TATA MOTERS LIMITED (FORMERLY KNOWN AS TATA ENGINEERING & LOCOMOTIVE COMPANY LTD.), MUMBAI V. DY.CIT, (H.Q.).-2, MUMBAI

ITA 3335/MUM/2011

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6049 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 06-05-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 27-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R MANJUNATHA SWAMY
• Keywords: Depreciation; Earning of tax free income; Retrospective amendment; Bad and doubtful debts; Unabsorbed depreciation; Revenue expenditure; Capital expenditure
• Section: 244A; 80HHC; 14A; 115JB; 80HH

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL, BENCH E, MUMBA I BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.3335/MUM/2011 (ASSESSMENT YEAR- 2004-05) M/S TATA MOTORS LTD. , BOMBAY HOUSE, 24, HOMI MODY STREET, HUTATMA CHOWK, MUMBAI-400001 PAN: AAACT2727Q VS. DCIT, RANGE-2(3), AAYAKAR BHAVAN, M.K. MARG, MUMBAI-400020. (APPELLANT) (RESPONDENT) ITA NO.4825/MUM/2011 (ASSESSMENT YEAR- 2004-05) A.C.I.T., RANGE-2(3) , AAYAKAR BHAVAN, M.K. MARG, MUMBAI-400020. VS. M/S TATA MOTORS LTD. , BOMBAY HOUSE, 24, HOMI MODY STREET, HUTATMA CHOWK, MUMBAI-400001 PAN: AAACT2727Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJAN VORA WITH SHRI NIKHIL TIWARI (AR) REVENUE BY : SHRI R. MANJUNATHA SWAMY (CIT-DR) DATE OF HEARING : 07.01.2019 DATE OF PRONOUNCEMENT : 07.01.2019 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER 1. THESE CROSS APPEAL ARE DIRECTED AGAINST THE ORDER O F LD. CIT(A)-6, MUMBAI DATED 03.03.2011 FOR ASSESSMENT YEAR 2004-05. 2. AT THE OUTSET OF HERING, THE LD. AR OF THE ASSESSEE SUBMITS THAT GROUND OF APPEAL RAISED BY ASSESSEE AS WELL AS BY REVENUE IS COVERED BY VARIOUS DECISION OF ITA NO. 3335 & 4825 MUM 2011-M/S TATA MOTORS LTD. 2 TRIBUNAL IN ASSESSEES OWN CASE, BY SPECIAL BENCH D ECISION, OR BY THE DECISIONS OF JURISDICTIONAL HIGH COURT OR HONBLE SUPREME COU RT. THE LD. AR OF THE ASSESSEE FURNISHED THAT CHART SHOWING THE NARRATION OF GROUNDS OF APPEAL AND THE REFERENCE OF DECISION WHEREIN THE GROUNDS OF APPEAL IS EITHER COVERED IN FAVOUR OF ASSESSEE OR AGAINST THE REVENUE. ON THE OTHER HA ND, THE LD. DR FOR THE REVENUE AFTER GOING THROUGH THE CHART FURNISHED BY LD. AR OF THE ASSESSEE, SUBMITS THAT THE GROUNDS OF APPEAL RAISED BY ASSESSEE AS WELL AS BY REVENUE IN ITS CROSS APPEAL ARE COVERED EITHER IN FAVOUR OF ASSESSEE OR AGAINST THE ASSESSEE. FIRST WE SHALL TAKEN THE GROUNDS OF APPEAL RAISED BY ASSESSEE IN I TS APPEAL IN ITA NO. 3335/MUM/2011. 3. GROUND NO.1 RELATES TO DISALLOWANCE UNDER SECTION 1 4A OF RS. 3,20,05,061/ -. THE LD. AR OF THE ASSESSEE SUBMITS THAT THIS GROUND OF APPEAL IS COVERED BY THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y . 2005-06 IN ITA NO. 630/MUM/2013, WHEREIN THE TRIBUNAL ON THE BASIS OF DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 1999-2000 TO 2002-03 D ATED 31.08.2013 RESTRICTED THE DISALLOWANCE UNDER SECTION 14A TO 1% OF THE DIV IDEND INCOME. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUBMITS THAT IN SO ME OTHER YEAR THE DISALLOWANCE WAS RESTRICTED TO 2% OF THE DIVIDEND I NCOME. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE NOTED THAT IN ASSESSEES OWN CASE FOR A.Y. 2005-06, ON IDENTICAL FACTS, THE TRIBUNAL PASS ED THE FOLLOWING ORDER: 16. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE NO TED THAT SIMILAR GROUND OF APPEAL WAS RAISED BY THE ASSESSEE IN EARLIER ASS ESSMENT YEAR AS ITA NO. 3335 & 4825 MUM 2011-M/S TATA MOTORS LTD. 3 SUBMITTED BY LEARNED AR OF THE ASSESSEE AND THE TRI BUNAL IN ASSESSEES OWN CASE VIDE ORDER DATED 31 AUGUST 2017 PASSED THE FOLLOWING ORDER; 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HA VE SEEN THAT DURING THE RELEVANT FINANCIAL YEAR THE ASSESSEE HAS EARNED DIVIDEND INCOME OF RS. 15.82 CRORE. THE AO WHILE GIVING EFFECT TO THE ORDER OF LD CIT(A) DISALLOWED 5% OF DIVIDEND INCOME U/S 14A OF THE ACT . WE HAVE PERUSED THE FINANCIAL STATEMENT OF ASSESSEE AS ON 31.03.200 2. THE ASSESSEE WAS HAVING CAPITAL OF RS. 319.82 CRORE AND RESERVE & SU RPLUS OF RS. 2145.24 CRORE. THUS, THE ASSESSEE HAS TOTAL CAPITAL , AND RESERVE & SURPLUS FUND OF RS. 2465.06 CRORE. THE ASSESSEE DUR ING THE RELEVANT FINANCIAL YEAR HAS MADE THE INVESTMENT OF RS. 1189. 