aggregated to Rs 56,704/-. While depreciation on Printers is held to be allowable @ 60%, the depreciation on UPS is restricted at 15%. The cost of UPS being 55,120/- a disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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