ITO 15(2)(1), MUMBAI V. KELLOGG INDIA P.LTD, MUMBAI

ITA 1906/MUM/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4585 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 28-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NILLU JAGGI
• Assessee Lawyers: KARAN MEHTA
• Keywords: Business income; Depreciation; Transfer pricing; International transaction; Initiation of penalty proceedings; Unabsorbed depreciation; TDS
• Section: 271(1)(c); 143(3); 92B; 234B; 250; 144C; 195A; 73; 72; 13; 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH K, MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.2262/MUM/2016(A.Y.2011-12) ITA NO.2314/MUM/2017(A.Y.2012-13) KELLOGG INDIA PRIVATE LIMITED, 1001-1002, 10 TH FLOOR, HIRANANDANI KNOWLEDGE PARK, HIRANANDANI BUSINESS PARK, POWAI, MUMBAI 400 076. PAN:AAACK 1748A ...... APPELLANT VS. INCOME TAX OFFICER-15(2)(1), ROOM NO.452, 4 TH FLOOR, AAYKAR BHAVAN, M.K.ROAD, MUMBAI 400 020 ..... RESPONDENT ITA NO.1906/MUM/2016(A.Y.2011-12) INCOME TAX OFFICER-15(2)(1), ROOM NO.452, 4 TH FLOOR, AAYKAR BHAVAN, M.K.ROAD, MUMBAI 400 020 ..... APPEL LANT VS. KELLOGG INDIA PRIVATE LIMITED, 1001-1002, 10 TH FLOOR, HIRANANDANI KNOWLEDGE PARK, HIRANANDANI BUSINESS PARK, POWAI, MUMBAI 400 076. PAN:AAACK 1748A ...... RESPONDENT ASSESSEE BY : S/SHRI HIRALI DESAI & KARAN MEHTA REVENUE BY : MS. NILLU JAGGI DATE OF HEARING : 12/12/2019 DATE OF PRONOUNCEMENT : 24/02/2020 2 ITA NO.2262/MUM/2016(A.Y.2011-12) ITA NO.2314/MUM/2017(A.Y.2012-13) ITA NO.1906/MUM/2016(A.Y.2011-12) ORDER PER VIKAS AWASTHY, JM: THESE THREE APPEALS, TWO BY THE ASSESSEE I.E ITA N O.2262/MUM/2016 FOR ASSESSMENT YEAR 2011-12, ITA NO.2314/MUM/2017FOR A SSESSMENT YEAR 2012- 13 AND THE APPEAL BY THE DEPARTMENT IN ITA NO.1906/ MUM/2016 ARE TAKEN UP TOGETHER AS THE ISSUES INVOLVED IN THE APPEALS ARE SIMILAR AND ARE ARISING FROM SAME SET OF FACTS. 2. ITA NO.2262/MUM/2016 BY THE ASSESSEE AND CROSS A PPEAL BY THE DEPARTMENT IN ITA NO.1906/MUM/2016 ARE DIRECTED AGA INST ASSESSMENT ORDER FOR ASSESSMENT YEAR 2011-12 DATED 29/01/2016 PASSE D UNDER SECTION 143(3) R.W.S. 144C OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 3. THE BRIEF FACTS AS EMANATING FROM THE RECORDS AR E: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE O F READY TO EAT CEREALS . DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR UN DER APPEAL, THE ASSESSEE HAD ENTERED INTO INTERNATIONAL TRANSACTION WITH ITS AES. REFERENCE UNDER SECTION 92CA(1) OF THE ACT WAS MADE TO TPO FOR COM PUTATION OF ARM'S LENGTH PRICE(ALP) IN RELATION TO THE INTERNATIONAL TRANSAC TIONS ENTERED INTO BY THE ASSESSEE. THE TPO VIDE ORDER DATED 30/01/2015 MAD E ADJUSTMENT OF RS.34.58 CRORES IN RESPECT OF BRAND PROMOTION AND MARKETING EXPENDITURE. APART FROM ABOVE TRANSFER PRICING ADJUSTMENT, THE ASSESSING OF FICER INTER-ALIA MADE ADDITIONS BY RECLASSIFICATION OF INTEREST INCOME AN D RECOMPUTATION OF DEPRECIATION UNDER SECTION 32 OF THE ACT. AGGRIEVE D AGAINST THE DRAFT ASSESSMENT ORDER DATED 27/03/2015, THE ASSESSEE FIL ED OBJECTIONS BEFORE THE DRP. THE DRP VIDE DIRECTIONS DATED 28/12/2015 PART LY ACCEPTED THE OBJECTIONS 3 ITA NO.2262/MUM/2016(A.Y.2011-12) ITA NO.2314/MUM/2017(A.Y.2012-13) ITA NO.1906/MUM/2016(A.Y.2011-12) RAISED BY THE ASSESSEE. THE ASSESSING OFFICER VID E IMPUGNED ORDER DATED 29/01/2016 GAVE EFFECT TO THE DIRECTION OF THE DRP. AGAINST THE SAID ASSESSMENT ORDER BOTH, THE ASSESSEE AND THE REVENUE ARE IN APPEAL BEFORE THE TRIBUNAL. 4. SHRI HIRALI DESAI APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED AT T HE OUTSET THAT HE IS NOT PRESSING GROUND NO.1 OF THE APPEAL. THUS, THE EFFECTIVE GROUNDS FOR ADJUDICATION IN THE APPEAL BY ASSESSE E ARE GROUND NO.2 & 3. GROUND NO.4 OF THE APPEAL IS AGAINST INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT , THE SAID GROUND IS PREMATURE AT THIS STAGE. 5. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESS EE SUBMITTED THAT IN GROUND NO.2 OF THE APPEAL, THE ASSESSEE HAS ASSAILE D ACTION OF ASSESSING OFFICER IN RECLASSIFICATION OF INTEREST INCOME OF R S.74,61,945/- AS INCOME FROM OTHER SOURCES AS AGAINST BUSINESS INCOME DECLARE D BY THE ASSESSEE. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITT ED THAT THIS ISSUE IS RECURRING IN NATURE. THE ASSESSEE IN THE PAST I.E. ASSESSMENT YEARS 2007- 08,2008-09 AND 2009-10 HAD OFFERED INTEREST INCOME UNDER THE HEAD BUSINESS INCOME. THE SAME WAS REJECTED BY THE REVENUE AND WAS TREATED AS INCOME FROM OTHER SOURCES. THE TRIBUNAL RESTORED THE IS SUE BACK TO THE FILE OF ASSESSING OFFICER FOR RE-EXAMINATION OF THE NATURE OF FIXED DEPOSIT RECEIPTS. THE LD.AR REFERRED TO THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.431/MUM/2010 FOR ASSESSMENT YEAR 2007-08 DECIDE D ON 22/12/2016 AND ITA NO.2866/MUM/2014 FOR ASSESSMENT YEAR 2009-10 D ECIDED ON 19/07/2019. 5.1 IN RESPECT OF GROUND NO.3 OF THE APPEAL, THE L D. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER WHILE 4 ITA NO.2262/MUM/2016(A.Y.2011-12) ITA NO.2314/MUM/2017(A.Y.2012-13) ITA NO.1906/MUM/2016(A.Y.2011-12) COMPLYING WITH THE DIRECTION OF DRP IN ALLOWING S ET OFF OF BROUGHT FORWARD BUSINESS LOSS OF PREVIOUS YEAR HAS FIRST SET OFF UNABSORBED DEPRECIATION AGAINST CURRENT YEAR BUSINESS INCOME AND INCO ME FROM OTHER SOURCES OF THE CURRENT YEAR. THE METHOD ADOPTED BY A.O SET O FF BUSINESS LOSSES OF PREVIOUS IS CONTRARY TO THE PROVISIONS OF SECTI ON 72(2) OF THE ACT. AS PER MANDATE OF SUB-SECTION (2) OF SECTION 72, THE BROU GHT FORWARD BUSINESS LOSSES ARE TO BE SET OFF FIRST, BEFORE SETTING OFF OF UNAB SORBED DEPRECIATION. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE PRAYED T HAT A DIRECTION MAY BE GIVEN TO ASSESSING OFFICER TO FIRST SET OFF BROUGHT FORWARD BUSINESS LOSSES OF PREVIOUS YEAR BEFORE SETTING OFF OF UNABSORBED DEPR ECIATION AGAINST BUSINESS INCOME AND INCOME FROM OTHER SOURCES. 6. MS. NILLU JAGGI REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED TH E FINDINGS OF ASSESSING OFFICER ON BOTH THESE ISSUES, HOWEVER, THE LD. DEPARTMENTAL REPRESENTATIVE FAIRLY ADMITTED THAT TH E ISSUE REGARDING RECLASSIFICATION OF INTEREST INCOME HAS BEEN CONSID ERED BY THE TRIBUNAL IN EARLIER ASSESSMENT YEARS IN ASSESSEES OWN CASE. T HE ISSUE HAS BEEN RESTORED BACK TO THE FILE OF ASSESSING OFFICER FOR RE-EXAMIN ATION. 7. WE HAVE HEARD THE SUBMISSIONS MADE BY RIVAL SIDE S AND HAVE PERUSED THE ORDER OF AUTHORITIES BELOW. THE ASSESSEE IN AP PEAL HAS RAISED FOUR GROUNDS. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS STATED AT THE BAR THAT HE IS NOT PRESSING GROUND NO.1 OF THE APPEAL. THUS , IN VIEW OF THE STATEMENT MADE BY LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE, GROUND NO.1 OF THE APPEAL RELATING TO MANNER OF RECOMPUTATION OF DEP RECIATION UNDER SECTION 32 OF THE ACT IS DISMISSED AS NOT PRESSED. 5 ITA NO.2262/MUM/2016(A.Y.2011-12) ITA NO.2314/MUM/2017(A.Y.2012-13) ITA NO.1906/MUM/2016(A.Y.2011-12) 8. THE GROUND NO.2 OF THE APPEAL IS AGAINST RECLASS IFICATION OF INTEREST INCOME. THE ASSESSEE HAS EARNED INTEREST INCOME OF RS.74,61,945/- AND HAS OFFERED THE SAME TO TAX UNDER THE HEAD BUSINESS IN COME. THE ASSESSING OFFICER HAS HELD THAT THE INTEREST INCOME EARNED BY THE ASSESSEE IS TO BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES . WE FIND THAT IN ASSESSEES OWN CASE THIS ISSUE HAS TRAVELLED TO THE TRIBUNAL IN EARLIER ASSESSMENT YEARS I.E. ASSESSMENT YEAR 2007-08, 200 8-09 AND 2009-10 . THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ITA NO.2866/MU M/2014 FOR ASSESSMENT YEAR 2009-10 (SUPRA) HAS RESTORED THE ISSUE BACK T O THE FILE OF ASSESSING OFFICER BY FOLLOWING THE DECISION OF THE TRIBUNAL I N ASSESSEES OWN CASE IN ASSESSMENT YEAR 2007-08 AND 2008-09. SINCE THE IS SUE IN THE ASSESSMENT YEAR UNDER APPEAL IS IDENTICAL, WE DEEM IT APPROPRIATE T O RESTORE THIS ISSUE TO THE FILE OF ASSESSING OFFICER FOR DENOVO EXAMINATION IN LINE WITH THE DIRECTION OF THE TRIBUNAL IN ITA NO.431/MUM/2010 FOR ASSESSMENT YEAR 2007-08 (SUPRA). THE GROUND NO.2 OF THE APPEAL IS ALLOWED FOR STATISTIC AL PURPOSE IN THE TERMS AFORESAID. 9. IN GROUND NO.3 OF THE APPEAL THE ASSESSEE HAS AS SAILED THE ACTION OF ASSESSING OFFICER IN SETTING OFF OF UNABSORBED DEPR ECIATION AGAINST BUSINESS INCOME AND INCOME FROM OTHER SOURCES FOR THE CURREN T YEAR BEFORE SETTING OFF OF BROUGHT FORWARD BUSINESS LOSSES OF PREVIOUS YEA R. BEFORE PROCEEDING FURTHER ON THIS ISSUE, IT WOULD BE PERTINENT TO REF ER TO THE PROVISIONS OF SUB- SECTION(2) OF SECTION 72 OF THE ACT DEALING WITH CA RRY FORWARD AND SET OFF OF BUSINESS LOSSES. SUB-SECTION(2) RELEVANT TO THE IS SUE IS REPRODUCED HEREIN BELOW:- 6 ITA NO.2262/MUM/2016(A.Y.2011-12) ITA NO.2314/MUM/2017(A.Y.2012-13) ITA NO.1906/MUM/2016(A.Y.2011-12) (2): WHERE ANY ALLOWANCE OR PART THEREOF IS, UNDER SUB-SECTION (2) OF SECTION 32 OR SUB-SECTION (4) OF SECTION 35 , TO BE CARRIED FORWARD, EFFECT SHALL FIRST BE GIVE N TO THE PROVISIONS OF THIS SECTION. A BARE PERUSAL OF SUB-SECTION (2) OF SECTION 72 W OULD SHOW THAT BEFORE GIVING EFFECT TO THE PROVISIONS OF SECTION 32(2) DEALING W ITH CARRY FORWARD OF UNABSORBED DEPRECIATION, PRECEDENCE IS GIVEN TO S ET OFF OF BROUGHT FORWARD BUSINESS LOSSES AGAINST INCOME UNDER THE HEAD PROFI TS AND GAINS FROM BUSINESS OR PROFESSION. THUS, WE FIND MERIT IN THE CONTENTI ONS OF THE ASSESSEE. THE ASSESSING OFFICER IS DIRECTED TO FIRST SET OFF BROU GHT FORWARD BUSINESS LOSSES OF PREVIOUS YEARS BEFORE SET OFF OF UNABSORBED DEPREC IATION OF THE EARLIER YEAR. THE ASSESSEE SUCCEEDS ON GROUND NO.3 OF THE APPEAL. 10. IN GROUND NO.4 OF THE APPEAL, THE ASSESSEE HA S ASSAILED INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. THIS GROUND OF APPEAL IS PREMATURE AT THIS STAGE. ACCORDINGLY, THE SAME IS DISMISSED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN THE TERMS AFORESAID. ITA NO.1906/MUM/2016,A.Y.2011-12 : 12. THE REVENUE IN ITS APPEAL HAS RAISED FOUR GROUN DS. THE GROUND NO.1 OF THE APPEAL IS AGAINST DIRECTIONS OF DRP IN DELETING TP ADJUSTMENT ON ACCOUNT OF ADVERTISING, MARKETING AND SALES PROMOTION EXPENDI TURE TO THE TUNE OF RS.17,68,29,302/-. THE LD.AUTHORIZED REPRESENTATIV E OF THE ASSESSEE SUBMITTED THAT THE ISSUE RAISED IN THE APPEAL BY THE REVENUE IS SQ UARELY COVERED BY THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.2866/MUM/ 2014 FOR ASSESSMENT YEAR 2009-10 DECIDED ON 19/07/2019, WHEREIN THE ENTIRE A DJUSTMENT HAS BEEN DELETED ON 7 ITA NO.2262/MUM/2016(A.Y.2011-12) ITA NO.2314/MUM/2017(A.Y.2012-13) ITA NO.1906/MUM/2016(A.Y.2011-12) THE GROUND THAT THERE IS NO AGREEMENT OR ARRANGEMEN T FOR INCURRING AMP EXPENDITURE. THE LD.AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ASSERTED THAT THE FACTS IN THE ASSESSMENT YEAR UNDER APPEAL ARE IDEN TICAL. 12.1 IN RESPECT OF GROUND NO.2 OF THE APPEAL BY RE VENUE, THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT REV ENUE HAS ASSAILED ORDER OF DRP IN DELETING THE DISALLOWANCE OF ROYALTY EXPENDITURE AM OUNTING TO RS.2,63,71,271/-. THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE POINTE D THAT THIS ISSUE WAS ALSO SUBJECT MATTER OF APPEAL BEFORE THE TRIBUNAL IN ITA NO.431/ MUM/2011 FOR ASSESSMENT YEAR 2007-08. THE FACTS IN THE ASSESSMENT YEAR UNDER AP PEAL ARE IDENTICAL. THE TRIBUNAL DELETED THE DISALLOWANCE OF ROYALTY BY HOLDING THAT THE ASSESSEE FULFILS ALL THE PRESCRIBED CONDITIONS OF SECTION 10(6A) OF THE ACT AND HENCE, ROYALTY IS EXEMPT FROM TAX. THE ASSESSING OFFICER ERRED IN GROSSING UP THE SAME UNDER SECTION 195A OF THE ACT. SIMILAR ISSUE HAD COME UP IN THE APPEAL THE ASSESSEE FOR ASSESSMENT YEAR 2009-10 BEFORE THE TRIBUNAL. THE TRIBUNAL IN PRINC IPLE ACCEPTED THAT IF CONDITION SET OUT IN SECTION 10(6A) OF THE ACT ARE SATISFIED, PAY MENT OF ROYALTY IS NOT TAXABLE, HOWEVER, THE MATTER WAS RESTORED TO THE FILE OF ASS ESSING OFFICER FOR LIMITED PURPOSE OF VERIFICATION AS TO WHETHER THE CONDITIONS OF SEC TION 10(6A) ARE FULFILLED. IN THE ASSESSMENT YEAR UNDER APPEAL THE ASSESSING OFFICER HAS ALREADY VERIFIED THE COMPLIANCE OF THE CONDITION SET OUT UNDER SECTION 1 0(6A) OF THE ACT AND AFTER HAVING BEEN SATISFIED WITH THE COMPLIANCE OF THE CONDITION S THE ASSESSING OFFICER DELETED THE ADDITION. 13. THE LD.DEPARTMENTAL REPRESENTATIVE VEHEMENTLY D EFENDED THE FINDINGS OF ASSESSING OFFICER IN DRAFT ASSESSMENT ORDER. HOWEV ER, THE LD.DEPARTMENTAL REPRESENTATIVE FAIRLY ADMITTED THAT BOTH THESE ISSU ES RAISED IN THE APPEAL BY THE DEPARTMENT WERE SUBJECT MATTER OF APPEAL BEFORE THE TRIBUNAL IN EARLIER ASSESSMENT YEARS. 8 ITA NO.2262/MUM/2016(A.Y.2011-12) ITA NO.2314/MUM/2017(A.Y.2012-13) ITA NO.1906/MUM/2016(A.Y.2011-12) 14. WE HAVE HEARD THE SUBMISSIONS MADE BY RIVAL SID ES. THE GROUND NO.1 OF THE APPEAL THE REVENUE IS WITH RESPECT TO TP ADJUSTME NT OF RS.34.58 CRORES ON ACCOUNT OF AMP EXPENDITURE. THE DRP AFTER EXAMINING THE ISSUE THREAD BARE DIRECTED THE ASSESSING OFFICER TO DELETE THE ADJUSTMENT. WE FIN D THAT IN THE ASSESSMENT YEAR 2009-10 IN ITA NO.2866/MUM/2014(SUPRA) SIMILAR ISSU E HAD COME UP. THE CO- ORDINATE BENCH OF THE TRIBUNAL DELETED THE ADJUSTM ENT BY OBSERVING AS UNDER:- 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D MATERIAL ON RECORD. WE HAVE ALSO APPLIED OUR MIND TO THE DECISIONS RELIED UPON. UNDISPUTED FACTS ARE, THE ASSESSEE IS NOT