9911796707
TMI Blog2024 (3) TMI 484X X X X Extracts X X X X X X X X Extracts X X X X ..... e and therefore it can be presumed that the assessee had sufficient own funds for making the aforesaid investment in tax-free securities. It is also evident from the record that the assessee has computed the suo-moto disallowance on the basis of the salary cost of the designated employees, however, there is no material available on record to show that the AO has recorded the requisite satisfaction to the effect that the computation made by the assessee is incorrect having regard to the accounts of the assessee. Since, in the present case, no proper satisfaction has been recorded by the AO in terms of the provisions of section 14A(2) of the Act, having regard to the accounts of the assessee, about the correctness of the claim of the assessee in respect of expenditure incurred in relation to exempt income, no reason for upholding the disallowance made by the AO u/s 14A read with Rule 8D of the Rules. Accordingly, the same is directed to be deleted. As a result, ground no.1 raised in assessee s appeal is allowed. Disallowance of expenditure incurred on the feasibility study report - HELD THAT:- From the perusal of the documents available on record, it is sufficiently evident that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it is not financially obligated to bear the cost of repayment of loans to the banks in case subsidiaries default in repayment, as the assessee itself has treated the credit facility extended to its subsidiaries pursuant to the letters of comfort as its contingent liability. During the hearing, no material was brought on record to controvert the disclosure made by the assessee in its financial statement. Further, from the document of the credit facility extended to Berger International Ltd, Singapore, we find that the credit facility was extended on the security/support of the letter of comfort issued by the assessee. As regards the ALP of the letters of comfort, the TPO considered 0.50% as the arm s length rate (being 50% of 1% fee for guarantee commission). While the learned CIT(A) reduced the arm s length corporate guarantee commission to 0.20%, and the arm s length rate for letters of comfort was also reduced to 0.04% (being 20% of 0.20%). During the hearing, the learned AR without prejudice to the main submission that the letters of comfort issued by the assessee are not an international transaction submitted that the corporate guarantee issued by the assessee cannot be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss than 180 days in the previous year, then the deduction in respect of depreciation shall be restricted to 50%. Accordingly, the assessee could claim only 10% of the additional depreciation for additions made in the second half of the financial year 2010-11 and the balance 10% additional depreciation was claimed in the year under consideration - HELD THAT:- We find that the coordinate bench of the Tribunal in assessee s own case cited supra, for the assessment year 2011-12 [ 2022 (7) TMI 1508 - ITAT MUMBAI] decided the similar issue in favour of the assessee by following the earlier decisions rendered in assessee s own case it is well settled by a number of judicial precedents that if for use of new plant and machinery for a period of less than 180 days the entire amount of additional depreciation cannot be claimed in the subject assessment year, the balance unclaimed amount can be claimed in the subsequent assessment year. It is also a fact on record, against similar claim allowed by learned Commissioner Appeals) in assessee's own case in Assessment Year 2008- 29, the revenue has not preferred any appeal before the Tribunal. In view of the above, we uphold the decision of Jea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had decided to waive Royalty by 2%. No material has been brought on record to show that there is no understanding between the assessee and its overseas subsidiaries to waive the Royalty. Such being the facts, we are of the considered view when only 1% Royalty is payable by the overseas subsidiaries, therefore the AO has no authority to make an addition of the balance 2% Royalty waived by the parties, which is nothing but a notional income considered taxable by the AO in assessee s hands. Before concluding, it is pertinent to note that in the assessment year 2011-12, the coordinate bench of the Tribunal decided a similar issue in favour of the assessee. Accordingly, in view of the aforementioned findings, we find no basis in the impugned addition made by the AO. As a result, ground raised by the Revenue is dismissed. Allowance of Corporate Social Responsibility ( CSR ) expenses - HELD THAT:- Explanation-2 to section 37(1) of the Act was introduced from 01/04/2015 and is prospective in nature, therefore CSR expenditures incurred prior thereto are allowable expenditures. We find that the in Pr.CIT v/s PEC Ltd [ 2022 (12) TMI 759 - DELHI HIGH COURT] held that amendment brought by way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. The Assessing Officer ( AO ) vide order dated 25/04/2016 passed under section 143(3) read with section 144C(3) of the Act assessed the total income of the assessee at Rs.1373,62,39,166, after making certain additions/disallowances. The learned CIT(A), vide impugned order, granted partial relief to the assessee. Being aggrieved, both the assessee as well as the Revenue are in appeal before us. ITA No.5363/Mum./2017 Assessee s Appeal A.Y. 2012 13 3. In its appeal, the assessee has raised the following grounds: 1) The learned Commissioner of Income Tax (Appeals) -55, Mumbai erred in applying Rule 8D and disallowed a sum of Rs. 66.75 lacs u/s 14A of the Income Tax Act, 1961. 2) The learned Commissioner of Income Tax (Appeals) -55, Mumbai disallowed Rs.174 lacs being expenditure incurred on feasibility study report for evaluation of various business opportunities as capital in nature. 3) The learned Commissioner of Income Tax (Appeals) -55, Mumbai erred in disallowing Rs.4.93 lacs on account of Transfer Pricing adjustments for non-recovery of charges for providing letter of support/comfort. 4) The learned Commissioner of Income Tax (Appeals)-55, Mumbai erred in confirming an ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case, the assessee earned a dividend income of Rs.40.57 crore, which has been claimed as exempt under section 10 of the Act. Further, there is also no dispute regarding the fact that the assessee while computing its taxable income suo-moto disallowed an amount of Rs.24,45,540 as an expenditure incurred for earning the aforesaid exempt income. As per the assessee, the aforesaid suo-moto disallowance is the salary cost in respect of the time spent by its employees on carrying out the investment-related activity, which has been computed as under: Disallowance u/s 14A of Income Tax Act (Estimated allocable expenses) Employee Designation Chief Financial Officer Senior Manager- Finance Finance Executive Total Proportionate salary Proportionate Interest amount Percentage 5% 25% 50% Cost to Company 1,62,88,500 30,28,400 10,30,600 Value of disallowance 8,14,425 7,57,100 5,15,300 20,86,825 3,58,715 Total Section 14A disallowance 24,45,540 9. It is the plea of the assessee that it has not engaged any specific staff for investment activity and the same is being carried out by the existing staff. Further, no incremental expenditure has been incurred on staff and other administrative activitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In that eventuality, it will have to record its satisfaction to this effect. Further, while recording such a satisfaction, the nature of the loan taken by the assessee for purchasing the shares/ making the investment in shares is to be examined by the Assessing Officer. Further, the Hon ble Supreme Court in Godrej Boyce Manufacturing Company Ltd. Vs DCIT: [2017] 394 ITR 449 (SC), observed as under: 37. We do not see how in the aforesaid fact situation a different view could have been taken for the Assessment Year 2002-2003. Sub-sections (2) and (3) of Section 14A of the Act read with Rule 8D of the Rules merely prescribe a formula for determination of expenditure incurred in relation to income which does not form part of the total income under the Act in a situation where the Assessing Officer is not satisfied with the claim of the assessee. Whether such determination is to be made on application of the formula prescribed under Rule 8D or in the best judgment of the Assessing Officer, what the law postulates is the requirement of a satisfaction in the Assessing Officer that having regard to the accounts of the assessee, as placed before him, it is not possible to generate the requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 14A of the Act read with Rule 8D of the Rules as expenditure incurred to earn exempt income. Thus, adding Rs.1.10 crores to the income of the respondent. (b) Being aggrieved, the respondent filed an appeal to the CIT(A) but without success. (c) On further appeal, the impugned order of the Tribunal while allowing the appeal held that before invoking the provisions of Rule 8D of the Income Tax Rules, the Assessing Officer has to record his non satisfaction with the suo moto disallowance of expenditure made towards earning exempt income by the respondent. This exercise not having been carried out by the Assessing Officer before applying Rule 8D of the Income Tax Rules, the disallowance of expenditure to earn exempt income cannot be sustained. (d) This issue is no longer res integra as the Apex Court in Gorej Boyce Mfg. Co. Ltd. Vs. Dy. CIT, 394 ITR 449 decided the issue in favour of the respondent. In the above case, the Supreme Court has while considering the issue of disallowing of expenditure incurred to earn exempt income observed as under:- Whether such determination is to be made on application of the formula prescribed under rule 8D or in the best judgment of the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The assessee further submitted that it has strategically looked at the home improvement and decor sector as an avenue for future growth especially since it has synergy with the existing line of decorative paint business in India. Accordingly, the assessee claimed that the expenses on exploratory exercises are incurred out of commercial expediency to expand the existing business by exploring new markets, products, etc. The AO vide assessment order did not agree with the submissions of the assessee and held that the assessee is in the field of paints business and based on the feasibility report the assessee entered into a completely new line of business, i.e. kitchen business, which is nowhere connected to its existing in business. Accordingly, the AO held that the expenditure amounting to Rs.1,74,40,000 paid to Avalon Consulting towards the feasibility report study is capital expenditure. 17. The learned CIT(A), vide impugned order, dismissed the ground raised by the assessee on this issue and held that the assessee is venturing into a new line of business, i.e. home improvements and decor, especially in the kitchen, which is not an extension of the existing business of paints. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to altogether a new line of business, which is different from the existing business of manufacturing paints and enamels. We agree with the conclusion of the learned CIT(A) that the new line of business operates completely on different domains, as the infrastructure, expertise, workforce and all other connected things engaged and involved are completely different. During the hearing, the learned DR placed reliance upon the decision of the Hon ble jurisdictional High Court in CIT v/s Zenit Steel Pipes and Industries Ltd, [2009] 315 ITR 95 (Bom.), wherein following the earlier decision of the Hon ble High Court in CIT v/s JK Chemicals Ltd, [1994] 207 ITR 985 (Bom.) it was held that expenditure incurred on obtaining market survey for setting up new line of business is a capital expenditure. Therefore, respectfully following the aforesaid decision and in view of the aforementioned findings, we find no infirmity in the findings of the learned CIT(A) on this issue. However, from the details of expenditure, as available on page no.258 of the paper book, we find that the entire expenditure of Rs.1,74,40,000 was not incurred on obtaining a feasibility report in respect of home improvement an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter of comfort is to be regarded as an international transaction, as an intergroup service has been rendered by the assessee to its associated enterprise. Considering the similarity in the facts and circumstances of the case vis-a-vis the issuance of corporate guarantee, the arm s length rate of the letter of comfort was determined at 0.50% (being 50% of 1% fee for guarantee commission). Accordingly, the TPO computed the transfer pricing adjustment of Rs.61,72,873 (i.e. 0.50% of Rs.123.46 crore) in respect of the letter of comfort issued by the assessee. 22. The learned CIT(A), vide impugned order, by following the orders of its predecessor in assessee s own case in earlier years restricted the arm s length rate of letters of comfort to 0.04% and confirmed the adjustment to the extent of Rs.4,93,840. Being aggrieved, both the assessee as well as the Revenue are in appeal before us. 23. We have considered the submissions of both sides and perused the material available on record. During the year under consideration, the assessee issued letters to the banks on behalf of some of its associated enterprises (i.e. Asian Paints (Bangladesh) Ltd. and Berger International Ltd, Singapore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to this company. (ii) Re: Facilities extended by Citibank N A to Berger International Limited, Singapore We confirm that we are aware of the facilities amounting to SGD 36.5 mn extended by Citibank N.A to our subsidiary (herein referred to as the Company ) We will continue to lend management and technical support to this Company and will be fully supportive of its operations. We, Asian Paints Limited confirm that it is our intention to maintain our majority ownership and management control of this company during the continuation of the facilities and that we will use are best endeavors to see that the obligations of the company y are met with as and when they fall due. We will also not do anything or take any step so as to permit the company to enter into liquidation (whether compulsory or voluntary) or any arrangement with its creditors in a manner as to prejudice your rights against the company in respect of the said facilities. We undertake to provide your bank with adequate notice if we decide to divest ourselves of our ownership in the company and/or reduce our management and technical support to this company. 25. At the outset, from the perusal of aforesaid letters, the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee issued letters of comfort on behalf of its associated enterprises outside India. Thus, in our considered view, the first condition for being an international transaction is satisfied in the present case. The aforesaid provision further requires that the transaction, inter-alia, needs to be of the following nature:- (a) purchase, sale or lease of tangible or intangible property; or (b) provision of services or lending or borrowing money; or (c) any other transaction having a bearing on the profits, income, losses or assets of such enterprises 28. From the perusal of the financial statement of the assessee, forming part of the paper book from pages 1-27, we find that the assessee has declared the letters of comfort/support issued to the banks on behalf of some of its subsidiaries as its contingent liability in Note-25 of the Notes to Financial Statements, as under:- NOTE 25: CONTINGENT LIBILITIES AND COMMITTMENTS (Rs. In Crores) a) Contingent Liabilities As at 31.03.2012 1. Guarantee given on behalf of Company s dealers in respect of loans granted to them by a bank for acquiring dealer tinting systems. 2.49 2. Corporate guarantees issued by the Company to certain banks on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment years, wherein the coordinate bench of the Tribunal held that issuance of a letter of comfort/support is not an international transaction within the meaning of the provisions of the Act. We find that the coordinate bench of the Tribunal in assessee s own case in Asian Paints Ltd v/s Addl.CIT, in ITA No. 2754/Mum./2014, vide order dated 03/02/2021, for the assessment 2009-10, observed as under:- 7. We have considered rival submissions in light of the decisions relied upon and perused materials on record. After going through sample copy of letter of comfort / support given to the bank towards loan availed by the AE, we have noticed that there is no liability or responsibility fastened with the assessee for making good the liability of the AE in case of any default. There is nothing on record to suggest that in case of any default by the AE, the outstanding loan will be recovered from the assessee. Pertinently, while sustaining a part of the adjustment made by the TPO, learned Commissioner (Appeals) has equated the letter of comfort / support to corporate guarantee. In our view, on perusal of the letter of comfort / support, it cannot be construed to be in the nature of any s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame to be reasonable in the peculiar facts and circumstances of the present case. Accordingly, ground no.3 raised in assessee s appeal is dismissed. 33. Ground no.4 raised in assessee s appeal was not pressed during the hearing. Accordingly the same is dismissed as not pressed. 34. During the hearing, the applications dated 16/03/2021 seeking admission of additional grounds of appeal were not pressed by the assessee. Accordingly, these applications are dismissed as not pressed. 35. In the result, the appeal by the assessee is partly allowed. ITA No.5934/Mum./2017 Revenue s Appeal A.Y. 2012 13 36. In its appeal, the Revenue has raised the following grounds: 1 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in restricting the disallowance on account of Letter of Comfort to 0.04% as against 0.50%., without appreciating the facts of the case. 2 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the A. O. to verify the allowability of expenditure incurred u/s 35(2AB) without appreciating the fact that the expenditure was disallowed by DSIR (as per Certificate in Form No. 3CL) as the same was not incurred for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pertains to restricting the transfer pricing adjustment on account of the letter of comfort. In view of our findings rendered in assessee s appeal on a similar issue, ground no.1 raised in Revenue s appeal is dismissed. 38. The issue arising in grounds no.2, 10, 11, and 12, raised in Revenue s appeal, pertains to allowability of expenditure under section 35(2AB) of the Act. 39. The brief facts of the case pertaining to this issue, as emanating from the record, are: During the assessment proceedings, it was observed that the assessee has claimed weighted deduction under section 35(2AB) of the Act. Accordingly, the assessee was asked to produce the certificate issued by the Department of Science and Industrial Research ( DSIR ) in Form No.3CL and reconciliation for the same. In response thereto, the assessee submitted that it has recognised R D unit at Turbhe (Navi Mumbai) and during the year claimed weighted deduction under section 35(2AB) of the Act for expenditures other than the land and building. The assessee furnished the copy of approval from DSIR obtained in Form No.3CM during the assessment proceedings. It was further submitted that the certificate in Form No.3CL is expected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipt of the certificate in Form No.3CL, the AO granted partial relief to the assessee and restricted the disallowance to Rs.579.81 lakh vide rectification order dated 06/10/2017. 43. We find that while deciding a similar issue the coordinate bench of the Tribunal in assessee s own case in Asian Paints Ltd v/s Addl. CIT, in ITA No. 2178/Mum./2012, vide order dated 20/12/2013, for the assessment year 2007-08, restored the issue to the file of the AO with a direction to decide the same afresh after verifying whether the expenditure in question has been incurred by the assessee on research and development, which is eligible for deduction under section 35(2AB) of the Act. The relevant findings of the coordinate bench, in the aforesaid decision, are reproduced as under:- 13. We have heard the arguments of both the sides on this issue and also perused the relevant material on record. In support of the assessee's case, the Id. Counsel for the assessee has relied on the decision of the Hon'ble Gujarat High Court in the case of CIT vs Cadila Health Care Itd. 87 DTR 56. A perusal of the judgment passed by the Hon'ble Gujarat High Court in this case, however, shows that the expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the time of the hearing before us. He, however, has contended that the claim of the assessee of having incurred the expenditure in question on R D which is eligible u/s 35(2AB) has not been examined either by the AO or by the ld. CIT(A). He has urged that the matter may therefore be restored to the file of AO for giving him an opportunity to verify the same. We find merit in this contention of the Id. DR and since the Id. Counsel for the assessee has also not raised any objection in this regard we restore this issue to the file of the AO with a direction to decide the same afresh after verifying whether the expenditure in question has been incurred by the assessee on research and development which is eligible for deduction u/s 35(2AB). The appeal of the assessee is accordingly treated as allowed for statistical purpose. 44. We find that similar directions were also rendered by the coordinate bench of the Tribunal in assessee s own case in subsequent assessment years, i.e. 2009-10, 2010-11, and 2011-12. The learned DR could not show us any reason to deviate from the aforesaid decision and no change in facts and law was alleged in the relevant assessment year. Since the learned CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the consequential effect in the opening stock be given. Being aggrieved, the Revenue is in appeal before us. 48. We have considered the submissions of both sides and perused the material available on record. We find that while deciding a similar issue in assessee s own case the coordinate bench of the Tribunal in Addl. CIT v/s Asian Paints Ltd., in ITA No. 749/Mum./2017, for the assessment year 2011-12, vide order dated 28/07/2022, observed as under:- 32. Considered the rival submissions and material placed on record, we observe that assessee is valuing closing stock for damaged stock taking the value at NIL and however, Assessing Officer makes disallowance to the extent of 0.5% of the value of closing stock and the same was confirmed by the Coordinate Bench in the earlier years from A.Y. 2003-04 to-2006-07 and A.Y. 2008-09. We further observed that following the decision of the ITAT, the Ld.CIT(A) in A.Y: 2009-10 and A.Y. 2010-11 had followed the same. Respectfully following the earlier decision of the ITAT, Ld.CIT(A) in the present appeal also allowed the same. Considering the fact on record and also this method is consistently followed by the assessee over the years there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee in the year under consideration and added the same to the total income of the assessee. 53. The learned CIT(A), vide impugned order, allowed the ground raised by the assessee on this issue by following the decision of its predecessor in assessee s own case. Being aggrieved, the Revenue is in appeal before us. 54. We have considered the submissions of both sides and perused the material available on record. We find that the coordinate bench of the Tribunal in assessee s own case cited supra, for the assessment year 2011-12, vide order dated 28/07/2022, decided the similar issue in favour of the assessee by following the earlier decisions rendered in assessee s own case. The relevant findings of the coordinate bench, in the aforesaid decision, are reproduced as under:- 35. Considered the rival submissions and material placed on record, we observe that similar issue was considered and adjudicated by the Coordinate Bench in assessee's own case for the A.Y. 2010-11 and decided the issue in favour of the assessee. While holding so the Coordinate Bench held as under: - 035. Ground number 6 is in relation to allowing the additional depreciation at the rate of 10% amounting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned Commissioner (Appeals). Taking note of the decision cited by the assessee including the decision of the Tribunal in assessee's own case for Assessment Year 2008 09, learned Commissioner (Appeals) deleted the disallowance made by the Assessing Officer. 40. The learned Departmental Representative supporting the decision of the Assessing Officer submitted, additional depreciation is a onetime allowance granted to the assessee for installing new v plant and machinery. Any unclaimed amount cannot be set off in the subsequent assessment year 41. The learned Counsel for the assessee strongly relying upon the decision of the first appellate authority submitted, the issue is now squarely covered by a number of judicial precedents including the decision of the Tribunal in assessee's own case. 42. We have considered rival submissions and perused materials on record. The facts on record clearly reveal that assessee had purchased and installed new plant and machinery in the preceding assessment year, which is eligible for additional depreciation @20%. However, since the new assets were put to use for less than 180 days in the preceding assessment year, the claim of additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... promotion expenses . Further, these expenses are mainly in the nature of providing freebies to the dealer in the form of luxury foreign/local tours and travels. During the assessment proceedings, the assessee was asked to furnish details of advertisement and sales promotion expenses. On perusal of these details, it was observed that the assessee has incurred an expenditure of Rs.75,91,09,528 under its Trip Scheme for its dealers. The AO vide assessment order disallowed the aforesaid expenditure on the basis that in the entire foreign trip of the dealers, there was no conference, exhibition, or meeting abroad to justify that the expenses are for business purposes. The AO held that the expenditure was incurred for the pure leisure trip for the dealers and accordingly cannot be said to have been expended wholly and exclusively for the purpose of the business. Accordingly, the AO disallowed the entire expenditure of Rs.75,91,09,528. Further, in the alternative, the AO held that even if these expenditures are considered in the nature of commission paid by the assessee directly to its dealers, in the absence of deduction of TDS under section 194H, these expenses are disallowable under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The assessee having failed to do so, the amount has to be disallowed under section 40(a) (ia) of the Act. 46. The learned Counsel for the submitted, there is no question of payment of any commission to the dealers and distributors as there is no principal agent relationship between the assessee and them. He submitted, the transactions with the distributors were carried out purely on principal-to-principal basis. Therefore, there is no liability to deduct tax under section 194H of the Act. In support, the learned Counsel relied upon the following decisions:- 1. CIT, Pune vs. Intervet India Pvt. Ltd. (ITA 1616/2011-Bombay High Court 2. Pr. GT vs. Reliance Communication Infrastructure Ltd. (ITA No. 702 of 12017-Bombay High Court 3. DOT vs. BCH Electric Ltd. (ITA 1336/Kol/2012) 4. ACIT vs. Raymond Ltd. ITA 5889/M/10 5. CIT vs. Piramal Healthcare Ltd. 230 Taxman 505 (Bom) 6. CIT vs. Qatar Airways 332 ITR 253 (Bom) 7. Radhasaomi Satsang vs. CIT (193 ITR 321 (SC) 47. Without prejudice, the learned Counsel submitted, since no amount has been paid or credited to the distributors, question of deduction of tax at source does not arise. Further, he submitted, whatever amount the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the coordinate bench in assessee's case own for assessment year 2009 10, in absence of any contrary evidence, we uphold the order of the learned CIT A deleting the above disallowance of Rs.252,660,686/-. Accordingly, ground number 7 of the appeal is dismissed. 60. We find that similar findings were rendered by the coordinate bench in assessee s own case for the assessment year 2011-12 cited supra. We find that this issue is recurring in nature and has been decided in favour of the assessee in the preceding assessment years. The learned DR could not show us any reason to deviate from the aforesaid decision and no change in facts and law was alleged in the relevant assessment year. Thus, respectfully following the judicial precedents in assessee s own case cited supra, ground no.6 raised in Revenue s appeal is dismissed. 61. The issue arising in ground no.7, raised in Revenue s appeal, pertains to deletion of addition on account of waiver of royalty received from two subsidiaries. 62. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee has various associated enterprises all over the globe situated in various countries from which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g study report, forming part of the paper book, it is claimed that the overseas subsidiaries are charged a Royalty of 1% to 3% on net sales realised product manufactured using the technology transferred by the assessee. The assessee entered into an agreement with its indirect subsidiaries, i.e. Asian Paints (Bangladesh) Ltd and Asian Paints (Lanka) Ltd, according to which the assessee was to receive a Royalty of 3% of net sales. However, considering the financial position of the group companies, the assessee agreed to waive the charges of the Royalty until the subsidiary company achieves breakeven. As a result, during the year under consideration, the assessee has accounted for Royalty income at 1% net sales basis and received Royalty income of Rs.24,18,244 from Asian Paints (Lanka) Ltd and Rs. 92,54,784 from Asian Paints (Bangladesh) Ltd. It is pertinent to note that the assessee declared the aforesaid international transaction pertaining to the receipt of Royalty income from its subsidiaries in Bangladesh and Sri Lanka in Form 3CEB and benchmarked the same by comparing it with the rate of Royalty charged to overseas subsidiaries. Undisputedly, the TPO vide order passed under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und no. 7 raised by the Revenue is dismissed. 66. The issue arising in ground no.8, raised in Revenue s appeal, pertains to allowance of Corporate Social Responsibility ( CSR ) expenses. 67. We have considered the submissions of both sides and perused the material available on record. During the year under consideration, the assessee claimed the deduction of Rs.21,36,527 under section 37(1) of the Act on CSR expenses. As per the assessee these expenditures are incurred in the vicinity of its manufacturing plants on blood donation camp, repairs to the school, contribution to Red Cross society, purchase of uniforms for children, contribution towards tree plantation, etc. It is an undisputed fact that all these expenditures were incurred at its manufacturing plants at Ankleshwar, Cuddalore, Patancheru, and Rohtak. The AO disallowed the aforesaid expenditure on the basis that the assessee has neither proved any commercial expediency nor any obligation towards the school and other purposes. However, the learned CIT(A), vide impugned order allowed these expenditures on the basis that similar expenditure was allowed in assessee s own case in the assessment year 2005-06. It was further hel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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