Dy. CIT, Circle 1(1), Pune V. M/s. Carraro India Ltd., Pune

ITA 1378/PUN/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0529 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-09-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 01-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Keywords: Capital asset; Depreciation; Rule of consistency; Revenue expenditure; Capital expenditure
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 1378/PN/2013 %' ( ')( / ASSESSMENT YEAR : 2008-09 DY. COMMISSIONER OF INCOME TAX, PUNE ....... / APPELLANT ' / V/S. M/S. CARRARO INDIA LTD., B/2/2, MIDC, RANJANGAON, PUNE-412210 PAN : AAACC5292M / RESPONDENT ASSESSEE BY : SHRI RAJENDRA AGIWAL REVENUE BY : SHRI P.L. KUREEL / DATE OF HEARING : 20-09-2016 / DATE OF PRONOUNCEMENT : 28-10-2016 * / ORDER PER VIKAS AWASTHY, JM : THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE ASSAILIN G THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-I, PUNE DATE D 04-04-2013 FOR THE ASSESSMENT YEAR 2008-09. 2 ITA NO. 1378/PN/2013, A.Y. 2008-09 2. THE GROUNDS RAISED BY THE REVENUE IN APPEAL ARE AS UNDER : 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TA X (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN HOLDING THE PAYMENT OF ROYALTY OF RS.2,28,84,778/- MADE BY THE ASSESSEE TO CARRARO SPA, ITALY AS REVENUE EXPENDITU RE INSTEAD OF UPHOLDING THE ASSESSING OFFICER'S STAND THAT THE SA ID PAYMENT PARTOOK THE NATURE OF CAPITAL EXPENDITURE, HENCE NOT ADMISS IBLE AS DEDUCTION. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN FAILING TO APPRECIATE THAT BY VIRTUE OF THE ROYALTY CONTRACT AGREEMENT, THE ASSESSEE HAD NOT ONLY ACQUIRED EXCLUSIVE LICENSE TO USE TECHNICAL KNOW- HOW; AS PER CLAUSE 2.6(B) OF THE SAID AGREEMENT, TH E ASSESSEE WAS ALSO DEEMED TO HAVE ACQUIRED A PERPETUAL AND ROYALTY-FRE E LICENSE TO USE THE LICENSED TECHNOLOGY ON EXPIRY OF THE TENURE OF THE AGREEMENT; AND THUS, THE PAYMENT WAS FOR A KNOW-HOW WHICH HAD ENURED TO THE ASSESSEE AN ENDURING ADVANTAGE, HENCE PATENTLY CAPITAL IN NATUR E. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN FAILING TO APPRECIATE THAT AS PER THE CBDT'S CIRCUL AR NO. 21 [F.NO.7A/40/68-IT(A-II)] DATED 09.07.1969, IN DECID ING THE QUESTION WHETHER EXPENDITURE ON TECHNICAL KNOW-HOW IS TO BE CONSIDERED AS CAPITAL OR REVENUE, THE RIGHTS AND BENEFITS WHICH W OULD PERMANENTLY ACCRUE TO THE INDIAN PARTICIPANT'S BUSINESS IS AN I MPORTANT YARDSTICK; AND THAT BY APPLYING THE SAID YARDSTICK THE PAYMENT MAD E BY THE ASSESSEE ON ACCOUNT OF ROYALTY WOULD HAVE TO BE TREATED AS C APITAL AND NOT REVENUE. 5. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN FAILING TO APPRECIATE THAT THE DECISION IN THE CASE OF CLIMATE SYSTEMS INDIA LTD. VS. COMMISSIONER OF INCOME-TAX [319 ITR 113 (DELHI)] IS NOT AT ALL APPLICABLE TO THE ASSESSEE'S CASE SINCE WHAT WA S INVOLVED IN THE CITED CASE WAS 'MERE USER' OF THE TECHNOLOGY AND NOT ANY PERPETUAL OR ROYALTY- FREE LICENSE. 6. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN FAILING TO APPRECIATE THAT IN VIEW OF CLAUSE 2.6(B) OF THE ASSESSEE'S AGREEMENT WITH CARRARO SPA LTD., THE DECISION IN TH E CASE OF FENNER WOODRUFF & CO. LTD. VS. COMMISSIONER OF INCOME-TAX (MAD.), 102 ITR 665, IS CLEARLY APPLICABLE TO THE ASSESSEE'S CASE; AND, IN THE 3 ITA NO. 1378/PN/2013, A.Y. 2008-09 CIRCUMSTANCES, IT WAS ERRONEOUS TO HOLD THE CITED D ECISION AS DISTINGUISHABLE. 7. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN ALLOWING THE ASSESSEE'S CLAIM OF DEDUCTION OF RS.68 ,04,201/- ON ACCOUNT OF AMORTIZATION OF LOOSE TOOLS INSTEAD OF CONFIRMIN G THE STAND TAKEN IN THE ASSESSMENT THAT SUCH AMORTIZATION WAS NOT PERMISSIB LE EITHER U/S. 36 OR 37(1) SINCE THE LOOSE TOOLS, BY THE ASSESSEE'S OWN ADMISSION WERE CAPITAL ASSETS; AND, MOREOVER, THE CLAIM THUS MADE CONSTITU TED WRITING OFF A CAPITAL ASSET NOT USED IN THE ASSESSEE'S BUSINESS. 8. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN ALLOWING THE CLAIM ON ACCOUNT OF AMORTIZATION OF LO OSE TOOLS MERELY BECAUSE THE ASSESSEE HAD CONSISTENTLY FOLLOWED ACCO UNTING PRACTICE OF AMORTIZATION RIGHT FROM THE A.Y. 2002-03 AND IN GRO SS DISREGARD OF THE FACT THAT NOT ONLY THAT SUCH AMORTIZATION IS IMPERM ISSIBLE IN LAW, REST JUDICATA IS ALSO NOT APPLICABLE TO INCOME-TAX PROCE EDINGS. 9. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF THE HEARING, THE ORDER OF THE LEARNED COMMISSIONER OF I NCOME-TAX (APPEALS) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 10. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL DURING THE COURSE OF THE AP PELLATE PROCEEDINGS BEFORE THE HON'BLE TRIBUNAL. 3. SHRI P.L. KUREEL REPRESENTING THE DEPARTMENT SUBMITTED THAT THE DEPARTMENT IN APPEAL HAS PRIMARILY RAISED TWO ISSUES. GRO UND NOS. 2 TO 6 RELATE TO PAYMENT OF ROYALTY OF ` 2,28,84,778/- MADE BY THE ASSESSEE TO CARRARO SPA, ITALY. THE ASSESSEE HAS CLAIM ED AFORESAID PAYMENT OF ROYALTY AS REVENUE EXPENDITURE. DURING THE C OURSE OF SCRUTINY ASSESSMENT THE ASSESSING OFFICER AFTER APPRECIATING THE FAC TS OF THE CASE AND DOCUMENTS ON RECORD CAME TO THE CONCLUS ION THAT THE PAYMENT OF ROYALTY PARTOOK THE CHARACTER OF CAPITAL EXPE NDITURE AND HENCE, IS NOT ADMISSIBLE FOR DEDUCTION. AS PERUSAL OF CLAUSE 2.6(B) OF THE AGREEMENT BETWEEN ASSESSEE AND CARRARO SPA, ITAL Y WOULD SHOW 4 ITA NO. 1378/PN/2013, A.Y. 2008-09 THAT THE ASSESSEE SHALL BE DEEMED TO HAVE ACQUIRED A P ERPETUAL AND ROYALTY FREE NON EXCLUSIVE LICENSE TO USE THE LICENSED TECH NOLOGY ON EXPIRATION OF THE TENURE OF THE AGREEMENT, SUBJECT TO CO MPLETE PAYMENT OF THE ROYALTY. THUS, THE PAYMENT OF ROYALTY IS CAPITAL IN N ATURE. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN ACCEPTING THE CONTENTIONS OF THE ASSESSEE. 