MERELY A DISTRIBUTOR OF THE PRO DUCTS MANUFACTURED BY THE AE BUT THE ASSESSEE ITSELF MANUFACTURES ITS OWN PRO DUCTS IN INDIA UNDER LICENSE FROM THE AE. IT IS ALSO A FACT THAT FOR MAR KETING AND PROMOTION OF ITS MANUFACTURED PRODUCTS IN INDIA, ASSESSEE HAS INCURR ED AMP EXPENDITURE BY MAKING PAYMENTS TO THIRD PARTIES IN INDIA. THEREFOR E, THE BASIC ISSUE WHICH ARISES FOR CONSIDERATION IS, WHETHER THE AMP EXPEND ITURE INCURRED BY THE ASSESSEE IN INDIA CAN COME WITHIN THE PURVIEW OF IN TERNATIONAL TRANSACTION AS DEFINED UNDER SECTION 92B OF THE ACT. IN THIS REGAR D, THE CONTENTION OF THE ASSESSEE BEFORE THE TRANSFER PRICING OFFICER WAS, S INCE THE ASSESSEE HAS INCURRED THE AMP EXPENDITURE FOR PRODUCTS MANUFACTU RED AND SOLD BY IT IN INDIA, IT DOES NOT COME WITHIN THE PURVIEW OF INTER NATIONAL TRANSACTION. FURTHER, THE ASSESSEE HAS ALSO SUBMITTED THAT SINCE THERE IS NO ARRANGEMENT/AGREEMENT BETWEEN THE ASSESSEE AND THE AE FOR INCURRING SUCH EXPENDITURE TO PROMOTE THE BRAND OF THE AE, IT CANN OT BE SAID THAT THERE IS AN INTERNATIONAL TRANSACTION RELATING TO AMP EXPENDITU RE. IT IS WORTH MENTIONING, THE TRANSFER PRICING OFFICER HAS ALSO AGREED WITH T HE ASSESSEE THAT THE AMP EXPENDITURE WAS INCURRED WITH THE THIRD PARTIES IN INDIA, HENCE, DO NOT CONSTITUTE INTERNATIONAL TRANSACTION. HAVING HELD S O, THE TRANSFER PRICING OFFICER HAS STILL PROCEEDED TO DETERMINE THE ARM'S LENGTH PRICE OF THE AMP EXPENDITURE ON THE REASONING THAT THE COMPENSATION REQUIRED IN THE ARRANGEMENT BETWEEN THE ASSESSEE AND THE AE FOR IMP ROVING THE BRAND INTANGIBLE OF THE OWNER HAS TO BE DETERMINED. FURTH ER, HE HAS OBSERVED THAT THE AMP EXPENDITURE INCURRED BY THE ASSESSEE NOT ON LY BENEFITS THE ASSESSEE BUT ALSO THE AE IN TERMS OF INCREASE IN THE BRAND V ALUE OF KELLOGG. THUS, THE TRANSFER PRICING OFFICER HAS INFERRED THAT THERE IS AN ARRANGEMENT BETWEEN THE ASSESSEE AND THE AE WITH REGARD TO PROMOTION OF THE BRAND OF THE AE BY INCURRING AMP EXPENDITURE. HOWEVER, HE HAS NOT PROV IDED ANY FACTUAL BASIS ON WHICH HE HAS DRAWN SUCH INFERENCE. BY MERELY STA TING THAT THERE IS AN ARRANGEMENT BETWEEN THE ASSESSEE AND THE AE, THE TR ANSFER PRICING OFFICER CANNOT BRING THE AMP EXPENDITURE WITHIN THE PURVIEW OF INTERNATIONAL TRANSACTION. IF THE TRANSFER PRICING OFFICER ALLEGE S THAT THE AMP EXPENDITURE COMES WITHIN THE PURVIEW OF INTERNATIONAL TRANSACTI ON BY VIRTUE OF AN 9 ITA NO.2262/MUM/2016(A.Y.2011-12) ITA NO.2314/MUM/2017(A.Y.2012-13) ITA NO.1906/MUM/2016(A.Y.2011-12) ARRANGEMENT BETWEEN THE RELATED PARTIES, THE BURDEN IS ENTIRELY UPON THE TRANSFER PRICING OFFICER TO DEMONSTRATE THE EXISTEN CE OF SUCH ARRANGEMENT. A CAREFUL READING OF THE IMPUGNED ORDER OF THE TRANSF ER PRICING OFFICER DOES NOT REVEAL ANY SUCH FACTUAL BASIS WHICH CAN DEMONSTRATE THE EXISTENCE OF AN ARRANGEMENT BETWEEN THE ASSESSEE AND THE AE FOR INC URRING AMP EXPENDITURE TO PROMOTE THE BRAND OF THE AE. THAT BEING THE CASE , THE ENTIRE APPROACH OF THE TRANSFER PRICING OFFICER IN DETERMINING THE ARM 'S LENGTH PRICE OF AMP EXPENDITURE IS FALLACIOUS. 7. MOREOVER, THERE IS NO DOUBT THAT THE TRANSFER PR ICING OFFICER HAS DETERMINED THE ARM'S LENGTH PRICE OF AMP EXPENDITUR E BY APPLYING BLT METHOD. WHILE DOING SO, HE HAS HEAVILY RELIED UPON THE SPECIAL BENCH DECISION OF THE TRIBUNAL, IN LG ELECTRONICS INDIA PVT. LTD. (SUPRA). NOW, IT IS FAIRLY WELL ESTABLISHED THAT DETERMINATION OF ARM'S LENGTH PRIC E OF AMP EXPENDITURE BY APPLYING BLT METHOD IS NOT VALID.IN A CATENA OF DEC ISIONS, THE HON'BLE DELHI HIGH COURT WHILE DISAPPROVING THE DECISION OF THE T RIBUNAL IN L.G. ELECTRONICS INDIA PVT. LTD. (SUPRA) HAVE HELD THAT BLT METHOD I S INVALID AS IT IS NOT PRESCRIBED IN THE STATUTE. IN THIS CONTEXT, WE MAY REFER TO THE DECISION OF THE HON'BLE DELHI HIGH COURT IN MARUTI SUZUKI INDIA LTD . (SUPRA). FOLLOWING THE DECISION OF THE HON'BLE DELHI HIGH COURT IN MARUTI SUZUKI INDIA LTD. (SUPRA) AND VARIOUS OTHER DECISIONS, DIFFERENT BENCHES OF T HE TRIBUNAL HAVE ALSO HELD THAT IN ABSENCE OF AN EXPRESS ARRANGEMENT/AGREEMENT BETWEEN THE ASSESSEE AND THE AE FOR INCURRING AMP EXPENDITURE TO PROMOTE THE BRAND OF THE AE, AMP EXPENDITURE INCURRED BY MAKING PAYMENT TO THIRD PARTIES FOR PROMOTING AND MARKETING THE PRODUCT MANUFACTURED BY THE ASSE SSEE, DOES NOT COME WITHIN THE PURVIEW OF INTERNATIONAL TRANSACTION. 