92 CRORE. FROM THE PERUSAL OF FINANCIAL STATEMENT, WE HAVE NOTED THAT THE INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE ARE MORE THAN THE INVES TMENT MADE DURING THE YEAR. THE HONBLE BOMBAY HIGH COURT IN RELIANCE UTILITY AND POWER LTD (SUPRA) HELD THAT WHERE BOTH THE INTEREST FREE FUNDS AND INTEREST BEARING FUNDS ARE AVAILABLE AND THE INTERE ST FREE FUNDS ARE MORE THAN THE INVESTMENT MADE THE PRESUMPTION IS THAT TH E INVESTMENT IS MADE OUT OF INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE. THE HIGH COURT FURTHER HELD THAT FOR THE YEARS FOR WHICH RU LE 8D IS NOT APPLICABLE AND IN THE EVENT THE AO IS NOT SATISFIED WITH THE WORKING GIVEN BY THE ASSESSEE, THE DISALLOWANCE UNDER SECTI ON 14A HAS TO BE MADE ON REASONABLE BASIS. THE HONBLE JURISDICTION AL HIGH COURT IN HDFC BANK LTD. (SUPRA) HELD THAT WHILE CONSIDERING DISALLOWANCE UNDER SECTION 36(1)(III) THE APPLICATION OF SECTIO N 14A OF THE ACT WOULD APPLY . CONSIDERING THE FACT THAT NO INTEREST BEARING FUND S WERE UTILIZED IN EARNING THE EXEMPT INCOME. THUS, NO INTEREST DIS ALLOWANCE CAN BE MADE WHILE DISALLOWANCE U/S 14A OF THE ACT. 7. WE HAVE FURTHER NOTICED THAT THE AO HAS NOT RECORDED HIS DISSATISFACTION ABOUT THE CLAIM OF ASSESSEE, FURTHE R THE LOWER AUTHORITY HAS NOT DISPUTED THAT THE MAJORITY INVESTMENTS ARE IN GROUP COMPANIES. WE HAVE NOTED THAT THE CO-ORDINATE BENCH OF KOLKATA TRIBUNAL IN ASHOKA TRADING CO. PVT. LTD., SAGRIKA GOODS & SERVI CE PVT. LTD. , DIAMOND COMPANY LTD. AND S.R. BATLIBOI & CO. (SUPRA ), THE TRIBUNAL HAS TAKEN A CONSISTENT VIEW TO ALLOW REASONABLE DIS ALLOWANCE AND RESTRICTED THE DISALLOWANCE U/S 14A OF THE ACT TO 1 % OF THE DIVIDEND INCOME. THUS, RESPECTFULLY FOLLOWING THE DECISION O F CO-ORDINATE BENCH, WE RESTRICT THE DISALLOWANCE U/S 14A TO 1% OF THE E XEMPT INCOME AND DIRECT THE AO TO WORK OUT THE DISALLOWANCE ACCORDIN GLY. 17. CONSIDERING THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE AS REFERRED ABOVE, WHEREIN THE IDENTICAL GROUND OF APPEAL WAS D ISMISSED IN APPEAL FOR ASSESSMENT YEARS 1999-2000 TO 2002-03. WE DIRECT TH E ASSESSING OFFICER TO ITA NO. 3335 & 4825 MUM 2011-M/S TATA MOTORS LTD. 4 RESTRICT THE DISALLOWANCE UNDER SECTION 14 A TO 1% OF THE DIVIDEND INCOME. IN THE RESULT THE GROUND OF APPEAL RAISED BY ASSESS EE IS ALLOWED. 5. RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDINATE BENCH, WE DIRECT THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE UNDE R SECTION 14A TO 1% OF THE DIVIDEND INCOME. IN THE RESULT, THIS GROUND OF APPE AL IS ALLOWED. 6. GROUND NO.2 RELATES TO INTEREST UNDER SECTION 244A OF RS. 58451536/-. THE LD. AR OF THE ASSESSEE SUBMITS THAT THE INTEREST UNDER SECTION 244A IS TAXABLE IN THE YEAR IN WHICH IT IS RECEIVED. THE LD. AR FURTHER SU BMITS THAT THE INTEREST ON INCOME-TAX REFUND PERTAINING TO A.Y. 1997-98 WAS NO T OFFERED TO TAX AS AGAINST THE ORDER OF LD. CIT(A), THE DEPARTMENT WAS IN APPE AL BEFORE THE TRIBUNAL AND THE ASSESSEE HAS OFFERED THE INTEREST INCOME UNDER SECT ION 244A TO TAX IN A.Y. 2017- 18 IN WHICH THE ORDER OF TRIBUNAL FOR A.Y. 1997-98 WAS RECEIVED. THE LD. AR FURTHER SUBMITS THAT THE APPROPRIATE DIRECTION MAY BE GIVEN TO THE ASSESSING OFFICER TO GRANT RELIEF TO THE ASSESSEE WHEREIN THE ASSESSEE HAS SUO-MOTO OFFERED THE TAX IN A.Y. 1917-18. THE LD. AR OF THE ASSESSEE FURNISHED THE COPY OF COMPUTATION OF INCOME FOR A.Y. 2017-18 AS PER PAGE NO. 48 & 49 OF THE PAPER BOOK. IN SUPPORT OF HIS SUBMISSION, THE LD. AR RELI ED UPON THE DECISION OF SPECIAL BENCH IN AVADA TRADING COMPANY PVT. LTD. (1 00 ITD 131) (MUM SB). 7. ON THE CONTRARY, THE LD. DR FOR THE REVENUE SUBMITS THAT THE ASSESSING OFFICER MAY BE DIRECTED TO VERIFY THE FACT AND PASS THE ORD ER IN ACCORDANCE WITH LAW. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDER OF LOWER AUTHORITIES. WE HAVE NOTED THAT THE LD. AR OF THE ASSESSEE HAS CLAIMED TO HAVE OFFERED THE INTEREST UNDER SECTION 244A IN THE RETURN OF INCOME FOR A.Y. 2017-18 ON THE GROUND THAT ORDER OF TRIBUN AL WAS RECEIVED IN A.Y. ITA NO. 3335 & 4825 MUM 2011-M/S TATA MOTORS LTD. 5 2017-18. THEREFORE, WE DEEM IT APPROPRIATE TO DIREC T THE ASSESSING OFFICER TO VERIFY THE FACT AND PASS THE ORDER IN ACCORDANCE WI TH LAW BY FOLLOWING THE DECISION OF SPECIAL BENCH OF MUMBAI TRIBUNAL IN AVA DA TRADING COMPANY PVT. LTD.(SUPRA). NEEDLES TO ORDER THAT BEFORE PASSING T HE ORDER, THE ASSESSING OFFICER SHALL GRANT OPPORTUNITY TO THE ASSESSEE. IN THE RES ULT, THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 9. GROUND NO.3 RELATES TO DEDUCTION UNDER SECTION 80HH C. THE LD. AR OF THE ASSESSEE SUBMITS THAT THIS GROUND OF APPEAL IS COVE RED AGAINST THE ASSESSEE BY THE DECISION OF HONBLE SUPREME COURT IN CASE OF IPCA L ABORATORY LTD. (266 ITR 521 (SC) & SHIRKE CONSTRUCTION EQUIPMENT LTD. (291 ITR 380) (SC). ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUBMITS THAT THE ASSESSEE HAS FAIRLY CONCEDED THAT THE ISSUE IS COVERED AGAINST THE ASSE SSEE. THEREFORE, THIS GROUND OF APPEAL IS DISMISSED. 10. WE HAVE CONSIDERED THE CONTENTION OF BOTH THE PARTI ES. CONSIDERING THE SUBMISSION OF LD. AR OF THE ASSESSEE THAT THE ISSUE OF DEDUCTION UNDER SECTION 80HHC TO BE COMPUTED AFTER SET OFF OF BROUGHT FORWA RD LOSS AND UNABSORBED DEPRECIATION IS AGAINST THE ASSESSEE BY THE DECISIO N OF IPCA LABORATORY LTD. AND & SHIRKE CONSTRUCTION EQUIPMENT LTD. (SUPRA). WE CO NFIRMED THE ORDER OF LD. CIT(A). IN THE RESULT, THIS GROUND OF APPEAL IS DIS MISSED. 11. GROUND NO.4 RELATES TO REVERSAL OF PROVISIONS OF DO UBTFUL DEBTS NOT EXCLUDED FROM THE BOOK PROFIT UNDER SECTION 115JB OF RS. 28, 48,46,678/-. THE LD. AR OF THE ASSESSEE SUBMITS THAT DURING THE YEAR THE ASSES SEE CLAIMED DEDUCTION FOR PROVISION OF DOUBTFUL DEBT WHILE COMPUTING BOOK PRO FIT UNDER SECTION 115JB. ITA NO. 3335 & 4825 MUM 2011-M/S TATA MOTORS LTD. 6 THE ASSESSING OFFICER ADDED BACK THE SAME AMOUNT BY TREATING IT AS UN-ASCERTAIN LIABILITY, THOUGH, THE GROUND OF APPEAL WAS RAISED BEFORE THE LD. CIT(A), BUT THIS GROUND OF APPEAL WAS NOT PRESSED. IN VIEW OF RETROS PECTIVE AMENDMENT THE W.E.F. 01.04.2011 INSERTED BY FINANCE ACT 2009. HOWEVER, S UBSEQUENTLY IT WAS SUBMITTED THAT CONSEQUENT TO THE AMENDMENT, THE REV ERSAL OF PROVISION FOR DOUBTFUL DEBTS SHOULD ALSO BE EXCLUDED FROM CALCULA TING BOOK PROFIT UNDER SECTION 115JB. THE LD. CIT(A) NOT ENTERTAIN THE GRO UND THAT THIS CLAIM WAS NOT MADE BEFORE THE ASSESSING OFFICER AND NO SUCH AMEND MENT IS MADE IN SECTION 115JB TO REDUCE THE REVERSAL OF THE PROVISION AND D ISMISSED THE SAME. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT ONCE IT IS HELD BY THE FINANCE ACT, 2009 HAVING RETROSPECTIVE EFFECT FROM 01.04.200 1, THAT PROVISION FOR DOUBTFUL DEBT IS NOT ALLOWABLE DEDUCTION WHILE COMPUTING THE BOOK PR OFIT AS PER SECTION 115JB, THE REVERSAL OF PROVISION FOR DOUBTFUL DEBT WOULD A LSO NOT BE TAXABLE. THE TREATMENT FOR THE PROVISION FOR DOUBTFUL DEBIT AND ITS REVERSAL WOULD GO HAND-IN- HAND AND ONCE DURING THE COURSE OF CIT(A) PROCEEDIN G, CLAIM FOR PROVISION FOR DOUBTFUL DEBT IS NOT PRESSED, THEREBY OFFERED TO TA X UNDER BOOK PROFIT, THEN THE REVERSAL FOR PROVISION OF DOUBTFUL DEBT SHOULD BE E XCLUDED FROM BOOK PROFIT AS A NATURAL COROLLARY. THE LD. AR FURTHER SUBMITS THAT IN VIEW OF THE DECISION OF JURISDICTIONAL HIGH COURT IN PRUTHVI BROKERS AND SH AREHOLDER (P.) LTD. 349 ITR 336 (BOM.) AND HONBLE APEX COURT IN JUTE CORPORATI ON OF INDIA LTD. 187 ITR 688 (SC) THE ASSESSEE IS ENTITLED TO RAISE ADDITION AL GROUND OF APPEAL. 12. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE STRON GLY SUPPORTED THE ORDER OF AUTHORITIES BELOW. ITA NO. 3335 & 4825 MUM 2011-M/S TATA MOTORS LTD. 7 13. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE LD. CIT(A) REP UDIATED THE CLAIM OF THE ASSESSEE THAT NO SUCH CLAIM WAS RAISED BEFORE ASSES SING OFFICER, THUS CANNOT BE ENTERTAINED DURING THE FIRST APPELLATE STAGE, SECON DLY THE AMENDED PROVISION DO NOT PROVIDE FOR SUCH ALLOWANCE AND DISMISSED THE CL AIM OF ASSESSEE. CONSIDERING THE DECISION OF JURISDICTIONAL HIGH COURT PRUTHVI B ROKER (SUPRA) WE ADMIT THE GROUNDS OF APPEAL RELATED WITH CLAIM OF REVERSAL OF PROVISION FOR DOUBTFUL DEBT AND RESTORE BACK THE ISSUE TO THE FILE OF ASSESSING OFFICER TO VERIFY THE FACT AND PASS THE ORDER IN ACCORDANCE WITH LAW. NEEDLESS TO ORDER THAT BEFORE PASSING THE ORDER, THE ASSESSING OFFICER SHALL GRANT OPPORTUNIT Y OF HERING TO THE ASSESSEE. IN THE RESULT, THIS GROUND OF APPEAL IS ALLOWED FOR ST ATISTICAL PURPOSE. 14. GROUND NO.5/ADDITIONAL GROUND RELATE TO COMPUTING B OOK PROFIT UNDER SECTION 115JB ON DISALLOWANCE UNDER SECTION 14A. THE LD. AR OF THE ASSESSEE SUBMITS THAT THE ASSESSING OFFICER ALSO MAKE DISALLOWANCE O F SECTION 14A WHILE COMPUTING BOOK PROFIT UNDER SECTION 115JB ON SIMILA R LINE AS MADE WHILE COMPUTING INCOME UNDER NORMAL PROVISION. THE LD. AR OF THE ASSESSEE SUBMITS THAT THIS GROUND OF APPEAL IS ALSO COVERED BY THE D ECISION OF ACIT VS. VIRRET INVESTMENT PVT. LTD. 165 ITD 27 (DEL. SB). 15. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE STRON GLY SUPPORTED THE ORDER OF AUTHORITIES BELOW. 16. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT NEITH ER ANY APPLICATION FOR RAISING ADDITIONAL GROUND OF APPEAL NOR SUCH ADDITIONAL GRO UND OF APPEAL IS RAISED BY THE ITA NO. 3335 & 4825 MUM 2011-M/S TATA MOTORS LTD. 8 ASSESSEE. THE ADDITIONAL GROUND OF APPEAL IS MENTIO NED ONLY ON THE CHART FURNISHED AT THE TIME OF HEARING OF THE APPEAL. IN OUR CONSIDERED VIEW, NO RELIEF CAN BE EXTENDED TO THE PARTIES IN ABSENCE OF SPECIF IC GROUNDS OF APPEAL RAISED IN THE APPEAL. THEREFORE, WE HAVE NO OCCASION TO ADJUD ICATE SUCH ADDITIONAL GROUND OF APPEAL WHICH IS NOT MENTIONED IN THE GROUND OF A PPEAL NOR THE LEAVE OF THE TRIBUNAL IS SOUGHT AT THE TIME OF MAKING SUBMISSION . IN THE RESULT, THE ALLEGED ADDITIONAL GROUND OF APPEAL IS NOT ADJUDICATED / EN TERTAINED. 17. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ITA NO 4825/M/2011 FOR AY 2004-05 BY REVENUE . 18. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL; (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, LD CIT (A) ERRED IN ALLOWING ASSESSEES CLAIM OF PROVISION FOR WARRANTY EXPENSES, WHICH WAS NOT CONCLUSIVELY PROVED TO HAVE BEEN SPEN T DURING THE PREVIOUS YEAR. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, LD CIT (A) ERRED IN DELETING THE ADDITION OF THE AO WHEREIN HE RIGHTLY TREATED THE KNOWHOW AS AN INTANGIBLE ASSET NECESSITATING DEPREC IATION. (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, LD CIT (A) ERRED IN HOLDING THE EXPENSES TOWARDS ISSUE OF FORE IGN CURRENCY CONVERTIBLE NOTES AS REVENUE EXPENSE IGNORING THE F ACT THAT THE SAME SHOULD BE TREATED AS CAPITAL EXPENDITURE. (4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, LD CIT (A) ERRED IN ALLOWING ASSESSEES APPEAL IN CONNECTION W ITH THE PRIOR PERIOD EXPENSES WITHOUT APPRECIATING AOS FINDING THAT THE ASSESSEE COULD NOT SUBSTANTIATE THE SAME DURING ASSESSMENT PROCEEDING. 19. WE HAVE HEARD THE LD REPRESENTATIVES OF THE PARTIES AND PERUSED THE RECORD. THE LD AR OF THE ASSESSEE ARGUED THAT ALL THE GROUNDS O F APPEAL RAISED BY THE REVENUE ARE COVERED IN FAVOUR OF THE ASSESSEE BY VARIOUS DE CISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR EARLIER YEARS AS WELL AS BY ORDERS OF SUPERIOR COURTS. THE LD AR FOR THE ASSESSEE FILED A DETAILS IN THE FORM OF A CHART REFERRING THE DETAILS OF ITA NO. 3335 & 4825 MUM 2011-M/S TATA MOTORS LTD. 9 ORDER COVERING THE GROUNDS OF APPEALS. THE LD DR FO R THE REVENUE NOT DISPUTED THE DETAILS OF ORDERS OF VARIOUS TRIBUNAL IN FAVOUR OF ASSESSEE. 20. THE GROUND NO. 1 RELATES TO PROVISION FOR WARRANTY EXPENSES. THE LD AR FOR THE ASSESSEE SUBMITS THAT THIS GROUND OF APPEAL IS COVE RED IN FAVOUR OF ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 1994-95 TO 1997-98. THE LD. AR FURTHER SUBMITS THAT ON THE BASIS OF EAR LIER YEARS THE ASSESSEE WAS ALLOWED SIMILAR RELIEF IN APPEAL FOR A.Y. 2005-06 I N ITA NO. 4826/M/2011 DATED 13.04.2018. THE LD AR ALSO RELIED ON THE DECISION O F HONBLE SUPREME COURT ROTORK CONTROLS (P) LTD (314ITR 62 SC). THE LD. DR FOR THE REVENUE NOT DISPUTED THE SUBMISSIONS OF THE LD AR FOR THE ASSES SEE. 21. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES A ND PERUSED THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2005-06 IN ITA NO. 4826/M/2011, WHEREIN ON IDENTICAL GROUND OF APPEAL, THE CO-ORDIN ATE BENCH OF TRIBUNAL PASSED THE FOLLOWING ORDER: 7. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE ( DR) FOR THE REVENUE AND LD. AUTHORIZED REPRESENTATIVE (AR) OF T HE ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AT THE OU TSET OF HEARING, THE LD. AR OF THE ASSESSEE SUBMITS THAT THE GROUNDS OF APPE AL RAISED BY REVENUE IS COVERED IN FAVOUR OF ASSESSEE IN ASSESSEES OWN CASE FOR A.YS 1999- 2000 TO 2002-03 IN ITA NOS. 3329 TO 3332/M/11 DATED 31.08.17, ITA NO. 3597 TO 3601/M/11 & 1039 TO 1041/M/13, ITA NOS. 621 4 6504/M/03 FOR AYS 1997-98 AND 1998-99 DATED 06.01.17, ITA NO. 7148-7441/M/04, ITA NO. 1015/M/01 FOR ASSESSMENT YEAR 1996-97 DATED . 31.07.07, ITA NOS. 2744/M/97 & 1962/M/2000 DATED. 06.02.17 & ITA NO. 7061/M/98 FOR ASSESSMENT YEAR 1994-95 DATED 19.04.06. THE LD . DR FOR THE REVENUE ON GOING THROUGH THE CHART FURNISHED BY LD. DR. CONSIDERING THAT THIS GROUND OF APPEAL IS COVERED IN FAVOUR OF ASSESSEE. WE HAVE NOTED ITA NO. 3335 & 4825 MUM 2011-M/S TATA MOTORS LTD. 10 THAT SIMILAR GROUND OF APPEAL WAS RAISED BY REVENUE IN A.Y. 1999-00 TO 2002-03 AND THE CO-ORDINATE BENCH OF TRIBUNAL PASSE D THE FOLLOWING ORDER: 20. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PART IES AND PERUSED THE ORDER OF THE TRIBUNAL IN ASSESSEE'S OWN CASE FO R AY 1997-98 AND 1998-99 IN ITA NO. 6214-6504IMJ2003 AND ITA NO. 714 8/M/2004 DATED 06.01.2017. THE PERUSAL OF THE ORDER SHOWS TH AT SIMILAR DISALLOWANCE WAS MADE AGAINST THE ASSESSEE FOR AY 1 997-98 AND FOR AY 1998-99, HOWEVER ON APPEAL BEFORE CIT(A) THE DIS ALLOWANCE WAS DELETED. THE REVENUE FILED APPEAL BEFORE THE TRIBUN AL AND THE SAME WAS DISMISSED VIDE ORDER DATED 06.01.2017 BY FOLLOW ING THE ORDER FOR AY 1996-97. THE APPEAL OF THE REVENUE WAS DISMI SSED BY THE COORDINATE BENCH OF THE TRIBUNAL WITH THE FOLLOWING ORDER; NEXT GROUND IS ABOUT PROVISION FOR WARRANTY OF RS.3 5.61 CRORES. IT IS FOUND THAT IDENTICAL GROUND RAISED BY THE AG, WAS D ISMISSED BY THE TRIBUNAL, WHILE DECIDING THE APPEAL FOR AY 1996-97. WE ARE REPRODUCING PARAGRAPH NO.2 OF THE PG. 10 OF THE SAI D ORDER AND IT READS AS UNDER:- GROUND NO.7 IN REVENUE'S APPEAL RELATES LA PROVISIO N FOR WARRANTY EXPENSES' OF RS. 12,55,68,000/-. BOTH THE PARTIES A GREED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR THE AYS 1992-93 , 1994-95 AND 1995-96 (ITA NO.961/M/03 DT. 23. 3. 