3.1 THE LD. DR FURTHER SUBMITTED THAT THE SECOND ISSUE IN PARAS 7 AND 8 OF THE APPEAL RELATE TO AMORTIZATION OF LOOSE TOOLS. IT IS AN UNDISPUTED FACT THAT THE LOOSE TOOLS ON WHICH THE ASSESS EE HAS CLAIMED AMORTIZATION ARE NOT INSTALLED IN THE BUSINESS PREMISES OF THE ASSESSEE. AS PER ASSESSEES OWN ADMISSIONS, LOOSE TOOLS ARE IN POSS ESSION OF VENDORS WHO ARE SUPPLYING COMPONENTS TO THE ASSESSEE . THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ACCEPTED THE CLA IM OF THE ASSESSEE BY FOLLOWING THE ORDERS OF HIS PREDECESSORS IN P RECEDING ASSESSMENT YEAR. THE PRINCIPLE OF RES JUDICATA DOES NOT APPLY IN INCOME TAX PROCEEDINGS. THE ISSUE RAISED IN EVERY ASSE SSMENT YEAR HAS TO BE DECIDED ON THE BASIS OF FACTS OF EACH YEAR. TH E LD. DR VEHEMENTLY SUPPORTED THE FINDINGS OF ASSESSING OFFICER AND PRAYED FOR SETTING ASIDE THE FINDINGS OF COMMISSIONER OF INCOME TAX (AP PEALS) ON BOTH THE ISSUES RAISED IN THE APPEAL BY THE DEPARTMENT. 4. ON THE OTHER HAND SHRI RAJENDRA AGIWAL APPEARING O N BEHALF OF THE ASSESSEE STRONGLY SUPPORTED THE FINDINGS OF COMMISSIO NER OF INCOME TAX (APPEALS). THE LD. AR SUBMITTED THAT THE ASSE SSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF TR ACTOR TRANSMISSION AGGREGATES AND FRONT AXLES. THE ASSESSEE COMPANY IS A JOINT VENTURE OF CARRARO SPA OF ITALY AND ESCORTS LTD. OF INDIA. DURING 5 ITA NO. 1378/PN/2013, A.Y. 2008-09 THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2008-09 TH E ASSESSEE PAID ROYALTY OF ` 2,28,84,778/- AND CLAIMED THE SAME AS REVENUE EXPENDITURE. THE ASSESSING OFFICER REJECTED THE CLAIM OF TH E ASSESSEE BY HOLDING THE PAYMENT OF ROYALTY AS CAPITAL EXPENDITURE. THE ISSUE REGARDING THE NATURE OF ROYALTY PAYMENT, WHETHER REVENU E OR CAPITAL WAS RAISED IN THE EARLIER ASSESSMENT YEARS, AS WELL. IN T HE ASSESSMENT YEAR 2007-08 THE TRIBUNAL IN ITA NO. 1278/PN/2012 DECIDE D ON 29-04-2013 BY FOLLOWING THE EARLIER DECISION OF TRIBUNAL IN ASS ESSEES OWN CASE HAS HELD THAT THE ROYALTY PAID BY THE ASSESSE E IS REVENUE IN NATURE. THE LD. AR PLACED ON RECORD A COPY OF THE ORDE R OF TRIBUNAL IN ITA NO. 1278/PN/2012. 4.1 IN RESPECT OF THE SECOND ISSUE RELATING TO AMORTIZATIO N OF LOOSE TOOLS, THE LD. AR SUBMITTED THAT THE ASSESSEE IS MANUFACTU RING TRACTOR AXLES AND TRANSMISSION AT ITS OWN FACTORY AT PUNE. BESIDE S THAT THE ASSESSEE IS GETTING SOME PARTS MANUFACTURED THROUGH VENDORS/MANUFACTURERS. CHARGE ON ACCOUNT OF AMORTIZATIO N OF LOOSE TOOLS REPRESENTS THE AMOUNTS WRITTEN OFF ON ACCOUNT OF CONSUMPTION/WEAR AND TEAR OF TOOLS USED BY SUPPLIERS WHO UNDERTAKE THE SUPPLY COMPONENTS/PARTS TO ASSESSEE. LOOSE TOO LS ARE SPECIAL PURPOSE TOOLS WHICH ARE REQUIRED TO MANUFACTURE COMPON ENTS ACCORDING TO DESIGNS AND TECHNICAL SPECIFICATIONS OF ASSESSE ES PRODUCTS AND CANNOT GENERALLY