8. AT THIS STAGE, IT IS RELEVANT TO OBSERVE, WHILE DECIDING IDENTICAL NATURE OF DISPUTE IN ASSESSEES OWN CASE FOR THE ASSESSMENT Y EAR 201112, LEARNED DRP IN DIRECTION DATED 28 TH DECEMBER 2015, HAVE DELETE D THE ADJUSTMENT MADE BY THE TRANSFER PRICING OFFICER ON ACCOUNT OF AMP E XPENDITURE BY RECORDING A FACTUAL FINDING THAT THE TRANSFER PRICING OFFICER H AS FAILED TO DEMONSTRATE THAT THERE IS AN AGREEMENT/ARRANGEMENT BETWEEN THE ASSES SEE AND THE AE FOR INCURRING AMP EXPENDITURE. WHILE DOING SO, LEARNED DRP HAS RELIED UPON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN MARUTI SUZUKI INDIA LTD. (SUPRA). THUS, VIEWED IN THE LIGHT OF THE RATIO LAID DOWN IN THE DECISIONS CITED BY THE LEARNED AUTHORISED REPRESENTATIVE, INCLUDING THE DE CISION OF THE HON'BLE DELHI HIGH COURT IN MARTUTI SUZUKI INDIA LTD. (SUPRA), IT HAS TO BE CONCLUDED THAT THE AMP EXPENDITURE INCURRED BY THE ASSESSEE IN INDIA C ANNOT COME WITHIN THE PURVIEW OF THE INTERNATIONAL TRANSACTION. HENCE, TH E TRANSFER PRICING OFFICER HAS NO JURISDICTION TO DETERMINE THE ARM'S LENGTH P RICE OF AMP EXPENDITURE. 10 ITA NO.2262/MUM/2016(A.Y.2011-12) ITA NO.2314/MUM/2017(A.Y.2012-13) ITA NO.1906/MUM/2016(A.Y.2011-12) 9. HAVING HELD SO, IT IS NOW NECESSARY TO DEAL WIT H THE CONTENTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE TO RESTORE THE ISSUE TO THE ASSESSING OFFICER FOR KEEPING IT PENDING TILL THE ISSUE IS SE TTLED BY THE HON'BLE SUPREME COURT. IN OUR VIEW, THE AFORESAID CONTENTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE IS NOT ACCEPTABLE. AS PER THE PREVAI LING LEGAL POSITION, THE AMP EXPENDITURE INCURRED BY THE ASSESSEE IN INDIA CANNO T COME WITHIN THE PURVIEW OF INTERNATIONAL TRANSACTION. THAT BEING THE CASE, THE ADJUSTMENT MADE BY THE TRANSFER PRICING OFFICER CANNOT SURVIVE. THEREFORE, WE DO NOT FIND ANY NECESSITY TO RESTORE THE ISSUE TO THE ASSESSING OFF ICER. GROUNDS ARE ALLOWED. THE LD.DEPARTMENTAL REPRESENTATIVE HAS BEEN NOT ABL E TO CONTROVERT THE FINDINGS OF CO-ORDINATE BENCH OF THE TRIBUNAL. RESPECTFULLY FO LLOWING THE SAME, WE UPHOLD THE FINDINGS OF THE DRP/ASSESSING OFFICER ON THIS ISSUE . THUS, GROUND NO.1 OF THE APPEAL OF THE REVENUE IS DISMISSED, SANS-MERIT. 15. IN GROUND NO.2 OF THE APPEAL, THE REVENUE HAS A SSAILED DELETION OF DISALLOWANCE OF ROYALTY EXPENDITURE. THE LD.AUTHOR IZED REPRESENTATIVE OF THE ASSESSEE HAS POINTED THAT THE ISSUE IS IDENTICAL TO THE ONE ADJUDICATED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2007-08 AND 2009-10 (SUPRA). WE FIND THAT IN ASSESSMENT YEAR 2007-08 THE TRIBUNAL DELETED THE ADDITION ON ACCOUNT OF ROYALTY PAYMENT BY OBSERVING AS UNDER:- 5.2 GROUND NO. 4 RELATES WITH ADDITION OF ROYALTY PAYMENT OF RS.75,27,2537- FOR NON DEDUCTION OF TAX AT SOURCE. THE ASSESSEE PAID CERTA IN ROYALTIES WHICH WAS SUBJECT TO TDS @15%. HOWEVER, THE PAYMENT OF TAX WAS THE RESPO NSIBILITY OF THE ASSESSEE AND ASSESSEE DEDUCTED DUE TDS @15% ON 'NET AMOUNT' PAID AS ROYALTY. AO WAS OF THE VIEW THAT THE IMPUGNED PAYMENTS WERE REQUIRED TO BE 'GROSSED UP' IN TERMS OF PROVISIONS OF SECTION 195A AND THEREAFTER, TDS ON G ROSS AMOUNT WAS TO BE DEDUCTED @15%. THUS, THERE WAS A SHORTFALL OF TDS ON ROYALTY PAYMENT OF RS.75,27,253/- AND HENCE DISALLOWANCE OF THE SAME WAS MADE UNDER SECTI ON 40(A)(I). BEFORE CIT(A), THE ASSESSEE CONTENDED THAT THE ROYALTY PAYMENTS WERE M ADE BY ASSESSEE TO KELLOGG COMPANY, USA UNDER AN AGREEMENT DATED 18/07/1994. T HE AGREEMENT WAS ENTERED PURSUANT TO APPROVAL GRANTED BY GOVERNMENT OF INDIA VIDE LETTER DATED 25/06/1993. THEREFORE, 'GROSSING UP' WAS NOT REQUIRED TO BE DON E FOR THE PURPOSES OF TDS IN TERMS OF PROVISIONS OF SECTION 10(6A). CIT(A) REJECTED TH E SAME ON THE GROUND THAT PROVISIONS OF SECTION10(6A) WERE APPLICABLE ONLY UP TO 31/05/2002 AND THE PRESENT AY BEING 2007-08, THE BENEFIT THEREOF WAS NOT AVAI LABLE TO THE ASSESSEE. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 11 ITA NO.2262/MUM/2016(A.Y.2011-12) ITA NO.2314/MUM/2017(A.Y.2012-13) ITA NO.1906/MUM/2016(A.Y.2011-12) 5.3 THE LD. AR DREW OUR ATTENTION TO THE FACT THAT THE PROVISIONS OF SECTION 10(6A) HAS BEEN MISUNDERSTOOD/MISAPPLIED BY LOWER AUTHORI TIES TO ARRIVE AT THE CONCLUSION THAT BENEFIT THEREOF WAS NOT AVAILABLE TO THE ASSES SEE. THE ASSESSEE FULFILLED ALL THE CONDITIONS OF THE SAID SECTION AND WAS SQUARELY ENT ITLED FOR THE BENEFIT OF THE SAME. THE LD. DR PACED RELIANCE ON STAND OF LOWER AUTHORI TIES. WE HAVE HEARD RIVAL CONTENTIONS. THE SHORT DISPUTE IS WITH REGARD TO CO RRECT INTERPRETATION OF SECTION IO(6A) WHICH IS EXTRACTED BELOW:- '(6A) WHERE IN THE CASE OF A FOREIGN COMPANY DERIVI NG INCOME BY WAY OF ROYALTY OR FEES FOR TECHNICAL SERVICES RECEIVED FRO M GOVERNMENT OR AN INDIAN CONCERN IN PURSUANCE OF AN AGREEMENT MADE BY THE FOREIGN COMPANY WITH GOVERNMENT OR THE INDIAN CONCERN AFTER THE 31ST DAY OF MARCH, 1976 BUT BEFORE THE 1ST DAY OF JUNE, 2002 AND,- (A) WHERE THE AGREEMENT RELATES TO A MATTER INCLUDE D IN THE INDUSTRIAL POLICY, FOR THE N FORCE, OF THE GOVERNMENT OF INDIA , SUCH AGREEMENT IS IN ACCORDANCE WITH THAT POLICY ; AND (B) IN ANY OTHER CASE, THE AGREEMENT IS APPROVED BY THE CENTRAL GOVERNMENT, THE TAX ON SUCH INCOME IS PAYABLE, UNDER THE TERMS OF THE AGREEMENT, BY GOVERNMENT OR THE INDIAN CONCERN TO THE CENTRAL GOV ERNMENT, THE TAX SO PAID.' (EMPHASIS SUPPLIED BY US) AFTER ANALYZING THE ABOVE PROVISIONS, WE CULL OUT T HE FOLLOWING ESSENTIAL REQUIREMENTS TO BE FULFILLED TO CLAIM THE BENEFITS THEREOF;- I. THE INCOME IS DERIVED BY FOREIGN COMPANY, II. SUCH INCOME IS DERIVED FROM 'ROYALTY' OR TEES FOR TECHNICAL SERVICES'. III. THE INCOME SHOULD BE DERIVED FROM GOVERNM ENT OR INDIAN CONCERN. IV. THE INCOME MUST BE DERIVED IN PURSUANCE OF AGREEMENT ENTERED INTO BETWEEN 31/03/1976 AND BEFORE 01/06/2002. V. IF THE AGREEMENT RELATES TO MATTER INCLUDED IN T HE INDUSTRIAL POLICY, IT SHOULD BE WITH IN ACCORDANCE WITH THAT POLICY. IN OTHER C ASES, THE AGREEMENT SHOULD BE APPROVED BY THE GOVERNMENT. WE FIND THAT CIT(A) WRONGLY INTERPRETED THE TIME WI NDOW TO MEAN THAT THE BENEFITS OF PROVISIONS WERE AVAILABLE ONLY UP-TO 31/05/2002 WHICH IS NOT THE CORRECT INTERPRETATION. AS ASSESSEE FULFILLED ALL THE PRE SCRIBED CONDITIONS, HE IS ENTITLED FOR THE BENEFIT OF THE SAME AND HENCE, WE ARE INCLINED TO DELETE THE IMPUGNED ADDITIONS AND ALLOW THE APPEAL OF THE ASSESSEE. WE DIRECT SO. 12 ITA NO.2262/MUM/2016(A.Y.2011-12) ITA NO.2314/MUM/2017(A.Y.2012-13) ITA NO.1906/MUM/2016(A.Y.2011-12) SIMILAR ADDITION WAS MADE BY ASSESSING OFFICER IN A SSESSMENT YEAR 2009-10 AND THE MATTER TRAVELLED TO THE TRIBUNAL. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN PRINCIPLE FOLLOWED THE DECISION OF THE TRIBUNAL FOR ASSESSMEN T YEAR 2007-08, HOWEVER, THE ISSUE WAS RESTORED TO THE FILE OF ASSESSING OFFICER FOR THE LIMITED PURPOSE OF VERIFICATION. IN THE ASSESSMENT YEAR UNDER APPEAL WE FIND THAT THE DRP/ASSESSING OFFICER HAS ALREADY VERIFIED THE FACTS. WE , THERE FORE, FIND NO REASON TO RESTORE THIS ISSUE TO THE FILE OF ASSESSING OFFICER. FOLLOWING THE ORDER OF TRIBUNAL IN ASSESSMENT YEAR 2007-08, WE UPHOLD THE FINDINGS OF DRP/TPO ON THIS ISSUE. ACCORDINGLY, THE GROUND NO.2 OF THE APPEAL BY THE REVENUE IS DISMISS ED. 16. THE GROUND NO.3 & 4 OF APPEAL ARE GENERAL IN NATURE, HENCE, REQUIRE NO ADJUDICATION. 17. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ITA NO.2314/MUM/2017, A.Y.2012-13: 18. THE ASSESSEE IN APPEAL HAS RAISED AS MANY AS SE VEN GROUNDS. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTE D THAT THE ISSUE RAISED IN GROUND NO.1 & 2 OF THE APPEAL ARE SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009-10. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT GROU ND NO.1 OF THE APPEAL IS WITH RESPECT TO TP ADJUSTMENT ON ACCOUNT OF AMP EXPENDIT URE OF RS.33,14,18,410/-. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBM ITTED THAT THIS ISSUE IS IDENTICAL TO GROUND NO.1 RAISED IN THE APPEAL BY THE DEPARTME NT IN ASSESSMENT YEAR 2011-12. THE SUBMISSIONS MADE THEREIN WOULD EQUALLY APPLY TO THE PRESENT GROUND OF APPEAL. THE LD AR POINTED THAT DRP IN PARA-2.12 OF THE DIRE CTIONS HAS OBSERVED THAT THERE IS NO ARRANGEMENT/AGREEMENT BETWEEN THE ASSESSEE AND I TS ASSOCIATED ENTERPRISE 13 ITA NO.2262/MUM/2016(A.Y.2011-12) ITA NO.2314/MUM/2017(A.Y.2012-13) ITA NO.1906/MUM/2016(A.Y.2011-12) FOR INCURRING AMP EXPENDITURE. THE DRP HAS FURTHER OBSERVED THAT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR THE DRP HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. HOWEVER, THE DRP IN THE CURRENT ASSE SSMENT YEAR DECIDED THE ISSUE AGAINST THE ASSESSEE AS THE DECISION OF DRP WAS NOT APPEALABLE BY THE DEPARTMENT AND THE DEPARTMENT WANTED TO KEEP THE ISSUE ALIVE. 18.1 IN RESPECT OF GROUND NO.2 OF THE APPEAL, THE L D. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IS IDENTICAL TO GROUND NO.2 OF THE APPEAL IN ASSESSMENT YEAR 2011-12, THEREFORE, THE SUBMISSION S MADE IN THE APPEAL FOR ASSESSMENT YEAR 2011-12 WOULD EQUALLY APPLY TO THE ASSESSMENT YEAR 2012-13. 18.2 IN RESPECT OF GROUND NO.3 OF THE APPEAL, THE L D. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER H AS ERRED IN NOT ALLOWING BROUGHT FORWARD UNABSORBED DEPRECIATION OF RS.7,15,99,575/- PERTAINING TO ASSESSMENT YEAR 1997-98. THE ASSESSING OFFICER DISALLOWED UNABSOR BED DEPRECIATION ON THE GROUND THAT ASSESSEE COULD CARRY FORWARD UNABSORBED DEPREC IATION UPTO A MAXIMUM PERIOD OF EIGHT YEARS. THE DRP REJECTED THE OBJECTIONS FI LED BY THE ASSESSEE MERELY TO KEEP THE ISSUE ALIVE AS THE DEPARTMENT COULD NOT HAVE FI LED APPEAL AGAINST THE ORDER OF DRP. THE AUTHORITIES BELOW HAVE ERRED IN NOT CONSI DERING THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. HINDUSTAN UNILEVER LTD. REPORTED AS 394 ITR 73 (BOM), WHEREIN IT HAS BEEN HELD THAT THE ASSESSE E CAN SET OFF BROUGHT FORWARD UNABSORBED DEPRECATION WITHOUT ANY CAP OF YEARS. T O FURTHER BUTTRESS HIS CONTENTION, THE LD. AUTHORIZED REPRESENTATIVE FOR T HE ASSESSEE PLACED RELIANCE ON THE FOLLOWING DECISIONS:- (1) CIT VS. ASSOCIATED CABLES PVT. LTD., 263 TAXAM AN 250 (SC) (2) GENERAL MOTORS INDIA PVT. LTD. VS. DCIT, 354 I TR 244(GUJ). 14 ITA NO.2262/MUM/2016(A.Y.2011-12) ITA NO.2314/MUM/2017(A.Y.2012-13) ITA NO.1906/MUM/2016(A.Y.2011-12) 18.3 THE GROUND NO.4 IS IN RESPECT OF LEVY OF INTER EST UNDER SECTION 234B OF THE ACT. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASS ESSEE FAILRY CONCEDED THAT IT IS CONSEQUENTIAL IN NATURE. 18.4 THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSE SSEE SUBMITTED THAT GROUND NO.5 OF THE APPEAL IS WITH RESPECT TO COMPUTATION O F INTEREST UNDER SECTION 234B OF THE ACT WITHOUT CONSIDERING SET OFF OF CREDIT OF MA T TAX PAID FOR ASSESSMENT YEAR 2009-10, 2010-11 AND 2011-12. THE LD. AUTHORIZED R EPRESENTATIVE FOR THE ASSESSEE PRAYED THAT APPROPRIATE DIRECTIONS MAY BE GIVEN FOR COMPUTING INTEREST UNDER SECTION 234B AFTER CONSIDERING SET OFF OF CREDIT OF MAT TAX PAID FOR ASSESSMENT YEAR 2009-10, 2010-11 AND 2011-12. 18.5 THE GROUND NO.6 OF THE APPEAL IS WITH RESPECT TO COMPUTATION OF INTEREST UNDER SECTION 234C OF THE ACT. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT INTEREST UNDER SECTION 234C OF THE ACT IS TO BE COMPUTED ON RETURNED INCOME AND NOT ASSESSED INCOME. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT APPROPRIATE DIRECTIONS MAY BE GIVEN TO THE AUTHORITIES BELOW FOR COMPUTATION OF INTEREST UNDER SECTION 234 C IN ACCORDANCE WITH THE SETTLED POSITION. 18.6 IN GROUND NO.7 OF THE APPEAL ASSESSEE HAS ASSA ILED INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. TH E LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THIS GROUND OF APPE AL IS CONSEQUENTIAL IN NATURE. 19. THE LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY DEFENDED THE IMPUGNED ORDER. HOWEVER, THE LD. DEPARTMENTAL REPRESENTATIV E FAIRLY ADMITTED THAT THE ISSUES RAISED BY THE ASSESSEE IN GROUND NO.1 & 2 OF THE AP PEAL ARE SIMILAR TO THE ONE RAISED 15 ITA NO.2262/MUM/2016(A.Y.2011-12) ITA NO.2314/MUM/2017(A.Y.2012-13) ITA NO.1906/MUM/2016(A.Y.2011-12) IN ASSESSMENT YEAR 2011-12 IN THE APPEALS BY THE R EVENUE AND THE ASSESSEE, RESPECTIVELY. 20. BOTH SIDES HEARD ORDERS OF THE AUTHORITIES BE LOW PERUSED. BOTH SIDES ARE UNANIMOUS IN ADMITTING THAT GROUND NO.1 OF THE APPE AL RELATING TO TP ADJUSTMENT ON ACCOUNT OF AMP EXPENDITURE RS.33,14,18,401/- IS I DENTICAL TO GROUND NO.1 RAISED IN APPEAL BY THE DEPARTMENT FOR ASSESSMENT YEAR 2011- 12. ON EXAMINATION OF THE DIRECTIONS OF DRP WE FIND THAT THE DRP HAS DECIDED THIS ISSUE AGAINST THE ASSESSEE IN THE IMPUGNED ASSESSMENT YEAR ONLY TO KEEP THE ISSUE ALIVE, AS THE DEPARTMENT COULD NOT HAVE FILED APPEAL AGAINST THE DIRECTIONS OF T HE DRP IN THE IMPUGNED ASSESSMENT YEAR CONSEQUENT TO THE AMENDMENT IN THE PROVISIONS OF THE ACT. THE DRP HAS CATEGORICALLY OBSERVED THAT ON SAME SET OF FACTS IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR THE DRP HAS ALLOWED ASSESSEES C LAIM. THE DRP FURTHER OBSERVED THAT THERE IS NO EXPLICIT AGREEMENT BETWEEN THE ASS ESSEE AND ITS AE FOR INCURRING AMP EXPENDITURE, HENCE, AMP EXPENDITURE CANNOT BE C ONSIDERED AS INTERNATIONAL TRANSACTION WITH AE. THUS, IN THE GIVEN FACTS OUR F INDING ON THE ISSUE IN APPEAL BY THE REVENUE FOR ASSESSMENT YEAR 2011-12 WOULD MUTATIS MUTANDIS APPLY TO THE PRESENT GROUND RAISED BY THE ASSESSEE. CONSEQUENTL Y THE FINDINGS OF DRP/ASSESSING OFFICER ARE REVERSED AND GROUND NO.1 OF THE APPEAL IS ALLOWED. 21. THE GROUND NO.2 OF APPEAL IS WITH RESPECT TO TA XABILITY OF INTEREST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES AS AGAIN ST INCOME FROM BUSINESS OR PROFESSION. THE ASSESSEE HAS OFFERED INTEREST INCO ME TO TAX UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS OR PROFESSION. THE ASSESSI NG OFFICER HAS CHANGED THE HEAD OF INCOME AND HAS INTEREST INCOME UNDER THE HE AD INCOME FROM OTHER SOURCES. THIS ISSUE HAD EMERGED IN THE EARLIER ASSESSMENT YE ARS AS WELL. IN ASSESSMENT YEAR 2011-12 WE HAVE RESTORED THIS ISSUE BACK TO THE FIL E OF ASSESSING OFFICER FOR 16 ITA NO.2262/MUM/2016(A.Y.2011-12) ITA NO.2314/MUM/2017(A.Y.2012-13) ITA NO.1906/MUM/2016(A.Y.2011-12) VERIFICATION OF FACTS. WE DEEM IT APPROPRIATE TO RESTORE THE ISSUE IN PRESENT APPEAL FOR VERIFICATION WITH SIMILAR DIRECTIONS. THE GROU ND NO.2 OF THE APPEAL IS THUS, ALLOWED FOR STATISTICAL PURPOSE. 22. THE GROUND NO.3 OF THE APPEAL IS QUA SET OFF OF BROUGHT FORWARD UNABSORBED DEPRECIATION OF RS.7,15,99,575/- PERTAINING TO ASSE SSMENT YEAR 1997-98. THE DRP IN ASSESSMENT YEAR 2011-12 HASDECIDED THIS ISSUE IN F AVOUR OF THE ASSESSEE. THE DRP IN THE ASSESSMENT YEAR UNDER APPEAL HAS DECIDED THIS I SSUE AGAINST THE ASSESSEE MERELY TO KEEP THE ISSUE ALIVE AS AFTER THE AMENDMENT, TH E DEPARTMENT CANNOT FILE APPEAL AGAINST THE DIRECTIONS OF DRP. WE FIND THAT THE HO N'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS.HINDUSTAN UNILEVER LTD. (SUPRA) FOLL OWING THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS IN DIA LTD. (SUPRA) HAS ALLOWED THE ASSESSEE TO SET OFF UNABSORBED DEPRECIATION IN ACCO RDANCE WITH THE AMENDED PROVISIONS OF SECTION 32(2) OF THE ACT. AS PER AME NDED PROVISION OF SECTION 32(2), THE UNABSORBED DEPRECIATION CAN BE CARRY FORWARD AND S ET OFF WITHOUT ANY TIME LIMIT. THUS, IN THE LIGHT OF THE SETTLED POSITION WE FIND MERIT IN THE CONTENTIONS OF THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO ALLOW SET OFF OF BROUGHT FORWARD UNABSORBED DEPRECIATION PERTAINING TO ASSESSMENT YE AR 2007-08 AGAINST THE PROFITS OF THE CURRENT YEARS ASSESSMENT. 23. GROUND NO.4 OF THE APPEAL IS AGAINST CHARGING O F INTEREST UNDER SECTION 234B OF THE ACT. CHARGING OF INTEREST UNDER SECTION 234 B IS CONSEQUENTIAL AND MANDATORY. ACCORDINGLY, GROUND NO.4 OF THE APPEAL IS DISMISSED . 24. THE GROUND NO.5 OF THE APPEAL IS IN RESPECT OF COMPUTATION OF INTEREST UNDER SECTION 234B OF THE ACT . THE CONTENTION OF THE AS SESSEE IS THAT INTEREST UNDER SECTION 234B HAS BEEN COMPUTED WITHOUT SET OFF OF C REDIT OF MAT TAX PAID FOR ASSESSMENT YEAR 2009-10, 2010-11 AND 2011-12. IT I S NO MORE RES-INTEGRA THAT 17 ITA NO.2262/MUM/2016(A.Y.2011-12) ITA NO.2314/MUM/2017(A.Y.2012-13) ITA NO.1906/MUM/2016(A.Y.2011-12) INTEREST UNDER SECTION 234B IS TO BE CHARGED AFTER MAT CREDIT AVAILABLE UNDER SECTION 115JAA IS SET OFF AGAINST TAX PAYABLE ON TOTAL INCO ME[ CIT VS. SAGE METALS LTD., 354 ITR 675(SC)]. THE GROUND NO.5 OF THE APPEAL IS ALL OWED, ACCORDINGLY. 25. THE GROUND NO.6 IS QUA CHARGING OF INTEREST UND ER SECTION 234C ON RETURNED INCOME. THE CONTENTION OF THE ASSESSEE IS THAT THE ASSESSING OFFICER HAS ERRED IN CHARGING INTEREST UNDER SECTION 234C ON ASSESSED INCOME. A BARE PERUSAL OF THE PROVISIONS OF SECTION 234C WOULD MAKE IT CLEAR THAT THE INTEREST UNDER SECTION 234C IS TO BE CHARGED ON RETURNED INCOME AND NOT ASSESS ED INCOME. THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE INTEREST UNDER SE CTION 234C OF THE ACT IN THE AFORESAID MANNER. THE GROUND NO.6 OF THE APPEAL IS ALLOWED ACCORDINGLY. 26. THE GROUND NO.7 IS AGAINST INITIATION OF PENALT Y UNDER SECTION 271(1)(C) OF THE ACT. THIS GROUND IS PREMATURE AT THIS STAGE. ACCO RDINGLY, THE SAME IS DISMISSED. 27.. IN THE RESULT, APPEAL OF THE ASSESSEE, IS PA RTLY ALLOWED. 28. TO SUM UP, THE APPEALS OF THE ASSESSEE FOR ASSE SSMENT YEAR 2011-12 AND ASSESSMENT YEAR 2012-13 ARE PARTLY ALLOWED AND APPE AL OF THE REVENUE FOR ASSESSMENT YEAR 2011-12 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON MONDAY, T HE 24 TH DAY OF FEBRUARY, 2020. SD/- SD/- (R.C.SHARMA) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 24/02/2020 VM , SR. PS(O/S) 18 ITA NO.2262/MUM/2016(A.Y.2011-12) ITA NO.2314/MUM/2017(A.Y.2012-13) ITA NO.1906/MUM/2016(A.Y.2011-12) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI