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TMI Blog2022 (7) TMI 854X X X X Extracts X X X X X X X X Extracts X X X X ..... peal of the revenue without adjudicating on merits. 2.2 The Ld. CIT(A) has erred in not following the decision of the Hon'ble apex court in the case of Sahney Steel and Press Works Ltd Vs CIT reported in 228 ITR 253 wherein identical issues are involved. 2.3 The Ld. CIT(A) has erred in ignoring the provisions of section 41(1) wherein VAT payments earlier claimed as deductions u/s.43B of the Act when got reimbursed, will partake nature of income in the hands of assessee. 2.4 The ld CIT(A) erred in allowing the claim of deduction towards corporate social responsibility merely following the decision in CIT Vs Madras Refineries Ltd reported in 313 ITR 334 without examining the facts of the case, when such decision did not lay down any law. 2.5 The ld CIT(A) has failed to note that the expenses incurred towards corporate social responsibility were not incurred wholly and exclusively for the purpose of business of assessee as envisaged in section 37(1) of the Act 2.6 The ld CIT(A) has erred in not following the decision of the Hon'ble Kerala High Court in the case of Malayala Manorama Ltd Vs CIT reported in 284 ITR 69 and decision of the Chennai Tribunal in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment for ten years, Government has considered to grant 75% VAT reimbursement to the assessee company for a period of five years both on output and input VAT and entitled for concessions and incentives as per Industrial Investment policy 2005-2010. The ld. Authorised Representative demonstrated the letter dated 09.01.2008 issued by the Government of Andhra Pradesh, Industries and Commerce Department regarding clarification on request for refund of Central Sales Tax besides VAT and domestic sale. We perused the Industrial Investment Promotion Policy referred at page 159 of the paper book which considered the incentives and subsidy provided to the units according to their investments criteria. Further, the facts that VAT subsidy is as per the order issued by the Government and further due to amendment to Sec. 2(24) (xviii) w.e.f. 01.04.2015 subsidy or a grant defined was made taxable under Income Tax. So, considering the apparent facts, provisions of law, industrial policy regulations, and rely on decision of Shree Balaji Alloys vs. CIT (2011) 198 Taxmann 122 (J & K), subsequently Hon'ble Supreme Court has upheld the decision in Civil Appeal No.10061/2011, dated 19.04.2016 by dismissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direct the ld. Assessing Officer to delete the addition and the ground of the assessee is allowed." Moreover, the explanation 2 to section 37 of the Act inserted by Finance Act, 2014 with effect from 01.04.2015 is not applicable in this case as the assessment year under consideration is 2014-15. Respectfully following the above decision of the Tribunal, the ld. CIT(A) has rightly directed the Assessing Officer to delete the addition of Rs..24,52,625/-. Thus, we find no infirmity in the order passed by the ld. CIT(A) on this issue and accordingly, the ground raised by the Revenue is dismissed. 6. The appeal filed by the assessee was delayed by 662 days in filing the appeal before the Tribunal. By filing a petition for condonation of delay in the form of an Affidavit, the submissions of the assessee are reproduced as under: "1. That the order of the Commissioner of Income Tax (Appeals)-3, Chennai passed under section 250 of the Income Tax Act dated 16.12.2019 for the AY 2014-15 was served on the deponent on 16.12.2019. 2. The Deponent had filed an appeal against the above Appellate Order before the Income Tax Appellate Tribunal, Chennai on 07.12.2021 with a delay of 662 days. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... done the delay in filing the appeal. 7. It is further affirmed that the above stated facts are true and correct to the best of my knowledge and belief." By explaining detailed reasons for the delay in filing the appeal before the Tribunal, the ld. Counsel for the assessee has prayed for condoning the delay and admitting the appeal for adjudication. The ld. DR has not seriously objected to the submissions of the ld. Counsel. Since the assessee was prevented by reasonable cause for the delay in filing the appeal before the Tribunal, the delay in filing the appeal is condoned and admitted the appeal for adjudication. 7. The first effective ground raised in the appeal of the assessee relates to confirmation of disallowance of depreciation claimed under section 32 of the Act amounting to Rs..20,48,31,501/-. In the assessment order, the Assessing Officer has noted that the assessee has claimed Rs..42,73,79,644/- as depreciation in the return of income. The assessee has claimed depreciation at the rate of 80% and additional depreciation on certain plant and machinery. The Assessing Officer asked the assessee as to why the depreciation claimed at the rate of 80% should not be restricte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e eligible for 80% depreciation. However, in the present case, on perusal of the assessment order or appellate order, it is not clear as to whether the said windmills and any specially designed devices which run on windmills are installed on or before 31.03.2012 or on or after 01.04.2012. Accordingly, we direct the Assessing Officer to verify as to whether the windmills are installed on or before 31.03.2012 or on or after 01.04.2012 and decide the issue afresh in accordance with law after affording an opportunity of being heard to the assessee. We make it clear that if the said windmills and any specially designed devices which run on windmills are installed on or before 31.03.2012 then the assessee would be eligible for depreciation at 80% and if the same was installed on or after 01.04.2012 then the assessee would be eligible for claiming depreciation at 15% only. 8. The next ground raised in the appeal of the assessee relates to confirmation of disallowance of additional depreciation claimed at Rs..3,01,17,327/- under section 32(1)(iia) of the Act. The assessee company claimed Rs.. 3,01,17,327/- as additional depreciation. The assessee was requested to produce the copies of inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce so as to justify the claim of additional depreciation. Thus, the disallowance additional depreciation claimed by the assessee of Rs. 3,01,17,327/- confirmed by the ld. CIT(A) is sustained. 9. The next ground raised in the appeal of the assessee relates to confirmation of addition of Rs. 5,88,18,500/- on account of disallowance of license fee. Against the claim of license fee, the Assessing Officer was of the view that the tenure of the agreement dated 29.07.2011 by which the license fee paid to the licensor M/s. Wind Direct GmbH, a German company being long gives the assessee enduring benefit and therefore the same is capital in nature. Therefore, the Assessing Officer disallowed the same under section 37 of the Act. On appeal, the ld. CIT(A) confirmed the disallowance. 9.1 We have heard the rival contentions. The assessee has claimed deduction of Rs. 5,88,18,500/- towards license fee paid to Wind Direct GmbH. Considering the tenure of the agreement, i.e., 20 years, an enduring technology benefit for the assessee, the Assessing Officer disallowed the same under section 37 of the Act. Before the ld. CIT(A), the assessee has relied on the decision of the Tribunal in assessee's o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. CIT, 412 ITR 436, after analyzing the decisions of the Hon'ble Supreme Court in the case of CIT vs CIBA of India Ltd, 69 ITR 692, Empire Jute Co. Ltd vs. CIT, 124 ITR T and Alembic Chemical works ltd vs CIT, 177 ITR 377 had held that license is only mere right to use the technical knowhow or trade mark. From the perusal of the license agreement, it is clear that appellant is conferred only right to use technical knowhow. The ownership always lies with licensor and the assessee had already set up the business. The technical knowhow is not used for the purpose of setting up the plant for manufacturer of wind energy generator. The technical knowhow is used in manufacturing of wind energy generator and therefore the ratio laid down by the Hon'ble Supreme Court in the case of Jonas Woodhead and Sons (India) Ltd (supra) is clearly not applicable. As regards to the decision of Hon'ble jurisdictional High Court in the case of Southern Switch Gear ltd (supra) is not applicable since the assessee is not entitled to use the technical knowhow made available in pursuance to the agreement after termination of the agreement and after expiry of period of twenty years. The ration l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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