BE USED TO MANUFACTURE COMPONEN TS FOR OTHERS. EACH TOOL HAS AN ESTIMATED LIFE IN TERMS OF NUMBER OF COMPO NENTS IT IS CAPABLE OF PROCESSING/MANUFACTURING. THE TOTAL COST OF THE TOOL IS SPREAD OVER THE NUMBER OF UNITS LIKELY TO BE MANUFACTURE D WITH THE HELP OF IT. THE AMORTIZATION RATE PER UNIT IS A PREDETERMIN ED RATE BETWEEN COMPANY AND THE SUPPLIERS. THE AMOUNT OF LOOSE TOOLS 6 ITA NO. 1378/PN/2013, A.Y. 2008-09 AMORTIZED EACH YEAR IS ARRIVED AT AFTER CONSIDERING THE A CTUAL NUMBER OF COMPONENTS RECEIVED FROM THE SUPPLIER AFTER PROCESSING ON THE RELATIVE TOOLS. ALTHOUGH THE LOOSE TOOLS ARE IN POSSESSION OF THE SUPPLIERS/MANUFACTURERS OF THE COMPONENTS THEY ARE THE PROPERTY OF THE ASSESSEE. THESE LOOSE TOOLS ARE USED BY THE SUPPLIE RS / MANUFACTURERS FOR MANUFACTURING THE COMPONENTS/PARTS TO BE USED BY THE ASSESSEE. THE ASSESSEE FOR THE PAST SEVERAL FINANCIAL YEARS H AS BEEN CONSISTENTLY FOLLOWING THE ACCOUNT PRACTICE OF AMORTIZATION OF LOOSE TOOLS. THE COMMISSIONER OF INCOME TAX (APPEALS) IN PARA 6.5 OF THE ORDER HAS GIVEN THE DETAILS OF EXPENDITURE AMORTIZED EVER Y YEAR ON ACCOUNT OF LOOSE TOOLS. THE ASSESSING OFFICER HAS ERRED IN DISALLOWING THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE TOOLS ARE NOT LAYING IN THE BUSINESS PREMISES OF ASSESSEE AND HENCE THE ASSES SEE IS NEITHER ELIGIBLE TO CLAIM DEPRECIATION ON THE LOOSE TOOLS NOR AMORTIZE THE SAME. THE LD. AR IN SUPPORT OF HIS SUBMISSIONS PLACED RELIANCE ON THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V S. GOPAL PUROHIT REPORTED AS 336 ITR 287 TO SAY THAT THE PRINC IPLE OF CONSISTENCY HAS TO BE FOLLOWED. THE REVENUE HAS NEVER RAISED ANY OB JECTION IN THE PAST, WHEN THE LOOSE TOOLS WERE AMORTIZED. IT IS FOR THE FIRST TIME IN THE ASSESSMENT YEAR UNDER APPEAL OBJECTION WAS RAISED BY T HE ASSESSEE ON AMORTIZATION OF LOOSE TOOLS. THE LD. AR FURTHER PLACED RELIANC E ON THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ASS ISTANT COMMISSIONER OF INCOME TAX VS. NATIONAL STOCK EXCHANGE OF INDIA LTD. REPORTED AS 14 ITR 583 TO SUPPORT THE PROPOSITION THA T EVEN THOUGH ASSETS ARE NOT LOCATED IN ASSESSEES BUSINESS PREMISES, DEPRECIATION IS ALLOWABLE. FURTHER, RELIANCE WAS PLACED ON THE CBDT CIRCULAR NO. 016 (XI-4) DATED 31 ST MAY, 1961 WHICH DEALS WITH THE CONCEPT OF CONSOLIDATING REVENUE EXPENDITURE AND AMORTIZING IT OVER A PERIOD OF 7 ITA NO. 1378/PN/2013, A.Y. 2008-09 YEARS. THE LD. AR FURTHER TO REINFORCE HIS SUBMISSIONS PLAC ED RELIANCE ON THE TAPARIA TOOLS LIMITED VS. JOINT COMMISSIONER OF INCO ME TAX REPORTED AS 372 ITR 605 (SC). 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO CONSIDERED THE DECISIONS ON WHICH THE LD. AR HAS PLACED RELIANCE. IN APPEAL THE DEPARTMENT HAS RAISED 10 GROUNDS. THE GROU ND NOS. 1, 9 AND 10 ARE GENERAL IN NATURE AND HENCE, REQUIRE NO ADJUDICATION. 6. THE GROUND NOS. 2 TO 6 RAISED IN THE APPEAL RELATE TO PAYMENT OF ROYALTY ` 2,28,84,778/-. THE ASSESSEE HAS CLAIMED ROYALTY PAYMENT A S REVENUE IN NATURE. THE ASSESSING OFFICER HAS HELD THE PA YMENT OF ROYALTY AS CAPITAL EXPENDITURE. WE FIND THAT THE ISSUE, WH ETHER THE PAYMENT OF ROYALTY BY ASSESSEE TO CARRARO SPA, ITALY IS REVENUE OR CAPITAL IN NATURE, HAS BEEN LAID TO REST BY THE TRIBUNAL WHILE DECIDING THE APPEAL OF THE DEPARTMENT IN ITA NOS. 1384 & 1385/PN /2010 FOR ASSESSMENT YEARS 2003-04 AND 2004-05. THEREAFTER, S IMILAR DISALLOWANCE WAS MADE IN ASSESSMENT YEAR 2007-08. THE C O-ORDINATE BENCH OF THE TRIBUNAL IN ITA NO. 1278/PN/2012 DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING ROYALTY PAYMENT BY ASS ESSEE TO CARRARO SPA, ITALY AS REVENUE EXPENDITURE BY FOLLOWING EA RLIER ORDER OF CO-ORDINATE BENCH IN ASSESSEES OWN CASE. THE RELEVAN T EXTRACT OF THE FINDINGS OF TRIBUNAL ARE AS UNDER : 2. THE ASSESSING OFFICER HAS DISALLOWED THE SUM OF RS.3,98,64,546/- BEING ROYALTY PAID BY THE ASSESSEE ON THE GROUND THAT SAME IS CAPITAL IN NATURE. THIS ISSUE IS ARISING FROM EARLIER ASSESSMENT YEARS STARTING FROM A.Y. 2003-04. IN THIS YEAR, TH E ASSESSING OFFICER HAS 8 ITA NO. 1378/PN/2013, A.Y. 2008-09 HELD THAT 25% OF THE EXPENDITURE INCURRED ON ROYALT Y IS CAPITAL IN NATURE. AT THIS STAGE, THE LD. AUTHORISED REPRESENTATIVE PO INTED OUT THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF THE ITAT, PUNE BENCH, IN ASSESSEES OWN CASE IN ITA.NO.1384/P N/2010, 1385/PN/2010 AND 205/PN/2011 FOR A.YS. 2003-04, 200 4-05 AND 2005-06 RESPECTIVELY, WHEREIN IT HAS BEEN HELD THAT EXPENDITURE ON ROYALTY IS REVENUE IN NATURE AND ALLOWABLE, BY OBSE RVING AS UNDER: 8. IN SUM AND SUBSTANCE AN OVERALL CONSIDERATION O F THE TERMS AND CLAUSES IN THE AGREEMENT BETWEEN THE ASSESSEE AND T HE CARRARO SPA, ITALY, IT IS DIFFICULT TO ACCEPT THE CONTENTION OF THE A.O. THAT ASSESSEE HAS BEEN GRANTED ABSOLUTE RIGHT OF THE USE OF THE TECHN OLOGY. WHILE GRANTING THE LIMITED RIGHT OF TECHNOLOGY WITH PUTTING LOT OF RESTRICTIONS THE PAYMENT OF THE ROYALTY IS LINKED TO THE NET SALE TURNOVER O F THE ASSESSEE IN THE SPECIFIED TERRITORY. IT IS PERTINENT TO NOTE THAT ROYALTY PAYMENT MADE BY THE ASSESSEE IS NOT A LUMPSUM PAYMENT BUT IT IS SPR EAD OVER FROM THE A.YS. 2002-03 TO 2008-09 (AS PER THE CHART FILED BE FORE US) WHICH WAS CLEARLY LINKED TO THE SALES OF THE LICENSED PRODUCT . WE HAVE ALSO ANXIOUSLY PERUSED THE DECISIONS RELIED ON DIFFERENT DECISIONS BY THE LD. COUNSEL. IN THE CASE OF CLIMATE SYSTEMS INDIA LTD. (SUPRA), HON'BLE HIGH COURT OF DELHI HELD THAT THE ROYALTY PAID BY THE AS SESSEE TO THE FOREIGN COLLABORATORS HAD A SPECIFIED PERCENTAGE OF ITS DOM ESTIC AND EXPORT SALES FOR USING THE TECHNOLOGY AND FILING OF THE TECHNICA L SERVICES AS PROVIDED BY THE LETTER UNDER THE TECHNICAL COLLABORATION AGR EEMENT IS ALLOWABLE AS A REVENUE EXPENDITURE. THE IDENTICAL VIEW HAS BEEN TAKEN IN THE DIFFERENT DECISIONS. WE HAVE ALSO CONSIDERED THE DE CISIONS RELIED ON BY THE LD. COUNSEL. MORE PARTICULARLY, IN THE CASE OF FENNER WOODROFFE & CO. LTD. VS. CIT (MAD) 102 ITR 665. IN THE SAID CA SE THERE WAS NO LIMITATION REGARDING EXPLOITATION OF THE KNOWHOW BE YOND THE TERM OF THE AGREEMENT. THOUGH IN THE SAID CASE THE AGREEMENT W AS STATED TO BE IN FORCE FOR THE PERIOD OF 10 YEARS, THERE WAS NO PROH IBITION FOR THE USE OF THE TECHNICAL DATA BY THE ASSESSEE AFTER THE PERIOD OF THE 10 YEARS NOR THERE WAS ANY CLAUSE REQUIRING THE SAID ASSESSEE TO RETURN THE TECHNICAL DATA IN RESPECT OF THE BENEFIT UNDER THE SAID AGREE MENT. BUT IT IS NOT THE CASE OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE DECISIONS RELIED ON BY THE LD. CIT(DR) IN THE CASE OF CIT VS. NAYA SAHI TYA 84 ITR 567 (DEL) AND TO VISAKHAPATNAM SUGAR AND REFINERY LTD. VS. CI T 47 ITR 139 (AP) AND IN OUR OPINION, BOTH THE DECISIONS ARE NOT HELP FUL TO THE REVENUE AS THE FACTS ARE TOTALLY DIFFERENT. IN OUR OPINION, TH E LD. CIT(A) HAS RIGHTLY ALLOWED THE EXPENDITURE OF THE ROYALTY AS A REVENUE EXPENDITURE AND WE FIND NO REASON TO INTERFERE WITH THE FINDINGS OF TH E LD. CIT(A) ON THE ABOVE REASONING. 9. IN THE RESULT, THE GROUND TAKEN BY THE REVENUE I S DISMISSED. 9 ITA NO. 1378/PN/2013, A.Y. 2008-09 NOTHING CONTRARY WAS BROUGHT TO OUR NOTICE. FACTS BEING SAME, SO FOLLOWING SAME REASONING WE HOLD THAT ROYALTY PAID IN RESPECT OF GOODS SOLD IN DOMESTIC MARKET AND THE AMOUNT OF ROYALTY P ERTAINS TO AND IS NECESSARILY AN EXPENSE INCURRED TO EARN SALES REVEN UE DURING THE YEAR, HENCE SAME IS REVENUE EXPENDITURE. THE ASSESSING O FFICER IS DIRECTED ACCORDINGLY. 7. THE LD. DR HAS NOT BEEN ABLE TO CONTROVERT THE FINDING S OF CO- ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE. U NDISPUTEDLY, THERE HAS BEEN NO CHANGE IN THE FACTS AND CIRCUMSTANCE S IN THE ASSESSMENT YEAR UNDER APPEAL, THEREFORE, WE FIND NO REAS ON TO TAKE A CONTRARY VIEW. THUS, IN VIEW OF THE DECISION OF CO-ORDINATE BENCH, WE DO NOT FIND ANY MERIT IN GROUND NOS. 2 TO 6 RAISED BY THE DEPARTMENT IN APPEAL. THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON THE ISSUE ARE UPHELD AND THE GROUND NOS. 2 TO 6 OF THE DEPA RTMENTS APPEAL ARE DISMISSED BEING DEVOID OF ANY MERIT. 8. THE SECOND ISSUE RAISED BY THE DEPARTMENT IN GROUN D NOS. 7 AND 8 OF THE APPEAL RELATE TO AMORTIZATION OF LOOSE TOOLS. THE ASSESSEE HAS BEEN CONSISTENTLY FOLLOWING ACCOUNTING PRACTICE OF AMORTIZA TION OF LOOSE TOOLS SINCE ASSESSMENT YEAR 2002-03. THE REVENUE HAS NEVER OBJECTED TO THE TREATMENT GIVEN BY THE ASSESSEE IN AMORTIZATION OF LOOSE TOOLS. THE DETAILS OF THE AMORTIZATION OF THE LOOSE TOOLS OVER THE PERIOD OF TIME STARTING FROM FINANCIAL YEAR 2001-02 UP TO FINANCIAL YEAR 200 7-08 ARE AS UNDER : F.Y. ASSTT. YEAR WDV ADDITIONS TOTAL AMORTIZATION BALANCE (3+4) 1 2 3 4 5 6 7 2001-02 2002-03 5,93,05,907 1,40,19,100 7,33,25,007 23,56,034 7,09,68 , 973 2002-03 2003-04 7,09,68,973 13,19,928 7,22,88,901 47,18,243 6 , 75,70,658 2003-04 2004-05 6,75,70,658 84,85,970 7,60,56,628 1,86,61,979 5,73,94,649 2004 - 05 2005-06 5,73,94,649 46,25,000 6,20,19 , 649 1,46,50,000 4 , 73 , 69,000 10 ITA NO. 1378/PN/2013, A.Y. 2008-09 2005-06 2006-07 4,73,69,000 85,11,000 5 , 58,80 , 000 65 . 78,000 4,76,65 , 439 2006-07 2007-08 4,76,65,439 62,53,842 5,39,19,281 83,46 , 184 4 , 55 , 73 , 097 2007-08 2008-09 4,55,73 , 097 1,21,22,219 5,76,95,316 68,04,201 5,08,91 , 115 SINCE, THE ASSESSEE HAS BEEN CONSISTENTLY FOLLOWING THIS ME THOD OF ACCOUNTING AND NO OBJECTION WAS EVER RAISED BY THE D EPARTMENT WE DO NOT FIND ANY MERIT IN THE OBJECTION RAISED FOR THE FIRST TIME IN THE ASSESSMENT YEAR 2008-09 ON AMORTIZATION OF LOOSE TOOLS. 9. THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF RA DHASOAMI SATSANG VS. COMMISSIONER OF INCOME TAX REPORTED AS 193 ITR 321 AND THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GOP AL PUROHIT (SUPRA) HAS EMPHASIZED ON THE PRINCIPLE OF CONSISTENCY. TH E HON'BLE BOMBAY HIGH COURT HELD THAT THERE SHOULD BE UNIFORMITY IN TREATMENT AND CONSISTENCY WHEN THE FACTS AND CIRCUMSTANCES IN DIFFER ENT YEARS ARE IDENTICAL, PARTICULARLY IN THE CASE OF SAME ASSESSEE. WE FIND NO MERIT IN THE GROUNDS RAISED BY THE DEPARTMENT AGAINST T HE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN ACCEPTING AMORTIZAT ION OF LOOSE TOOLS. 10. WE WOULD LIKE TO OBSERVE THAT LOOSE TOOLS REFER TO P ATTERNS/DIES FURTHER REQUIRED TO MANUFACTURE COMPONENTS ACCORDING TO DESIGN AND TECHNOLOGY SPECIFICATIONS OF THE ASSESSEE. THESE COMPONEN TS ARE USED IN THE PRODUCTS MANUFACTURED BY THE ASSESSEE. UNDISPUT EDLY, THE DIES AND DESIGNS ARE PROVIDED BY THE ASSESSEE TO THE SUPPLIE RS OF THE COMPONENTS. MERELY FOR THE REASON THAT THE LOOSE TOOLS ARE IN POSSESSION OF THE SUPPLIERS OF THE COMPONENTS, IT DOES NOT MEAN THAT THE LOOSE TOOLS CEASES TO BE THE ASSETS OF THE ASSESSE E. THE ASSESSEE HAS PROVIDED THE LOOSE TOOLS TO THE SUPPLIERS OF THE COMP ONENTS FOR ITS 11 ITA NO. 1378/PN/2013, A.Y. 2008-09 OWN CONVENIENCE. IT IS NOT THE CASE OF THE REVENUE TH AT THE ASSESSEE HAS CHARGED FOR THE DIES/PATTERNS (LOOSE TOOLS) FROM THE S UPPLIERS. THUS, IN VIEW OF OUR ABOVE FINDINGS WE DO NOT FIND ANY MERIT IN THE GROUND NOS. 7 AND 8 RAISED BY THE DEPARTMENT. ACCORDIN GLY, THE SAME ARE DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 28 TH DAY OF OCTOBER, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 28 TH OCTOBER, 2016 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-I, PUNE 4. ' / THE CIT-I, PUNE 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE