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TMI Blog2024 (9) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... t of total disallowance of Rs. 19,63,90,203 made by the Assessing Officer in respect of legitimate business expenditure incurred by the appellant-company for sponsorship expenses of medical practitioners/doctors. 2. On the facts and in the circumstances of the case, the learned CIT(Appeals) erred in confirming disallowance of Rs. 21,29,612 made by the Assessing Officer in respect of employees' contribution to PF/ESI, on the ground that the same was not paid within the prescribed time limit under the PF/ESI Acts, even though the payment was made within the time limit for filing the return of income u/s 139(1) of the I.T. Act. 3. On the facts and in the circumstances of the case, the learned CIT(Appeals) erred in confirming the Assessing Officer's action in reducing the quantum of deduction u/s. 80-IC in respect of the Baddi Unit by excluding the following items of income from the profits of the Baddi Unit eligible for such deduction: Rs. (a) Cash discount 9,40,184 (b) Export benefits 3,72,14,846 (c) Insurance Income 8,418 (d) Government Grant 3,41,469 (e) Interest Income 23,106 Total 3,85,28,023 4. On the facts and in the cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n u/s.80-IE of the I.T Act. Rs. (a) Insurance Income 49,259 (b) Government Grant 57,071 (c) Interest Income 68,809 Total: 1,75,139 11. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal. 3.1 The assessee vide letter dated 13-01-2023 also raised following additional grounds of appeal: The Appellant craves leave to raise these additional grounds of Cross Objections before the Hon'ble ITAT. This are legal grounds and therefore, as per the decision of Hon'ble Supreme court in the case of National Thermal Power (229 ITR 383), it can be raised before the Hon'ble ITAT. In view of the above, the appellant hereby raises following grounds as additional grounds of Appeal, which is without prejudice to the grounds raised by the appellant while filing appeal in Form 36A. 1. Without prejudice to all the grounds raised, in law and in the facts and circumstances of the appellant's case, the appellant requests Hon'ble ITAT for admission of its additional claim and for not including the Excise Refund of Rs. 22,00,96,112/- receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise from the order of the Commissioner of Income-tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross-objections before the Tribunal. The Tribunal should not be prevented from considering questions of law arising in assessment proceedings, although not raised earlier. 3.5 From the above, it is transpired that the view that the Tribunal is confined only to those issues arising out of the appeal before Commissioner (Appeals) is too narrow a view to describe the powers of the Tribunal. Undoubtedly, the Tribunal has the discretion to allow or not to allow a new ground to be raised. In view of the above judgment referred to above, we admit the additional grounds raised by the assessee. 4. The 1st issue raised by the assessee is that the Ld. CIT-A erred in confirming the disallowance of Rs. 15,15,09,216/- out of total disallowance of Rs. 19,63,90,203/- made by the AO related to expenses incurred on account of sponsorship expenses of medical practitioners/doctors. 5. The facts in brief are that the assessee, a public company, engaged in the business of manufacturing and marketing of pharmaceutical products. The assessee during the year under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned head includes gift items distributed to various stakeholders which were less than Rs. 1000/- only. Further, it is also not the case that the gift items were exclusively given to doctors/medical practitioners only. Therefore, same cannot be said to be incurred in violation of regulation issued by the Indian Medical Council in exercise of power conferred under section 33 of Indian Medical Council Act 1956 and the consequent CBDT circular bearing No. 05/2012 dated 01-08-2012. The learned CIT(A) also found that identical disallowance was made in the own case of the assessee for AY 2011-12 and 2012-13 which was allowed by predecessor CIT(A) in favour of the assessee. Accordingly, the learned CIT(A) deleted the disallowances of 10% of "Business Advancement and Sales Promotion" made by the AO for Rs. 5,30,61,002/- and Rs. 37,78,978/- respectively. 6.1 Regarding the expenses claimed under the head "Doctor's Sponsorship" amounting to Rs. 19,63,90,203/-, the learned CIT(A) concurred with the view of the AO. However, the learned CIT(A) held that CBDT circular prohibiting the expenses for benefit of doctor was issued on 01-08-2012. Therefore, the expenses incurred before 01-08-2012 cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 (the regulations) on 10-12-2009 wherein the MCI has imposed prohibition on the medical practitioner and their professional associations from taking any Gift, Travel facility, Hospitality, Cash, or monetary grant from the pharmaceutical and allied health sector Industries. Subsequently, the CBDT vide circular No. 05/2012 dated 01-08-2012 clarified that expenditure incurred by the pharmaceutical or allied health sector industries in the nature of freebie to doctors is in violation of above mentioned regulation of MCI and therefore, such expenditure will not be allowed as deduction to the pharmaceutical or allied health sector industries under the provision of explanation to section 37(1) of the Act being expenses incurred for a purpose which is either an offence or prohibited by law. 8.1 However, based on the judicial trend, freebies given to /expenses incurred for the benefit of doctors by pharmaceutical companies were allowed as a deduction under section 37(1) of the Act. Previously, it has also been held that regulation issued by the MCI are only applicable to medical practitioners/doctors and same can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CBDT Circular 05/2012 dated 01-08-2012 shall be applicable prospectively or retrospectively i.e. whether applicable from the date on which circular was published (01-08-2012) or from the date on which MCI regulation was published (14-12-2009). In this regard we note that the Hon'ble Supreme court in case of M/s Apex Laboratories (P.) Ltd. (Supra) held that "The CBDT circular being clarificatory in nature, was in effect from the date of implementation of Regulation 6.8 of the 2002 Regulations, i.e., from 14-12-2009." Hence, it is settled position now that CBDT circular prohibiting allowance/ deduction of expenses incurred by the pharmaceuticals industries in nature of freebie to doctor is applicable retrospectively from 14-12-2009. 8.5 Coming to the facts of the case on hand, the assessee has claimed deduction of certain expenditures which are, or which included expenses in the nature of freebies to doctors. Such expenditures are detailed as under: (1) Business Advancement Expenses Rs. 53,06,10,021/- (2) Sales Promotion Expenses Rs. 3,77,89,705/- (3) Doctor's Sponsorship Rs. 19,63,90,203/- 8.6 Regarding the expenses under the head "Business Advancement & Sales Promotion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e us also failed to establish that the expenses under the head "Doctors Sponsorship" are not in the nature of freebies to doctor. However, the learned CIT(A) divided the amount incurred before and after the date of issue of CBDT circular bearing No. 05/2012 dated 1-8-2012. The learned CIT(A) accordingly held that the expenses incurred before 1st August 2012 shall not be subject to the disallowance. As such, the learned CIT(A) held the applicability of the impugned circular with prospective effect. On the other hand, we have already discussed in the preceding paragraph that the Hon'ble Supreme Court has taken the view that the impugned circular is clarificatory in nature and applicable with retrospective effect from 1st April 2009. Hence, we hereby set aside the finding of the learned CIT(A) and held that entire amount of expenses incurred during the year under the head "Doctors Sponsorship" shall be disallowed. Thus, in view of the above discussion, the grounds of appeal raised by the assessee and Revenue are hereby partly allowed. 9. The next issue raised by the assessee vide ground No. 2 of its appeal is that Ld. CIT(A) erred in confirming the disallowance of employee's contribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,48,476/- (ii) Sale of Scrap Rs. 93,83,606/- (iii) Service tax refund Rs. 2,92,338/- (iv) Miscellaneous and rounding off Rs. 34,59,093/- (v) Forex gain Rs. 54,93,768/- (vi) Cash discount Rs. 9,40,184/- (vii) Export benefit Rs. 3,72,14,846/- (viii) Insurance income Rs. 8,418/- (ix) Interest Income Rs. 23,106/- (x) Government grant Rs. 3,41,469/- 15.1 Nevertheless, the assessee has claimed deduction under section 80-IC of the Act by treating them as profit derived from the business of eligible undertaking. However, the AO disputed the deduction with respect to such items of income by holding that such incomes are not derived from business of manufacturing of article or things. In other words, the above incomes did not have direct nexus with the manufacturing activity of the eligible undertaking. Thus, the AO denied the deduction claimed by the assessee. On appeal by the assessee, the learned CIT(A) allowed deduction on certain items as income eligible for deduction under section 80-IC of the Act and simultaneously, confirmed the disallowance of certain item by holding them non-eligible for deduction under section 80-IC of the Act. Thus, both the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or deduction under sections 80-I and 80-IA." 73.2 In view of the above, we hold that the assessee is eligible for deduction in respect of the income as discussed above under section 80 IC of the Act. Accordingly we direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed and the Revenue is dismissed. 69.3. Respectfully following the same, we do not find any reason to interfere in the order of the ld. CIT-A and thus direct the AO grant the deduction under section 80-IA of the Act on the items of income as discussed above. Hence, we hereby dismiss the ground of appeal of the Revenue. 16.1 Before us, no material has been placed on record by the Revenue demonstrating that the decision of the Tribunal in own case of the assessee as discussed above has been set aside/stayed or overruled by the Higher Judicial Authorities. Before us, no material was placed on record pointing out any distinguishing feature in the facts of the case of earlier AY and the year under consideration. Thus, respectfully following the order of the tribunal in the own case of the assessee discussed above, we do not find any infirmity in the finding of the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is eligible for deduction under section 80-IC of the Act with respect to the income being service tax discussed above in the given facts and circumstances. (vi) Miscellaneous income (Revenue appeal) 18. At the outset, we note that identical issue came before this Tribunal in own case of the assessee for A.Y. 2007-08 and 2008-09 in ITA No. 907 and 1634/AHD/2012 where the issue has been decided in favour of the assessee and against the Revenue vide order dated 15-05-2019. The relevant finding of the Bench is extracted as under: "73. We have heard the rival contention and perused the material available on record. The issue in the instant case is whether the miscellaneous income such as Penalty Received from Supplier, Discount Received from Vendors and Export Benefits are eligible for the deduction u/s 80IC of the Act. 73.1 It is an undisputed fact that all the aforesaid income or arising from the activities carried out by the industrial undertaking eligible for deduction under section 80IC of the Act. Therefore we are of the considered view all the incomes are eligible for deduction under section 80A of the Act. Regarding this we find support and guidance from the judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2022. The relevant finding of the Bench is extracted as under: 223. We have heard the rival contentions of both the parties and perused the material available on records. With respect to the foreign exchange income, we note that this issue has already been allowed in favour of the assessee in the series of judgments which have been reproduced in the order of the learned CIT-A. At the time of hearing, the learned DR has not brought anything on record contrary to the finding of the learned CIT-A. 19.1 Before us, no material has been placed on record by the Revenue demonstrating that the decision of the Tribunal in own case of the assessee discussed above has been set aside/stayed or overruled by the Higher Judicial Authorities. Before us, no material was placed on record pointing out any distinguishing feature in the facts of the case of earlier AY and the year under consideration. Thus, respectfully following the order of the tribunal in the own case of the assessee discussed above, we do not find any infirmity in the finding of the learned CIT(A). Thus, we hold that the assessee is eligible for deduction under section 80-IC of the Act with respect to the income being Forex Gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing the order of the tribunal in the own case of the assessee discussed above, we hereby set aside the finding of the learned CIT(A). Thus, we hold that the assessee is eligible for deduction under section 80-IC of the Act with respect to the income being Cash Discount discussed above. (vii) & (viii) Export benefit & Insurance Income (Assessee's appeal) 21. At the outset, we note that identical issue came before this Tribunal in the own case of the assessee for AY 2010-11 in ITA No. 1286/Ahd/2017 where the issue has been decided in favour of the assessee and against the Revenue vide order dated 22-02-2022. The relevant ground of appeal and the relevant finding of the Bench is extracted as under: Ground of appeal 89. Ground No.4 : By this ground, assessee challenges order of the ld. CIT(A), who has confirmed the action of the ld.AO in reducing the following income while computing deduction under section 80IC of the Income Tax Act, 1961. (d) Other income Rs. 76,774/- (e) Export Benefits Rs. 1,23,57,230/- (f) Insurance Income Rs. 2,69,386/- (g) Penalties recovered from suppliers Rs. 2,60,250/- Finding of the bench 94. Heard both the sides. We have also gone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income as discussed above under section 80 IC of the Act. Accordingly, we direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed, and the Revenue is dismissed." 94.1. In view of the above order of the Tribunal, we do not find any disparity of facts and circumstances in the present year as that of earlier years. Therefore, we are unable to deviate from the view taken by the Co-ordinate Bench on this issue. We set aside orders of the Revenue authorities on this issue, and allow impugned claim of the assessee. This ground of appeal of the assessee is allowed. 21.1 Before us, no material has been placed on record by the Revenue demonstrating that the decision of the Tribunal in own case of the assessee discussed above has been set aside/stayed or overruled by the Higher Judicial Authorities. Before us, no material was placed on record pointing out any distinguishing feature in the facts of the case of earlier AY and the year under consideration. Thus, respectfully following the order of the tribunal in the own case of the assessee discussed above, we hereby set aside the finding of the learned CIT(A). Thus, we hold that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rived from'. The relevant decision of the Supreme Court reads as under: "The Legislature has deliberately used the expression 'attributable to', having a wider import than the expression 'derived from', thereby intending to cover receipts from sources other than the actual conduct of the business of the specified industry." (p.85) 23.2 From the ratio of the aforesaid decision of the Hon'ble Apex Court, it emerges that the phrase 'derived from' covers receipts from the actual conduct of business of the specified industry as provided under section 80-IC of the Act. 23.3 Likewise, as per the Hon'ble Bombay High Court in the case of Hindustan Lever Ltd. v. CIT [1980] 121 ITR 951/3 Taxman 390, the word 'derived' as far as income-tax law is concerned, has been given a narrow meaning - a strict meaning, by the courts and has been understood in the restricted sense of a direct derivation and not understood in the broad sense as equivalent to be derived directly or indirectly. In other words, only the proximate source has to be considered and not the source to which it may ultimately be referable. 23.4 In the light of the aforesaid discussion, it may safely be concluded that the expre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expenses incurred in earning such interest income. Hence the ground of appeal of the assessee in this regard is partly allowed. (x) Government grant (Assessee) 24. The assessee during the year under consideration receives a government grant of Rs. 3,41,469/- in the Baddi unit from the Department of Biotechnology under the scheme of Biotechnology Industry Partnership Program. Such grant was received by the assessee for undertaking research in frontier futuristic technology to make Indian industry globally competitive. The assessee claims that the research activity is essential to its business, therefore such receipt of grant is eligible for deduction under section 80-IC of the Act. 24.1 However, AO disallowed the claim of the assessee by holding Government Grant for undertaking research activity is not the profit or gains derived from the activity of manufacturing. 24.2 On appeal by the assessee, the learned CIT(A) also confirmed the finding of the AO. 24.3 Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. 24.4 The learned AR before us submitted that the grant received by it has direct nexus and therefore, the same should be eligibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . As per the AO, the administrative expenses are required to be allocated based on the turnover of the respective units. Accordingly, the AO allocated an additional sum of Rs. 2,36,92,391/- to Baddi Unit and Rs. 5,50,80,826/- to the Sikkim Unit which resulted in a reduction in the deduction under section 80IC and 80IE of the Act of the respective eligible unit. 27. On appeal by the assessee, the learned CIT(A) confirmed the finding of the AO by observing that the method adopted by the AO for allocation of administrative expenses based on turnover is an appropriate method. 28. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. 28.1 The learned AR before us submitted that in the earlier year, the administrative expenses were allocated based number of employees, and the same basis should be adopted by the Revenue in the year in dispute. 28.2 On the other hand, the learned DR vehemently supported the order of the authorities below. 29. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that an identical issue came before this Tribunal in the own case of the assessee for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking of the assessee. Regarding the allocation, we are of the view that these expenses cannot be allocated based on the turnover. It is because the turnover of any undertaking is very much volatile and keep on changing depending upon the market forces, competition, Government policies, etc. There can be a situation that the turnover of one undertaking is very high in a particular year but in the subsequent year the turnover may go done or vice versa which will affect the pattern and consistency in the allocation of the administrative expenses and distort the presentation of the financial statements for different years. Therefore we are of the considered view that the basis of the allocation of administrative expenses based on the turnover is not advisable. 21.5 The next controversy arises what should be the basis of the allocation of the said expenses in the given facts and circumstances. Generally, the human resources working in any of the undertakings of the assessee does not frequently change as the market forces do not regulate it, unlike the sales. Therefore, in the given facts and circumstances, we are of the view that the allocation of the administrative expenses should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of both the parties and perused the materials available on record. At the outset, we note that an identical issue came before this Tribunal in the own case of the assessee for AY 2011-12 in ITA No. 1396/AHD/2018 where the issue has been decided against the assessee vide order dated 22-02-2022. The relevant finding of the Bench is extracted as under: 146. We have heard the rival contentions of both the parties and perused the materials available on record. There are certain expenses which are allowed on payment basis in pursuance to the provisions of section 43B of the Act irrespective of the year of incurrence. One of such expenditure is leave encashment. Admittedly, the assessee has not made the payment of the leave encashment and therefore the same can't be allowed as deduction. However, the assessee is at liberty to claim the deduction of such expense in the year of payment. Thus the ground of appeal of the assessee is dismissed in terms of the above. 34.1 Before us, no material has been placed on record by the learned AR demonstrating that the decision of Tribunal in own case of the assessee discussed above has been set aside/stayed or overruled by the Higher Judicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture must be approved by the prescribed authority (DSLR). When the prescribed authority has categorically certified that such expenditure is outside approved facility it cannot be allowed. In this regards reliance is also placed upon the decision of the Hon'ble Supreme Court in a bench of Five Judges in the case of Padmasundara Rao vs State of Tamil Nadu [2002] 255 ITR 147 and also in the case of Prakash Nath Khanna vs. CIT [2004] 266 ITR 1 (SC). "Once it is shown that the case of the assessee comes within the letter of the law, he must be taxed, however great the hardship may appear to the judicial mind to be" Further reliance is placed on the judgment of II'AT [2012] 54 SOT 615 (MUM) / [2012] 24 taxmann.com 218 (MUM) [04.07.2012] in the case of USV Ltd. vs. DCIT Circle-32, Mumbai wherein hon'ble tribunal held as under: "Whether expenses not reported in Department of Scientific and Industrial Research (DSLR) certificate, would not be eligible for deduction under section 35(2AB) - Held, yes" Similar issue is considered by the ITAT Mumbai "F" Bench in ITA No. 2179/Mum/2009 fir AY 2005-06 and reliance is placed on the same. It is pertinent to mention here that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nses of Rs. 110.77 Lakhs. 37.2 Regarding the claim of weighted deduction on the remaining expenditures being interest on loan, labour, and job work charges and capital expenditure on furniture & electrical equipment, the learned CIT(A) found that such expenditures are not approved by the DSIR. Further, the assessee failed to establish that such expenditures were incurred in connection with R&D expenses. Thus, the ld. CIT-A confirmed the disallowance made by the AO. 38. Being aggrieved by the order of the learned CIT(A), both the assessee and the Revenue are in appeal before us. The assessee is in appeal against the confirmation of disallowance of weighted deduction claimed whereas the revenue is in appeal against the deletion of the disallowances of weighted deduction. The relevant ground of appeal of the Revenue in ITA No. 2369/Ahd/2018 reads as under: 8. That the Ld.CIT(A) has erred in law and on the facts in deleting the disallowance made by the assessing officer out of Rs. 23.42,01,943/- out of deduction claimed by the assessee u/s. 35(2AB) in respect of research and development expenditure consisting of. i. Salary to Dr. Dutt of Rs. 272.31 lakhs ii. Building repait e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot find any infirmity into the order passed by Ld. CIT(A). Hence, this ground of Revenue's appeal is dismissed. 39.1 Thus, respectfully following the order of this Tribunal in the own case of the assessee discussed above, we do not find any infirmity in the order of the learned CIT(A) with respect to the claim of deduction on salary to Dr. C Dutt, Building repairs and Municipal tax. 39.2 Coming to the issue of claim of deduction on the expenditures incurred relating to clinical trial, product/patent registration, studies, and professional charges in relation to clinical trial & patient registration etc., we note the same has been covered in favour of the assessee by the order of this Tribunal in own case of the assessee in ITA 1327/AHD/2017 vide order dated 22-02-2022 pertaining to the AY 2009-10. The relevant extract of the order is reproduced as under: 50. Coming to deduction with respect to expenses incurred on account of clinical trial and patient registration, we note this issue also covered in favour of the assessee by the order of special bench of the Tribunal in case of Cadila Healthcare Ltd. vs. ADIT reported in 29 taxmann.com 229 where the special bench held as u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and same was disallowed by the AO and the learned CIT(A). The assessee carried mater before this tribunal in ITA No. 1397/Ahd/2018. The tribunal vide order dated 22-02-2022 decided the issue in favour of the assessee by observing as under: 192. We have heard the rival contentions of both the parties and perused the materials available on records. At the outset, we note that issue of allowance of weighted deduction on account of expenditure incurred in connection with research and development activity is covered in favour of the assessee by the order of the Hon'ble Gujarat High Court in the own case of the assessee (supra) wherein the Hon'ble court held as under: 13. As regards Question No.(A), we find that the Tribunal has followed its earlier decision passed in respect of this very assessee in ITA No.446/Ahd/2002. In our opinion, the Tribunal rightly held that the assessee is entitled to weighted deduction in respect of the entire expenditure incurred for the development of in- house "R&D" facility in terms of Section 35(2AB) of the Act. Consequently, we answer Question No. (A) in favour of the assessee and against the Revenue. 191.1. Respectfully following the above ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Taxmann.com 415 has held that the disallowance made u/s 14A r.w.r. 8D cannot be the subject matter of disallowance while determining the net profit u/s 115JB of the Act. The relevant portion of the said order is reproduced below: "In view of above discussion, the computation under clause (f) of Explanation 1 to section 115JB(2), is to be made without resorting to the computation as contemplated under section 14A, read with rule 8D of the Income-tax Rules, 1962." 44.1 The ratio laid down by the Hon'ble Tribunal is squarely applicable to the facts of the case on hand. Thus, it can be concluded that the disallowance made under section 14A r.w.r. 8D cannot be resorted while determining the expense as mentioned under clause (f) to explanation 1 to section 115JB of the Act. 44.2 However, it is also transparent that disallowance needs to be made with respect to the exempted income in terms of the provisions of clause (f) to section 115JB of the Act while determining the book profit. The provision of clause (f) of explanation 1 to subsection 2 of section 115JB of the Act requires that while computing book profit, the expenses in relation to exempted income under section 10/11/12 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the learned CIT(A) confirmed the adjustment made by the AO/TPO by following the order of its predecessor CIT(A). 49. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. 49.1 The learned AR before us submitted that the AE did not utilize the guarantee furnished by the assessee. Therefore, there is charging any fees from the AE. 49.2 On the other hand, the learned DR before us vehemently supported the order of the authorities below. 50. We have heard the rival contentions of both the parties and perused the materials available on record. The facts of the issue in hand have been elaborated in the preceding paragraphs. Therefore, we are not inclined to repeat the same for the sake of brevity. The transaction of extending corporate guarantee to the AE has been covered under the net of international transaction by the explanation inserted to subsection 2 of section 92B of the Act vide Finance Act 2012. Recently the Hon'ble Madras High Court in the case of PCIT vs. Redington (India) Ltd. reported in 122 taxmann.com 136 has held that corporate guarantee is covered under the limb of international and having bearing on profit and loss account. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for the same needs to be benchmarked. 50.2 Coming to the case on hand, the assessee company has extended corporate guarantee to its AE. However, such guarantee was not utilized by the AE. Therefore, in the given facts and circumstances, we are of the considered opinion that no inherent risk arises to the assessee company or financial services utilized by the AE from the assessee company. However, the assessee has suo- moto offered guarantee commission on the corporate guarantee to the one AE namely Zao Torrent Pharma Russia @ 1.5% of the guaranteed amount. 50.3 Be that as may be, we find that the assessee in A.Y. 2009-10 has also provided corporate guarantees to its 4 different AE and benchmarked the guaranteed commission at NIL. The TPO in its order benchmarked the commission at @ 3% of guaranteed value based on analysis of US Bond data and risk factor. The issue travelled before this Tribunal in assessee's appeal bearing ITA No. 1285/Ahd/2017. The Bench vide order dated 22-02-2022 after analyzing the various case laws held that commission @ 0.5% of value of corporate guarantee shall be taken as ALP. In the present case the assessee has already offered ALP commission @ 1.5% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omputing the ALP also considered the risk adjustment on account of financial strength of the assessee and the AE. The view of the TPO has been confirmed by the learned CIT(A). In our considered view, the learned CIT(A) failed to appreciate the fact that in the given case a holding company extended loans and advances to its foreign subsidiary to grow the business. Such a transaction cannot be compared with loan extended by the banks whose main activity is extending loans to generate revenue. In holding so, we draw support and guidance from the judgment of judgment of Hon'ble Bombay High Court in case of CIT vs. Everest Kento Cylinders Ltd reported in 58 taxmann.com 254 wherein it was held that as under: In the present case, it is assessee-company that is issuing corporate guarantee to the effect that if the subsidiary AE does not repay loan availed of it from ICICI, then in such event, the assessee would make good the amount and repay the loan. The considerations which apply for issuance of a corporate guarantee are distinct and separate from that of bank guarantee and, accordingly, commission charged cannot be called in question, in the manner TPO has done. The comparison is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not given the comparable basis for arriving at the aforesaid rate. However, in our view, the Ld. CIT(Appeals) has failed to appreciate various judicial precedents which have held that LIBOR plus 2% is a reasonable margin to compute ALP of loan given to subsidiaries. In the instant case, the assessee has worked out the ALP at LIBOR plus 2.5%. Further, the Ld. CIT(Appeals) has also not appreciated the fact that the mark-up of 3.72% computed by the TPO works out to nearly 72% of LIBOR which in our view, is quite excessive. Accordingly, looking into the instant facts of the instant case, we are of the considered view that the assessee is justified in computing the ALP at 7.69% (i.e. at LIBOR plus 2.5%) and the appeal of the assessee is allowed with respect to this Ground of Appeal. 54.3 In view of the above discussion and finding by the tribunal that the reasonable rate of interest shall be LIBOR + 2%, we hereby hold that suo-moto notional interest offered by the assessee at LIBOR + 400 basis is at ALP and no further adjustment is required to be made. Hence, we hereby set aside the finding of the learned CIT(A) and direct the AO to delete the upward adjustment made on account of ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed CIT(A) restricted the addition to the extent of Rs. 14,05,927/- against Rs. 72,24,571/- made by the AO/TPO. 57. Being aggrieved by the order of the learned CIT(A) both the assessee and the revenue are in appeal before us. The assessee is in appeal against the addition confirmed by the ld. CIT-A for Rs. 14,05,927/- whereas the Revenue is against the deletion of the addition made by the AO. The relevant ground of appeal of the revenue in ITA No. 2369/Ahd/2018 reads as under: 10) "that the Ld. CIT (A) has erred in law and on the facts in deleting the upward adjustment amounting to Rs 9,30,45,293/- made by TPO consisting of:" i) Liaison Support Services of Rs. 1,72,06,725/- ii) Dossier Licensing Fee of Rs 5,49,35,742/- iii) Capital Infusion Transaction of Rs 72,71,834/- out of total adjustment of Rs 86,77,761/- iv) Custodian Fee of Rs 1,09,53,149/-" 57.1 Both the ld. AR and the DR before us vehemently supported the order of the authorities below to the extent favorable to them. 58. We have heard the rival contentions of both the parties and perused the material on record. At the outset, we note that the part of share application amount on which the TPO/AO benchmark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground that there has been a delay in allotment of shares. On facts of this case also, there is no finding about what is the reasonable and permissible time period for allotment of shares, and even if one was to assume that there was an unreasonable delay in allotment of shares, the capital contribution could have, at best, been treated as an interest free loan for such a period of ' inordinate delay' and not the entire period between the date of making the payment and date of allotment of shares. Even if ALP determination was to be done in respect of such deemed interest free loan on allotment of shares under the CUP method, as has been claimed to have been done in this case, it was to be done on the basis as to what would have been interest payable to an unrelated share applicant if, despite having made the payment of share application money, the applicant is not allotted the shares. That aspect of the matter is determined by the relevant statute. This situation is not in parimateria with an interest free loan on commercial basis between the share applicant and the company to which capital contribution is being made. On these facts, it was unreasonable and inappropriate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n items as income eligible for deduction under section 80-IE of the Act and simultaneously confirmed the disallowances of certain item by holding that the items were not eligible for deduction under section 80-IE of the Act. 61.1 The item of income on which learned CIT(A) allowed the deduction under section 80-IE of the Act read as under: i. Notice Pay Rs. 3,40,963/- ii. Sale of Scrap Rs. 8,35,083/- iii. Excise duty on sale of scrap Rs. 1,248/- iv. Cash discount Rs. 2,56,886/- v. Miscellaneous Income Rs. 4,27,344/- vi. Forex gain Rs. 3,712/- 61.2 The item of income on which learned CIT(A) disallowed the deduction under section 80-IE of the Act read as under: i. Insurance income Rs. 49,259/- ii. Interest Income Rs. 68,809/- iii. Government Grant Rs. 57,071/- 62. Being aggrieved by the order of the learned CIT(A) both the assessee and the Revenue are in cross appeal before us. The assessee is in appeal against the amount of disallowance sustained by the learned CIT(A) whereas the revenue is appeal against the deduction allowed by the ld. CIT-A. The relevant ground of revenue's appeal in ITA No. 2369/Ahd/2018 reads as under: 11) ''that the Ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce income has been allowed whereas interest income and government grant have been dismissed as shown in the above said paragraphs. Hence, the assessee's grounds of appeal for the same u/s 80IE of the Act are hereby partially allowed. 64. The assessee vide first additional ground of appeal requested to give directions with respect to exclusion of excise refund of Rs. 22,09,96,112/- from the computation of book profit under section 115JB of the Act. 65. At the outset, we note that the issue raised by the assessee in the additional ground of appeal discussed above has been settled by the ITAT in the cases listed below: i. Greenply Industries Limited v. ACIT in ITA No. 232/Gua/2019 ii. Ambuja Cement Limited vs. Addl CIT in ITA No. 2968/Mum/2015 65.1 The relevant finding of the ITAT in the case of Greenply Industries Limited v. ACIT reads as under: 10. We have heard the rival contentions and perused the relevant material available on record. We note that the assessee runs two manufacturing units in the name of Rudrapur Plywood Unit and Rudrapur MDF Unit and both are covered by the Excise Notification No.50/2003 dated 10.06.2003. Both the units are located in backward areas and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso liable to be excluded from the computation of book profit. Relevant extract of the order of the Hon'ble Tribunal is reproduced below: ***************** 12. The Hon'ble Kolkata ITAT in case of DCIT -vs.- M/S Century Plyboards (I) Ltd. (ITA No. 2149/Kol/2019 And C.O. No. 22/Kol/2020 In ITA No.2149/Kol/2019) relied upon finding of its coordinate bench in the case of Sicpa India (P) Ltd. - vs.- DCIT T20171 186 TTJ 289 (Kol.) (Refer Page 123-150 of the Case Law Paper book) wherein it has been held that subsidies cannot be regarded as income even for the purpose of book profits u/s.115JB of the Act though credited in the profit and loss account and have to be excluded for arriving at the book profits u/s. 115JB of the Act. 13. Coordinate Bench Delhi in case of Uflex Limited -vs.- ACIT 2022 (1) TMI 731 - ITAT Delhi held that CENVAT credit, as received by the Assessee, in accordance with the incentive scheme for J & K as formulated by the Central Government is a capital receipt not liable to tax, accordingly the same cannot be part of book profit under Section 115JB also. Relevant extract of the order of the Hon'ble ITAT is reproduced below: ************************* 14. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (URO) (Refer Page 151 -156 of the Case Law Paperbook) wherein it was held that any income, which does not fall within the purview of Total Income u/s 5 of the IT Act, cannot be taxed under any other provisions of the Act. Further, the Hon'ble Tribunal held that the provisions of Chapter Xll-B of the Act do not operate to extend the scope of Total Income but provides an alternative basis for computing the income and hence income which is not chargeable to tax cannot be included in the computation of Book Profit u/s 115JB. 20. In the case of Sutlej Cotton Mills Ltd -vs.- ACIT (1993) 45 ITD 22 (Cal) (SB) (Refer Page 157-201 of the Case Law Paperbook), it was held that according to standard accounting practice, capital receipt cannot be part of the profit. Therefore, capital receipts which do not have the character of income cannot be liable to income-tax by adding it to the book profit. When an amount which forms part of the book profit itself cannot be taxed under s. 115J, when it does not have the income character it has to be accepted that when what is routed through the P&L account and carried to reserve is of a capital receipt and does not have an income character. It cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the provisions of section 115JB of the Act. Thus Ground No. 2 raised by the assessee is allowed. 65.2 Likewise, the relevant finding of the ITAT in the case of Ambuja Cement Limited vs. Addl CIT (supra) is reproduced as below: 106. We find that a coordinate bench of this Tribunal, in JSW Ltd's case (supra), has inter alia, observed as follows: 47. We further noted that Hon'ble Kolkata High Court, in the case of Pr. CIT v. Ankit Metal & Power Ltd. [2019] 109 taxmann.com 93/266 Taxman 237 Ltd. had considered an identical issue and after considering the decision of Hon'ble Supreme Court in the case of Apollo Tyres Ltd. (supra) held that when a receipt is not in the character of income as defined under section 2(24) of the I.T. Act, 1961, then it cannot form part of the book profit u/s 115JB of the I.T. Act, 1961. The Hon'ble High court, further observed that sales tax subsidy received by the assessee is capital receipt and does not come within definition of income under section 2(24) of the I.T. Act, 1961 and when, a receipt is not a in the nature of income, it cannot form part of book profit u/s 115JB of the I.T. Act, 1961. The Court, further observed that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s tax subsidy received by the assessee amounting to Rs. 36,15,49,828/- from book profits computed u/s 115JB of the I.T. Act, 1961. 107. We see no reasons to take any other view of the matter than the view so taken by the coordinate bench. Respectfully following the same, we uphold the plea of the assessee and direct the Assessing Officer to exclude the sales tax incentive subsidy for computing book profit under section 115 JB of the Act. The assessee gets the relief accordingly. 66. The principles laid down by the ITAT in the cases cited above are squarely applicable in the given facts and circumstances. However, we find that the issue was first-time raised before the ITAT and therefore we are inclined to set aside the same to the file of the AO for fresh adjudication as per the provisions of law after considering the cases listed above. Hence the addition of appeal of the assessee is allowed for the structural purposes. 67. The last issue raised by the assessee in the additional ground of appeal is that no R&D expenses either for discovery or product development or capital expenses shall be allocated to the eligible units. 68. The necessary facts are that the assessee has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computing the profit eligible for deduction u/s 80IC or 80IE of Act. Hence the ground of appeal raised by the assessee in additional ground of appeal regarding allocation of R&D expense is hereby allowed. 70. In the result, the appeal of the assessee is hereby partly allowed for statistical purposes. Coming to ITA No. 2369/Ahd/2018, an appeal by the Revenue for AY 2013-14. 71. The Revenue has raised following grounds of appeal: 1) "that the Ld. CIT (A) has erred in law and on the facts in the disallowance of selling / distribution /publicity / Medical/Literature expenses u/s. 37(1) of the Act consisting of: i) Doctor Sponsorship Expenses of Rs. 4,48,80,987/- out of Rs. 19,63,90,203/- ii) selling and distribution expenses under the heads Business advancement expenses of Rs. 5,30,61,002/- iii) sales promotion expenses of Rs. 37,78,971/-. " 2) "that the Ld. CIT (A) has erred in law and on the facts in directing the AO toallow deduction u/s. 80IC after allowing the claim of the assessee of i) Notice Pay of Rs. 8,48,47 6/- ii) Sale of Scrap of Rs. 93,83,606/- iii) Service Tax Refund Income of Rs. 2,92,338/- iv) Miscelleneous income and rounding off of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) "that the Ld. CIT (A) has erred in law and on the facts in directing the AOto allow deduction u/s. 80IE after allowing the claim of the assessee consisting of: i) Notice Pay of Rs. Rs. 3,40,963/- ii) Sale of Scrap of Rs. 8,35,083/- iii) Excise duty on sale of scrap of Rs. 1,248/- iv) Cash Discount(other income) of Rs. 2,56,886/- v) Miscelleneous income and rounding off of Rs. 4,27,344/~ v) Net Foreign Exchange Gains of Rs. 3,712/- 12) "that the Ld. CIT(A) has erred in law and on the facts in deleting the addition of unutilized MODVAT/CENVAT credit of Rs. 7,14,75,444/- made u/s. 145A of the I.T. Act." 72. The first issue raised by the Revenue is that the learned CIT(A) erred in deleting the disallowance of expense incurred in contravention of MCI regulation. 73. At the outset, we note the issue raised by the revenue in the captioned ground of appeal has been adjudicated along with assessee's ground of appeal raised on the same issue in ITA No. 2365/Ahd/2018. The ground of appeal of the assessee has been adjudicated vide paragraph No. 8 of this order wherein we have decided the issue partly in favour of the Revenue and assessee. For the detailed discussion, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital expenses in the manner detailed below: Particulars Total Baddi Sikkim Others Revenue Expenses Discovery Cost Development Cost 38,32,88,000 72,80,75,925 7,01,83,556 16,97,00,440 1,84,99,320 4,32,67,969 29,46,05,124 51,51,07,516 Total 1,11,13,63,925 23,98,83,996 6,17,67,288 80,97,12,641 Capital Expenses Building Other than 39,44,364 7,22,249 1,90,374 30,31,741 Building 4,91,75,979 90,04,574 23,73,469 3,77,97,936 Total 5,31,20,343 97,26,823 25,63,843 4,08,29,677 Accordingly, the following further amounts are allocated to Baddi unit and Sikkim unit as under Nature Baddi unit Sikkim Unit Discovery Cost 70,183,556 1,84,99,320 Capital expenditure (Building) 7,22,249 1,90,374 Capital expenditure (Other than Building) 90,04,574 23,73,469 Total 7,99,10,379 2,10,63,163 77.2 The AO further found that the assessee has claimed weighted deduction under section 35(2AB) of the Act @ 200% on the above R&D expenses except for expenditure on building repairs (i.e. 100% on building repair). Thus, the AO considering the same reduced the eligible profit of Baddi and Sikkim unit under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch activity which did not materialize. Therefore the same was not allocated to the eligible unit as the same was not directly connected with the eligible unit. In our considered view the cost which is directly connected with the eligible unit is eligible for deduction while determining the deduction under section 80 IC of the Act. 40.2 We further note that the Hon'ble ITAT in the own case of the assessee (supra) has not allocated the cost incurred on the scientific research activity while working out the deduction under section 80-HH/80-I of the Act. Though the decision of the tribunal was about the deduction under section 80HH/80I of the Act, in our considered view the principles laid down by the Tribunal are directly applicable to the facts of the case on hand. At this juncture we find important to refer the relevant extract of the order of this tribunal in the own case of the assessee (supra) which reads as under: 5. We have heard the rival submissions, perused the material available on record and the judgment cited by the parties. There is no dispute that the facts in the present case are identical with the facts of the case pertaining to A.Y. 2004-05. We have perused th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. CIT reported in 193 ITR 121 (SC). 25.2. It is also important to note that the Hon'ble Gujarat High Court in the own case of the assessee reported in 88 taxmann.com 530 has held that the R and D expenses should not be allocated to the units eligible for deduction under section 80-IA of the Act. The relevant extract of the judgment is reproduced as under: 8.1 It is not in dispute that research centre is an independent centre and that its main object is to conduct research for the business of the assessee. The research centre, therefore, in our opinion, is not directly linked with the eligible undertaking. Thus, for the purpose of computing deduction u/s.80HH and 80I, profit from eligible undertaking is to be computed on the basis of gross income by reducing expenditure which has been incurred for the eligible undertaking out of the gross income derived from the industrial undertaking. In view of the aforesaid, question no.(A) is answered in favour of the assessee and against the Revenue. 25.3. In that view of the matter, we do not hesitate to hold that R&D expenditure is need not to be allocated to Baddi Unit as the case made out by the assessee are to be viewed this pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al disallowance was made by the AO in the assessment 2007-08. The issue came before this tribunal in Revenue's appeal bearing ITA No. 938/Ahd/2012. The Tribunal vide order dated 15-05-2019 decided the issue in favour of the assessee by observing as under: 26. We have heard the rival contentions and perused the material on records. In the instant case we note that the co-ordinate bench decided the identical issue in favor of assessee in ITA No. 1869/Ahd/2009 pertaining to the AY 2005-06 by observing as under: "4. Ground No.1 is against deletion of disallowance of garden expenses of Rs. 27,06,563/-. Ld. CIT-DR strongly supported the order passed by Assessing Officer and submitted that Ld. CIT(A) has wrongly deleted the disallowance made by Assessing Officer. On the contrary, Ld. Authorized Representative for the assessee pointed out that this issue is squarely covered in favour of assessee in ITA No.4356/Ahd/2007 order dated 31-01-2011 by the co- ordinate Bench. Ld. AR submitted Hon'ble ITAT has followed the decision rendered in respect of A.Y. 2004-05." As the facts are identical to the facts of the case as discussed above, therefore respectfully following the same, we d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee itself has classified this application software separately from the computer in the books of accounts. Thus, the AO reduced the rate of the depreciation from 60% to 25% and disallowed the excess deprecation of Rs. 60,84,447/- by adding to the total income of the assessee. 88. On appeal by the assessee the learned CIT(A) allowed the depreciation on software @ 60% by following the order of this Tribunal in the case of ACIT vs. Voltamp Transformer Ltd in ITA No. 1676/Ahd/2012 vide order dated 22-03-2013. 89. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us. 89.1 The learned DRbefore us vehemently supported the order of the AO. On the other hand, the learned AR before us submitted that the issue on hand is covered in favour of the assessee by the order of the Tribunal in its own case for AY 2009-10. 90. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that in own case of the assessee identical disallowance was made by the AO in the assessment year 2009-10. The issue came before this Tribunal in Revenue's appeal bearing ITA No. 1327/Ahd/2017. The Tribunal vide orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon'ble Madras High court, we do not find any infirmity in the finding of the learned CIT (A). Hence the ground of the Revenue's appeal is dismissed. 90.1 Before us, no material has been placed on record by the Revenue demonstrating that the decision of Tribunal in the own case of the assessee discussed above has either been set aside/stayed or overruled by the Higher Judicial Authorities. Before us, no material was placed on record pointing out any distinguishing feature in the facts of the case of earlier AY and the year under consideration. Thus, respectfully following the order of the Tribunal in the own case of the assessee discussed above, we do not find any infirmity in the finding of the learned CIT(A). Thus, the ground of appeal raised by the revenue is hereby dismissed. 91. The next issue raised by the revenue is that Ld. CIT-(A), erred in deleting the disallowance of depreciation of Rs. 2,34,902/- made on capital investment subsidy of Rs. 30 lakhs by treating the costof capital assets. 92. At the outset, we note that the issue on hand arising from AY 2009-10. As such, the assessee during AY 2009-10 received subsidy of Rs. 30 Lakh from central government under Cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovided ************************ (c) in the case of any block of assets,- (i) **************** (ii) in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 1989, the written down value of that block of assets in the immediately preceding previous year as reduced by the depreciation actually allowed in respect of that block of assets in relation to the said preceding previous year and as further adjusted by the increase or the reduction referred to in item (i). 43. In sections 28 to 41 and in this section, unless the context otherwise requires- (1) "actual cost" means the actual cost of the assets to the assessee, reduced by that portion of the cost thereof, if any, as has been met directly or indirectly by any other person or authority: 67.1. On perusal of the above provision, we find that the WDV is to be actual cost of the assets at which the assessee acquired the same. There is no provision for reducing the value of WDV by any amount of incentive or subsidy. In this regard we also find support and guidance from the judgment of Hon'ble supreme court in case of CIT vs. PJ Chemicals reported in 210 ITR 830, wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the finished goods. Therefore, the same cannot be treated as part and parcel of Plant & Machineries. Accordingly, the AO treated such assets being Trolleys, Mobile Racks and wooden pallets as furniture and fixture and disallowed the excess depreciation and additional depreciation of Rs. 19,55,145/- on the same. 95. On appeal by the assessee the learned CIT(A), deleted the disallowances made by AO following the order of its predecessor CIT(A) in own case of the assessee. 96. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us. 96.1 Both the learned DR and the learned AR before us vehemently supported the order of the authorities below as favorable to them. 97. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that in the own case of the assessee identical disallowance was made by the AO in the assessment year 2012- 13. The issue came before this Tribunal in Revenue's appeal bearing ITA No. 1415/Ahd/2018. The Tribunal vide order dated 22-02-2022 decided the issue in favour of the assessee by observing as under: 230. We have heard the rival contentions of both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... along with the assessee's ground of appeal raised on the same issue in ITA No. 2365/Ahd/2018. The ground of appeal of the assessee has been adjudicated vide paragraph No. 39 of this order wherein we have decided the issue against the Revenue. For detailed discussion, please refer to the said paragraph of this order. Hence, the ground of appeal of the Revenue is hereby dismissed. 100. The next issue raised by the revenue is that the learned CIT(A) erred in deleting the disallowance of deduction claimed by the assessee under section 80G and 80GGB of the Act. 101. The assessee during the year donated Rs. 9,67,55,000/- and Rs. 5,30,00,000/- to the institutions eligible for deduction under section 80G & 80GGB of the Act respectively. The assessee accordingly claimed deduction of Rs. 4,83,77,500 under section 80G and Rs. Rs. 5,30,00,000/- under section 80GGB of the Act. 101.1 However, the AO found that the assessee has not allocated the donation to the Baddi and Sikkim Units eligible for deduction under section 80-IC and 80-IE of the Act. The AO was of the view that the donation paid by the assessee is also to be allocated to the eligible unit as the HO paid such the donation. The AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incurred wholly and exclusively for the purpose of the business as provided under section 37(1) of the Act. Thus even if the assessee claimed the donation as an expense in the profit and loss account, then it has to be disallowed while computing the income under the head business and profession. Thus the only option available to the assessee to claim the deduction on account of such donation is only under the provisions specified under section 80G of the Act which can be claimed in the manner as discussed above. In view of the above, we do not find any infirmity in the order of the learned CIT (A). Accordingly, we decline to interfere in his order. Hence the ground of appeal of the Revenue is dismissed. 104.1 Before us, no material has been placed on record by the Revenue demonstrating that the decision of the Tribunal in own case of the assessee as discussed above has either been set aside/stayed or overruled by the Higher Judicial Authorities. Before us, no material was placed on record pointing out any distinguishing feature in the facts of the case of earlier AY and the year under consideration. Thus, respectfully following the order of the Tribunal in the own case of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2022 decided the issue in the favour of the assessee by observing as under: 84. Coming to upward adjustment of Rs. 6,80,243/- on account liaison fee paid to AE. We note that the identical addition was made by the TPO/AO in immediate preceding assessment year 2009-10 which has been deleted by the learned CIT(A) by observing as under: The order of the TPO and above submission given by the appellant has been considered carefully. It is noticed that the TPO has restricted the compensation to the AEs to 2% on the basis of Ahmedabad ITAT ruling in case of Cadila 1 Health Care. The TPO has not denied the services provided by the AEs which include Registration of Dossier, Liaison support, Market information, Regulatory support and Logistic support. The assessee also provided the copy of agreement where the nature of services being received from AEs is mentioned. The appellant also provided the report of the independent review of the expert after considering the factuality and nature of services rendered where mark up of 10% to 16% over costs has been considered as appropriate so as to compensate for these services. The AR also argued that in earlier years also the appellant company h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of Dossier licensing fees. It was explained that there is an agreement between the assessee and Torrent Pharmaceuticals Gmbh Germany. As per the agreement, the AE has to get registration of the product developed by the assessee and subsequently market the same. In return, the AE has to share the income with the assessee in the ratio of 75:25. In other words, the share of the income from the impugned activity of the AE is 75% whereas the share of the assessee is 25% only. The assessee to benchmark the transaction has adopted a profit split method. As per the assessee, the sharing of income with the AE was at the arm length price. However, the TPO found that the major work i.e. the development of the product was carried out by the assessee. Likewise, the ownership of the IPR of the product was also with the assessee. Accordingly, the TPO held that the major risk was born by the assessee. On the other hand, the AE only provided support services and marketing of the product. Thus, the TPO attributed the profit in the Ratio 75% to the assessee and 25% to the AE and accordingly made an upward adjustment of Rs. 5,49,35,742/-. 108.1 On appeal by the assessee, the learned CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding of the learned CIT(A). Thus, the ground of appeal raised by the revenue is hereby dismissed. Custodian Fees 109. The assessee during the year paid an amount of Rs. 1,09,53,149/- to its German AE namely Torrent Pharma GMBH (here after- TPG). The assessee in this regard submitted that it was paid in pursuance of the agreement with TPG for dossier license since the year 2003. As per the agreement, the TPG was eligible to sub-license dossier document of the assessee company. The impugned dossier agreement was terminated in the year under consideration and all the economic and beneficial interest in the dossier was transferred to it (the assessee). However, for marketing of dossier in Germany it is necessary to hold such document in the name of local entity. TPG agreed to hold marketing authorization of dossier on its behalf and for such services TPG charged custodian fee in following manner: No. of Marking authorization Fee per authorisation 0 to 250 500 Euro 251 to 500 250 Euro 109.1 The assessee further submitted that identical custodian fee to independent party namely Emifarma SA de C.V. for holding its Marketing Authorization in Maxico @ $ 2000 to $ 3500 whereas it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parable by the TPO and therefore when higher fees paid to related party has been accepted as ALP the question of making adjustment in the current year does not arise. More particularly when the fees charged by TPO is much lower than charged by Emifarma; * The TPO has erred in not determining the actual Arm's Length Price of the transaction and disallowing the entire sum of payments. In doing so he has also challenged the prudence of the transaction. It is noticed that the Appellant has made efforts in justifying the benchmarking undertaken by him. On the contrary the TPO has summarily rejected all arguments put forth and disallowed the entire custodian fees. It is not a case that the TPO has confronted with a more acceptable comparable instance to the appellant. In view of the above the upward adjustment made by the TPO amounting to Rs 1,09,53,149/- by disallowing the entire custodian fee is not sustainable and same is deleted." 109.6 Being aggrieved by the order of the learned CIT(A), the revenue is in appeal before us. 109.7 The learned DR before us vehemently supported the order of the Assessing Officer. 109.8 On the other hand, the learned AR before us vehemently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k. The assessee also claimed that even if books of account were maintained following the inclusive method, still there would be no impact on P & L account. 114.1 However, the AO disagreed with the submission of the assessee and held that unutilized amount of the dutyis required to be adjusted with the closing value of stock. As such, the unutilized MODAVT/CENVAT was a kind of subsidy and incentives given by the Government, which could not be treated as an advance, and therefore, stock should be valued in accordance with the provisions of section 145A of the Act. Accordingly, the unutilized portion of MODVAT/CENVAT for Rs. 7,14,75,444/- was added by the AO to the total income of the assessee. 115. On appeal by the assessee, the learned CIT(A) deleted the addition made by the AO by following order of this tribunal in the case of ITO vs. Gujarat Parafins Pvt Ltd in ITA No. 2335/Ahd/2011 and ACIT vs. Kiran Industries Pvt Ltd in ITA No. 1450/Ahd/2012. 116. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us. 116.1 The learned DR before us vehemently supported the order of the Assessing Officer. 116.2 On the other hand, the learned AR before us veh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discussed above has either been set aside/stayed or overruled by the Higher Judicial Authorities. Before us, no material was placed on record pointing out any distinguishing feature in the facts of the case of earlier AY and the year under consideration. Thus, respectfully following the order of the tribunal in the own case of the assessee discussed above, we do not find any infirmity in the finding of the learned CIT(A). Thus, the ground of appeal raised by the revenue is hereby dismissed. 118. In the result appeal of the Revenue is hereby partly allowed. Coming to ITA No. 2366/Ahd/2018, an appeal by the assessee for AY 2014-15 119. The assessee has raised following grounds of appeal: "1. On the facts and in the circumstances of the case, the learned CIT(Appeals) erred in confirming disallowance of Rs. 25,99,87,036 made by the Assessing Officer in respect of legitimate business expenditure incurred by the appellant-company for sponsorship expenses of medical practitioners/doctors. 2. On the facts and in the circumstances of the case, the learned CIT(Appeals) erred in confirming disallowance of Rs. 1,87,614 made by the Assessing Officer in respect of employees' contri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of hearing of the appeal." 119.1 The assessee vide letter dated 13-01-2023has raised following additional grounds of appeal: "The Appellant craves leave to raise these additional grounds of Cross Objections before the Hon'ble ITAT. This are legal grounds and therefore, as per the decision of Hon'ble Supreme court in the case of National Thermal Power (229 ITR 383), it can be raised before the Hon'ble ITAT. In view of the above, the appellant hereby raises following grounds as additional grounds of Appeal, which is without prejudice to the grounds raised by the appellant while filing appeal in Form 36A. 1 Without prejudice to all the grounds raised, in law and in the facts and circumstances of the appellant's case, the appellant requests Hon'ble ITAT for admission of its additional claim and for not including the Excise Refund of Rs 26,75,10,140/- received by the appellant, while computing the Book Profit u/s 115JB of the Act on the ground that it is income in the nature of "capital receipts as per the settled legal precedents. 2 Without prejudice to all the grounds raised, in law and in the facts and circumstances of the appellant's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TA No. 2365/AHD/2018 shall also be applicable for the assessment year 2014-15. The relevant ground of appeal of the assessee for the A.Y. 2013-14 has been decided by us vide paragraph No. 13 of this order against the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2013-14 shall also be applied for the assessment year 2014-15. Hence, the ground of appeal filed by the assessee is hereby dismissed. 124. The next issue raised by the assessee is that the learned CIT(A) erred in confirming the disallowances of deduction under section 80-IC of the Act on receipt of cash discount, export benefit, insurance income and interest income. 125. At the outset, we note that the issues raised by the assessee in its ground of appeal for the AY 2014-15 are identical to the issue raised by the assessee in ITA No. 2365/AHD/2018 for the assessment year 2013-14. Therefore, the findings given in ITA No. 2365/AHD/2018 shall also be applicable for the assessment year 2014-15. The relevant ground of appeal of the assessee for the AY 2013-14 with respect to receipt of cash discount, export benefit and insurance income has been decided by us vide par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowances of weighted deduction under section 35(2AB) of the Act on account of Interest cost, labour& Job work charges, furniture & fixture, electrical equipment, vehicle, and expenses on employee not having degree in science. 131. At the outset, we note that the issue raised by the assessee in its ground of appeal for the AY 2014-15 is identical to the issue raised by the assessee in ITA No. 2365/AHD/2018 for the assessment year 2013-14. Therefore, the findings given in ITA No. 2365/AHD/2018 shall also be applicable for the assessment year 2014-15. The relevant ground of appeal of the assessee for the A.Y. 2013-14 has been decided by us vide paragraph No. 39 of this order in favour of the assessee after placing reliance on the judgment of Hon'ble Gujarat High court in own case of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2013-14 shall also be applied for the assessment year 2014-15. Hence, the ground of appeal filed by the assessee is hereby allowed. 132. The next issue raised by the assessee is that the learned CIT(A) erred in confirming the disallowance of deduction under section 80-IE of the Act on the recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by us vide paragraph No. 69 of this order in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2013-14 shall also be applied for the assessment year 2014-15. Hence, the ground of appeal filed by the assessee is hereby allowed. 138. In the result, the appeal filed by the assessee is hereby partly allowed for statistical purposes. Coming to ITA No. 2368/Ahd/2018, an appeal by the Revenue for AY 2014-15 139. The Revenue has raised following grounds of appeal: "1) that the Ed CIT (A) hat erred in law and on the facts in the disallowance of selling/dutribution/publicity / Medical/Literature expenses s. 37(1) of the Act consisting of i) Selling and distribution expenses under the heads Business ii) advancement expenses of Rs. 5,51,37,4271 iii) Sales promotion expenses of Rs. 56,21,474 2) "that the LA CIT (A) has erred in law and on the facts in directing the AQ to allow deduction u/s. 80IC after allowing the claim of the assessee of i) Sale of Scrap of Rs. 96,73,002/- ii) Service Tax Refund Income of Rs. 33,575/- iii) Miscelleneous income and rounding off of Rs. 1,48,948/- as income derived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06/- claimed by the assessee u/s, 80G and u/s 80GGB respectively. 10) "that the Ld. CIT (A) has erred in law and on the facts in deleting the disallowance made u/s. 14A for Rs. 18.14.792/- while computing book profits u/s 115JB of the Act." 140. The first issue raised by the Revenue is that the learned CIT(A) erred in deleting the disallowance of expense incurred in contravention of MCI regulation. 141. At the outset, we note that the issue raised by the revenue in its ground of appeal for the AY 2014-15 is identical to the issue raised by the revenue in ITA No. 2369/AHD/2018 for the assessment year 2013-14. Therefore, the findings given in ITA No. 2369/AHD/2018 shall also be applicable for the assessment year 2014-15. The relevant ground of appeal of the revenue for the AY 2013-14 has been decided by us vide paragraph No. 8 and73 of this order partly in favour of the revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2013-14 shall also be applied for the assessment year 2014-15. Hence, the ground of appeal filed by the revenue is hereby partly allowed. 142. The next issue raised by the Revenue is that the learned CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligible for deduction under section 80IC and 80IE of the Act. 147.1 On the other hand, the AO was of the view that the common administrative expenses should be allocated to the different units based on the turnover of the respective units. Accordingly, the AO worked out the amount of administrative expense liable to be allocated to the eligible unit being Baddi and Sikkim units, based on turnover at Rs. 13,47,67,189/-and Rs. 36,33,99,725/- respectively. 147.2 However, the AO held that the amount of administrative expenses allocated by the assessee to Baddi Unit is higher than the amount calculated based on turnover ratio therefore no adjustment is required to be made to Baddi unit but allocated the additional amount of administrative expenses of Rs. 27,74,99,662/- to Sikkim unit based on turnover ratio. 148. On appeal by the assessee, the ld. CIT(A) confirmed the view of the AO that the common administrative expenses should be allocated based on the turnover of the respective units. The ld. CIT(A) was also of the view that if additional administrative expenses was allocated to Sikkim unit due to change in the basis from number of employees to turnover, then excess amount already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me basis should be adopted for the issue under consideration and accordingly the amount of Rs. Rs. 19,75,94,583/-should be allocated to the Baddi unit as done by the assessee based on the number of employees as against the amount Rs. 13,47,67,189/- directed by the learned CIT(A). Hence, the ground, of appeal of the revenue is hereby allowed. 151. The next issue raised by the revenue is that the learned CIT(A) erred in deleting garden expenses for Rs. 49,40,748/- only. 152. At the outset, we note that the issue raised by the revenue in its ground of appeal for the AY 2014-15 is identical to the issue raised by the revenue in ITA No. 2369/AHD/2018 for the assessment year 2013-14. Therefore, the findings given in ITA No. 2369/AHD/2018 shall also be applicable for the assessment year 2014-15. The relevant ground of appeal of the revenue for the A.Y. 2013-14 has been decided by us vide paragraph No. 85 of this order against the revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2013-14 shall also be applied for the assessment year 2014-15. Hence, the ground of appeal filed by the revenue is hereby dismissed. 153. The next issue r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en decided by us vide paragraph No. 99 read with para 39 of this order against the revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2013-14 shall also be applied for the assessment year 2014-15. Hence, the ground of appeal filed by the revenue is hereby dismissed. 159. The next issue raised by the revenue is that the learned CIT(A) erred in deleting the disallowance of deductions under section 80G and 80GGB of the Act. 160. At the outset, we note that the issue raised by the revenue in its ground of appeal for the AY 2014-15 is identical to the issue raised by the revenue in ITA No. 2369/AHD/2018 for the assessment year 2013-14. Therefore, the findings given in ITA No. 2369/AHD/2018 shall also be applicable for the assessment year 2014-15. The relevant ground of appeal of the revenue for the A.Y. 2013-14 has been decided by us vide paragraph No. 104 of this order against the revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2013-14 shall also be applied for the assessment year 2014-15. Hence, the ground of appeal filed by the revenue is hereby dismissed. 161. The next ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce made under section 14A r.w.r. 8D cannot be resorted while determining the expense as mentioned under clause (f) to explanation 1 to section 115JB of the Act. 165.2 However, it is also transparent that disallowance needs to be made with respect to the exempted income in terms of the provisions of clause (f) to section 115JB of the Act while determining the book profit. In holding so, we draw support from the judgment of Hon'ble Calcutta High Court in the case of CIT Vs. Jayshree Tea Industries Ltd. in GO No.1501 of 2014 (ITAT No.47 of 2014) dated 19.11.14 wherein it was held that the disallowance regarding the exempted income needs to be made as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. The relevant extract of the judgment is reproduced below: "We find computation of the amount of expenditure relatable to exempted income of the assessee must be made since the assessee has not claimed such expenditure to be Nil. Such computation must be made by applying clause (f) of Explanation 1 under section 115JB of the Act. We remand the matter for such computation to be made by the learned Tribunal. We accept the submission of Mr. Khaitan, learned Sen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, the learned CIT(Appeals) erred in upholding the Assessing Officer's action reducing the quantum of deduction u/s 80-IE in respect of the Sikkim Unit, by allocating additional administrative expenses of Rs 10,54,02,221/- to the Sikkim Unit resulting into reduction of the profits of the Sikkim Unit eligible for such deduction. 5 On the facts and in the circumstances of the case, the learned CIT(Appeals) erred in not allowing weighted deduction u/s 35(2AB) in respect of the following items of expenditure incurred by the appellant- company on research and development Rs. in Lacs (a) Interest on loan 17.11 (b) Labour and Job work charges 228.16 (c) Capital expenditure on furniture, electrical equipments and vehicles (being 200% of exp Incurred of Rs. 427 42 lacs) 854.84 (d) Expenses on employees not having not having degree in science 365.16 (e) Expense not identified 12.32 Total: 1477.59 6. On the facts and in the circumstances of the case the learned CIT(Appeals) erred in confirming exclusion of the following items of Income from the profits of the Sikkim Unit for the purposes of granting deduction u/s 80IE of the IT Act:- (a) Insurance Income 2,83 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional ground of appeal filed by the assessee for the year under consideration are hereby admitted. 169. The first issue raised by the assessee is that the learned CIT(A) erred in confirming the disallowances of doctor's sponsorship expenses of Rs. 26,20,83,897/- only. 170 At the outset, we note that the issue raised by the assessee in its ground of appeal for the AY 2015-16 is identical to the issue raised by the assessee in ITA No. 2365/AHD/2018 for the assessment year 2013-14. Therefore, the findings given in ITA No. 2365/AHD/2018 shall also be applicable for the assessment year 2015-16. The relevant ground of appeal of the assessee for the AY 2013-14 has been decided by us vide paragraph No. 8 of this order against the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2013-14 shall also be applied for the assessment year 2015-16. Hence, the ground of appeal filed by the assessee is hereby dismissed. 171. The next issue raised by the assessee is that the learned CIT(A) erred in confirming the addition of employee contribution to PF/ESI of Rs. 3,28,550/- only. 172. At the outset, we note that the issue raised by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal of the assessee for the A.Y. 2013-14 has been decided by us vide paragraph No. 29 of this order in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2013-14 shall also be applied for the assessment year 2015-16. Hence, the ground of appeal filed by the assessee is hereby allowed. 177. The next issue raised by the assessee is that the learned CIT(A) erred in confirming the disallowances of weighted deduction under section 35(2AB) of the Act on account of Interest cost, labour& Job work charges, furniture & fixture, electrical equipment, vehicles, and expenses on employee not having degree in science. 178. At the outset, we note that the issue raised by the assessee in its ground of appeal for the AY 2015-16 is identical to the issue raised by the assessee in ITA No. 2365/AHD/2018 for the assessment year 2013-14. Therefore, the findings given in ITA No. 2365/AHD/2018 shall also be applicable for the assessment year 2015-16. The relevant ground of appeal of the assessee for the AY 2013-14 has been decided by us vide paragraph No. 39 of this order in favour of the assessee after placing reliance on the jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be allocated to the eligible units. 184. At the outset, we note that the issue raised by the assessee in its additional ground of appeal for the AY 2015-16 is identical to the issue raised by the assessee in ITA No. 2365/AHD/2018 for the assessment year 2013-14. Therefore, the findings given in ITA No. 2365/AHD/2018 shall also be applicable for the assessment year 2015-16. The relevant ground of appeal of the assessee for the A.Y. 2013-14 has been decided by us vide paragraph No. 69 of this order in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2013-14 shall also be applied for the assessment year 2015-16. Hence, the ground of appeal filed by the assessee is hereby allowed. 185. In the result, the appeal of the assessee is hereby partly allowed for statistical purposes. Coming to ITA No. 1279/Ahd/2019 an appeal by the Revenue for A.Y. 2015-16 186. The Revenue has raised following grounds of appeal:"1) that the Ld CIT (A) has erred in law and on the facts in allowing the disallowance made u/s 37(1) of the Act consisting of i) Selling and distribution expenses under the heads Business ii)advan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Ld. CIT (A) has erred in law and on the facts in reducing the disallowance of deduction claimed by the assessee for eligible deduction u/s 80IE of the Income Tax Act, 1961. 13) "that the Ld. CIT (A) has erred in law and on the facts in deleting the addition of unutilized MODVAT/CENVAT credit of Rs. 8,71,14,462/-." 187. The first issue raised by the Revenue is that the learned CIT(A) erred in deleting the disallowance of expenses incurred in contravention of MCI regulation. 188. At the outset, we note that the issue raised by the revenue in its ground of appeal for the AY 2015-16 is identical to the issue raised by the revenue in ITA No. 2369/AHD/2018 for the assessment year 2013-14. Therefore, the findings given in ITA No. 2369/AHD/2018 shall also be applicable for the assessment year 2015-16. The relevant ground of appeal of the revenue for the A.Y. 2013-14 has been decided by us vide paragraph No. 73 read with para 8 of this order partly in favour of the revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2013-14 shall also be applied for the assessment year 2015-16. Hence, the ground of appeal filed by the revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in ITA No. 2368/AHD/2018 shall also be applicable for the assessment year 2015-16. The relevant ground of appeal of the revenue for the A.Y. 2014-15 has been decided by us vide paragraph No. 150 of this order in favour of the revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2014-15 shall also be applied for the assessment year 2015-16. Hence, the ground of appeal filed by the revenue is hereby allowed. 195. The next issue raised by the revenue is that the learned CIT(A) erred in deleting garden expenses for Rs. 64,20,381/- only. 196. At the outset, we note that the issue raised by the revenue in its ground of appeal for the AY 2015-16 is identical to the issue raised by the revenue in ITA No. 2369/AHD/2018 for the assessment year 2013-14. Therefore, the findings given in ITA No. 2369/AHD/2018 shall also be applicable for the assessment year 2015-16. The relevant ground of appeal of the revenue for the A.Y. 2013-14 has been decided by us vide paragraph No. 85 of this order against the revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2013-14 shall also be applied for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks which are treated as furniture and fixtures by him while allowing/disallowing the claim of depreciation and additional depreciation. Accordingly, the AO was of the view that once the impugned assets are treated as part of furniture and fixtures, then the investment allowances under section 32AC(1) of the Act cannot be allowed on the same as part of investment in plant and machinery. Thus, the AO disallowed corresponding amount of investment allowances for Rs. 84,11,534/- only. 203. On appeal by the assessee, the learned CIT(A) deleted the addition made by the AO by observing as under: "11.3 Decision: It is observed that claim of additional depreciation on trolleys, mobile racks, pallets have been duly allowed in preceding years by the undersigned. These assets are used in manufacturing process and fulfil the functional test, hence, the same are held to be Plant and Machinery. Also, similar issue has been allowed in favour of appellant in A.Y. 2011-12, 2012-13, 2013-14 and 2014-15 by the undersigned. Even while deciding similar issue during the year under consideration in Para 10 hereinabove, the claim of additional depreciation on such assets has been duly allowed. As claim o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 2013-14. Therefore, the findings given in ITA No. 2369/AHD/2018 shall also be applicable for the assessment year 2015-16. The relevant ground of appeal of the revenue for the A.Y. 2013-14 has been decided by us vide paragraph No. 99 read with para 39 of this order against the revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2013-14 shall also be applied for the assessment year 2015-16. Hence, the ground of appeal filed by the revenue is hereby dismissed. 208. The next issue raised by the revenue is that the learned CIT(A) erred in deleting the disallowance of deductions under section 80G and 80GGB of the Act. 209. At the outset, we note that the issue raised by the revenue in its ground of appeal for the AY 2015-16 is identical to the issue raised by the revenue in ITA No. 2369/AHD/2018 for the assessment year 2013-14. Therefore, the findings given in ITA No. 2369/AHD/2018 shall also be applicable for the assessment year 2015-16. The relevant ground of appeal of the revenue for the A.Y. 2013-14 has been decided by us vide paragraph No. 104 of this order against the revenue. The learned AR and the DR also agreed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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