03, ITA NO.6705 /M/98 DT.19.4.06 AND ITA NO.1690/M/00 DT.6.2.07). WHEREIN THE TRIBUNAL HAS ALLOWED THE CLAIM OF THE ASSESSEE. FOLLOWING TH E SAME, THE ISSUE IS DECIDED IN FAVOUR A/THE ASSESSEE AND AGAINST THE REVENUE. RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE TRIBU NAL, GROUND NO.7 IS DECIDED AGAINST THE A.O. 21. CONSIDERING THE DECISION OF TRIBUNAL IN ASSESSE ES OWN CASE FOR ASSESSMENT YEAR 1997-98 AND FOR ASSESSMENT YEAR 199 8-99 AND FOLLOWING THE PRINCIPAL OF CONSISTENCY THE GROUND O F APPEAL RAISED BY THE REVENUE IS DISMISSED. ITA NO. 3335 & 4825 MUM 2011-M/S TATA MOTORS LTD. 11 8. CONSIDERING THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE AS REFERRED ABOVE, WHEREIN THE IDENTICAL GROUND OF APPEAL WAS D ISMISSED IN APPEAL FOR ASSESSMENT YEARS 1994-1995 TO 2002-2002. THUS, FOLL OWING THE ORDER OF THE TRIBUNAL, WE DO NOT FIND ANY MERIT IN THE GROUN DS OF APPEAL RAISED BY REVENUE. 22. IN VIEW OF THE DECISION OF TRIBUNAL IN ASSESSEES O WN CASE FOR AY 1997-98 AND 1998-99 IN ITA NO. 6214-6504/M/2003 AND ITA NO. 714 8/M/2004 DATED 06.01.2017 WHICH WAS FOLLOWED IN ASSESSEES OWN CAS E FOR A.Y. 2005-06, WE HAVE NOTED THAT THE REVENUE HAS NOT BROUGHT ANY FAC T ON RECORD TO SHOW THE MATERIAL CHANGE IN FACT FOR THE YEAR UNDER CONSIDER ATION. THEREFORE, WE DO NOT FIND ANY MERITS IN THE GROUND OF APPEAL RAISED BY R EVENUE. IN THE RESULT, THIS GROUND OF APPEAL IS DISMISSED. 23. GROUND NO.2 RELATES TO ALLOWABILITY OF PRODUCT DEVE LOPMENT EXPENSES AS REVENUE EXPENSES AS TREATMENT BY AO AS INTANGIBLE ASSET BEI NG KNOWHOW. THE LD. AR OF THE ASSESSEE SUBMITS THAT THIS GROUND OF APPEAL IS ALSO COVERED BY THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 1999-2000 TO 2002-03 IN ITA NO. 3329 TO 3332/MUM/2011 DATED 31.08.2017. ON THE OTHER HAN D, THE LD. DR FOR THE REVENUE NOT DISPUTED THE CONTENTION OF LD. AR OF TH E ASSESSEE THAT SIMILAR ISSUES WERE DECIDED IN FAVOUR OF ASSESSEE IN EARLIER YEARS . 24. WE HAVE CONSIDERED THE SUBMISSION OF THE PARTIES AN D HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE NOTED THAT SIM ILAR GROUND OF APPEAL WAS DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 1999-2000 TO 2002-03 IN ITA NO. 3329 TO 3332/MUM/2011 DATED 31.08.2017 B Y FOLLOWING THE DECISION OF TRIBUNAL FOR A.Y. 1997-98 TO 1999-2000 IN ITA NO . 4120-4122/MUM/2005 DATED 16.05.2014 AND PASSED THE FOLLOWING ORDER: ITA NO. 3335 & 4825 MUM 2011-M/S TATA MOTORS LTD. 12 27. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. REPRESENTATIVES AND PERUSED THE ORDER OF THE AUTHORITIES BELOW. THE LD CIT(A) WHILE DECIDING THE RELEVANT GROUND OF APPEAL ( GROUND NO.8 BEFORE HIM) FOLLOWED THE ORDER OF EARLIER YEAR I.E. AY 1998-99 AND GRANTED RELIEF TO THE ASSESSEE ( PARA 11 OF THE IMPUGNED ORDER). WE HAVE SEEN THAT IN THE ASSESSEES GROUP CASE I.E. IN TATA IRON &STEEL CO. LTD VS DCIT FOR AY 1997-98, 1998-1999,1999-2000 IN ITA NO 4120-22 /M/2 005 DATED 16.05.2014 ON SIMILAR GROUNDS OF APPEAL PASSED THE FOLLOWING ORDE R; 3. NOW, WE WOULD TAKE UP THE COMMON GROUNDS OF APPEAL RAISED IN DIFFERENT YEARS. FIRST OF THEM IS ABOUT FEES PAID TO CONSULTANTS FOR FEASIBILITY STUDIES FOR THE AY.S.1997-98,1998-1999 AND 2000-01 RESPECTIVELY. DU RING THE ASSESSMENT PROCEEDINGS, AO.S FOUND THAT THE ASSESSEE HAD PAID RS.34.96 LAKHS, RS.34.94 AND RS.12.61 LAKHS TO THE CONSULTANTS FOR CONDUCTING FE ASIBILITY STUDIES FOR THE YEARS UNDER APPEAL. AO.S WERE OF THE OPINION THAT THE EXP ENDITURE WAS INCURRED IN CONNECTION WITH THE EXPANSION OF THE INDUSTRIAL UND ERTAKING, THAT SAME WAS CAPITAL EXPENDITURE, THAT THE EXPENDITURE INCURRED ON PREPA RATION OF FEASIBILITY/PROJECT REPORTS IN CONNECTION WITH THE EXPANSION OF INDUSTR IAL UNDERTAKINGS OR IN CONNECTION WITH THE SETTING UP OF A NEW UNITS WAS AN ADMISSIBL E DEDUCTION U/S.35D OF THE ACT. 3.1. IN THE APPELLATE PROCEEDINGS, UPHOLDING THE ORDER O F THE AO.S, FAA HELD THAT THE EXPENDITURE INCURRED WAS IN THE CAPITAL FIELD. WE FIND THAT IDENTICAL ISSUE HAS BEEN DECIDED BY US, WHILE ADJUDICATING THE APPEALS FOR THE AY.1996-97 IN THE FOLLOWING MANNER: 5.2. BEFORE US, AR SUBMITTED THAT SIMILAR KIND OF EXPEND ITURE IN THE EARLIER YEARS WAS ALLOWED BY THE TRIBUNAL ,WHEREIN FAA HAD CONFIR MED THE ADDITIONS MADE BY THE AO IN SIMILAR FASHION. DR LEFT THE ISSUE TO THE DISCRETION OF THE BENCH. WE FIND THE IN THE EARLIER AY.S., WE HAVE DEALT THE ISSUE A S UNDER: 9. NEXT COMMON GROUND OF APPEAL (G.12-1991-92, G.9-199 4-95)IS ABOUT FEES PAID TO CONSULTANTS FOR FEASIBILITY STUDIES. AO. FOUND T HAT THE ASSESSEE HAD PAID RS.4.83 LAKHS AND RS.24.94 LAKHS TO THE CONSULTANTS FOR CON DUCTING FEASIBILITY STUDIES FOR THE YEARS UNDER APPEAL. AO.S WERE OF THE OPINION THAT T HE EXPENDITURE WAS INCURRED IN CONNECTION WITH THE EXPANSION OF THE INDUSTRIAL UND ERTAKING, THAT SAME WAS CAPITAL EXPENDITURE, THAT THE EXPENDITURE INCURRED ON PREPA RATION OF FEASIBILITY/ PROJECT ITA NO. 3335 & 4825 MUM 2011-M/S TATA MOTORS LTD. 13 REPORTS IN CONNECTION WITH THE EXPANSION OF INDUSTR IAL UNDERTAKINGS OR IN CONNECTION WITH THE SETTING UP OF A NEW UNITS WAS AN ADMISSIBL E DEDUCTION U/S.35D OF THE ACT. 9.1. IN THE APPELLATE PROCEEDINGS, UPHOLDING THE ORDER O F THE AO.S, FAA HELD THAT THE EXPENDITURE INCURRED WAS IN THE CAPITAL FIELD. WE FIND THAT IDENTICAL ISSUE HAS BEEN DECIDED BY US, WHILE ADJUDICATING THE APPEALS FOR THE EARLIER THREE AY.S.I.E.- AY.S.1987-88,1989-09 AND 1990-91(SUPRA)IN THE FOLLO WING MANNER: BEFORE US, AR AND DR AGREED THE IDENTICAL ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE ORDER FOR THE AY.1986-87.WE FIND TH AT IN THE EARLIER AY, ISSUE OF EXPENDITURE INCURRED FOR MAKING PAYMENTS TO CONSULT ANTS FOR FEASIBILITY STUDIES, HAS BEEN DEALT IN FOLLOWING MANNER: 16.2. BEFORE US, AR SUBMITTED THAT SIMILAR ISSUE WAS DECI DED IN FAVOUR OF THE ASSESSEE IN THE PRECEDING AY.DR DID NOT CONTROVERT THE FACT. WE FIND THAT IN THE AY.1985-86 ASSESSEE HAD PAID FEES FOR FEASIBILITY S TUDY TO THE SAME CONSULTANT TO WHOM FESS WAS PAID DURING THE YEAR ALSO. WHILE DECI DING THE APPEAL , TRIBUNAL AT PARAGRAPH 38 HAS HELD AS UNDER: WE HAVE PERUSED THE DETAILS O F THE EXPENSES A SUM OF RS.10 LAKHS WAS PAID FOR MODERNIZATION PROJECT PHASE-I.A SUM OF RS.2 LAKHS A ND RS.3 LAKHS WAS PAID FOR PROJECT REPORT FOR FEASIBILITY OF PLASTIC LINES AND COATED PIPES AND REVAMPING THE ERW MILL RESPECTIVELY. IN AY.1968-69 IN I.T.A. NO.2068/BOM/7 4-75 THE HONBLE ITAT IN ASSESSEES OWN CASE CONSIDERED EXPENDITURE ON REPORT FOR INCRE ASING PRODUCTION CAPACITY AND FUTURE DEVELOPMENT. AFTER ELABORATE DISCUSSION, THE TRIBUN AL CAME TO THE CONCLUSION THAT EXPENDITURE WAS NOT A CAPITAL EXPENDITURE AND ALLOW ED DEDUCTION OF SAME AS A REVENUE EXPENDITURE. FACTS AND CIRCUMSTANCES BEING IDENTICA L IN THIS YEAR, RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL, WE HOLD THAT THE EXPENDIT URE IN QUESTION HAS TO BE ALLOWED AS A DEDUCTION BEING REVENUE EXPENDITURE. GROUND NO. 12 IS ALLOWED. FOLLOWING THE ABOVE, WE DECI DE GROUND NO.16, BEFORE US, IN FAVOUR OF THE ASSESSEE. IN VIEW OF THE ABOVE,G.14/G.1 3 FOR THE AY.S UNDER APPEAL ARE DECIDED IN FAVOUR O F THE ASSESSEE. FOLLOWING OUR ORDERS FOR THE EARLIER YEARS, WE DECIDE THE ISSUE OF PAYMENT OF F EES TO THE CONSULTANTS FOR CONDUCTING FEASIBILITY REPORT IN FA VOUR OF THE ASSESSEE. IN VIEW OF THE DECISION OF EARLIER YEARS, GROUND NO.7 IS DECIDED IN FAVOUR OF THE ASSESSEE. FOLLOWING OUR ORDER FOR THE AS SESSMENT YEAR 1996-97, GROUNDS NO.9 (1997-98) AND1(FOR 1998-99 AND 2000-01) IS ALLOWED. ITA NO. 3335 & 4825 MUM 2011-M/S TATA MOTORS LTD. 14 FURTHER, THE COORDINATE BENCH OF THE TRIBUNAL IN AS SESSEES GROUP CASE I.E. IN TATA IRON & STEEL COMPANY LTD VS DCIT IN ITA 7270&7747/M/2010 FOR AY 2001-02 BY FOLLOWING THE DECISION OF EARLIER YEAR PASSED THE F OLLOWING ORDER; 6. EFFECTIVE GROUND NO.1, FILED BY THE AO, IS ABOUT EXPENSES OF RS.4.90 LACS INCURRED ON TECHNO FEASIBILITY REPORT. BEFORE US, R EPRESENTATIVES OF THE BOTH THE SIDES ADMITTED THAT THE IDENTICAL ISSUE WAS DECIDED BY THE TRIBUNAL WHILE ADJUDICATING THE APPEAL FOR YEARS 1997-98 TO 2000-0 1 (SUPRA). WE FIND THAT IN THE APPEALS FOR THE ABOVE REFERRED FOUR YEARS, THE ISSU E WAS DEALT BY THE TRIBUNAL AS UNDER: 3. NOW, WE WOULD TAKE UP THE COMMON GROUNDS OF APPEAL RAISED IN DIFFERENT YEARS. FIRST OF THEM IS ABOUT FEES PAID TO CONSULTANTS FOR FEASIBILITY STUDIES FOR THE AY.S.1997-98,1998-1999 AND 2000-01 RESPECTIVELY .DU RING THE ASSESSMENT PROCEEDINGS, AO.S FOUND THAT THE ASSESSEE HAD PAID RS.34.96 LAKHS,RS.34.94 AND RS.12.61 LAKHS TO THE CONSULTANTS FOR CONDUCTING FE ASIBILITY STUDIES FOR THE YEARS UNDER APPEAL. AO.S WERE OF THE OPINION THAT THE EXP ENDITURE WAS INCURRED IN CONNECTION WITH THE EXPANSION OF THE INDUSTRIAL UND ERTAKING, THAT SAME WAS CAPITAL EXPENDITURE, THAT THE EXPENDITURE INCURRED ON PREPARATION OF FEASIBILITY/PROJECT REPORTS IN CONNECTION WITH THE EXPANSION OF INDUSTRIAL UNDERTAKINGS OR IN CONNECTION WITH THE SETTING UP O F A NEW UNITS WAS AN ADMISSIBLE DEDUCTION U/S.35D OF THE ACT. 3.1. IN THE APPELLATE PROCEEDINGS, UPHOLDING THE ORDER O F THE AO.S, FAA HELD THAT THE EXPENDITURE INCURRED WAS IN THE CAPITAL FI ELD. WE FIND THAT IDENTICAL ISSUE HAS BEEN DECIDED BY US, WHILE ADJUDICATING THE APPE ALS FOR THE AY.1996-97 IN THE FOLLOWING MANNER: 5.2. BEFORE US, AR SUBMITTED THAT SIMILAR KIND OF EXPEND ITURE IN THE EARLIER YEARS WAS ALLOWED BY THE TRIBUNAL, WHEREIN FAA HAD CONFIR MED THE ADDITIONS MADE BY THE AO IN SIMILAR FASHION. DR LEFT THE ISSUE TO THE DISCRETION OF THE BENCH. WE FIND THE IN THE EARLIER AY.S., WE HAVE DEALT THE ISSUE A S UNDER: 9. NEXT COMMON GROUND OF APPEAL (G.12-1991-92,G.9-1994 -95)IS ABOUT FEES PAID TO CONSULTANTS FOR FEASIBILITY STUDIES. A.O. F OUND THAT THE ASSESSEE HAD PAID RS.4.83 LAKHS AND RS.24.94 LAKHS TO THE CONSULTANTS FOR CONDUCTING FEASIBILITY STUDIES FOR THE YEARS UNDER APPEAL. AO.S WERE OF TH E OPINION THAT THE EXPENDITURE WAS INCURRED IN CONNECTION WITH THE EXPANSION OF TH E INDUSTRIAL UNDERTAKING, THAT SAME WAS CAPITAL EXPENDITURE, THAT THE EXPENDITURE INCURRED ON PREPARATION OF FEASIBILITY/ PROJECT REPORTS IN CONNECTION WITH THE EXPANSION OF INDUSTRIAL UNDERTAKINGS OR IN CONNECTION WITH THE SETTING UP O F A NEW UNITS WAS AN ADMISSIBLE DEDUCTION U/S.35D OF THE ACT. ITA NO. 3335 & 4825 MUM 2011-M/S TATA MOTORS LTD. 15 9.1. IN THE APPELLATE PROCEEDINGS, UPHOLDING THE ORDER O F THE AO.S, FAA HELD THAT THE EXPENDITURE INCURRED WAS IN THE CAPITAL FIELD. WE FIND THAT IDENTICAL ISSUE HAS BEEN DECIDED BY US, WHILE ADJUDICATING THE APPEALS FOR THE EARLIER THREE AY.S.I.E.- AY.S.1987-88, 1989-09 AND 1990-91(SUPRA) IN THE FOL LOWING MANNER: BEFORE US, AR AND DR AGREED THE IDENTICAL ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE ORDER FOR THE AY.1986-87.WE FIND TH AT IN THE EARLIER AY, ISSUE OF EXPENDITURE INCURRED FOR MAKING PAYMENTS TO CONSULT ANTS FOR FEASIBILITY STUDIES, HAS BEEN DEALT IN FOLLOWING MANNER: 16.2. BEFORE US, AR SUBMITTED THAT SIMILAR ISSUE WAS DECI DED IN FAVOUR OF THE ASSESSEE IN THE PRECEDING AY.DR DID NOT CONTROVERT THE FACT. WE FIND THAT IN THE AY.1985-86 ASSESSEE HAD PAID FEES FOR FEASIBILITY S TUDY TO THE SAME CONSULTANT TO WHOM FESS WAS PAID DURING THE YEAR ALSO. WHILE DECI DING THE APPEAL, TRIBUNAL AT PARAGRAPH 38 HAS HELD AS UNDER: WE HAVE PERUSED THE DETAILS OF THE EXPE NSES. A SUM OF RS.10 LAKHS WAS PAID FOR MODERNIZATION PROJECT PHASE-I.A SUM OF RS.2 LAKHS A ND RS.3 LAKHS WAS PAID FOR PROJECT REPORT FOR FEASIBILITY OF PLASTIC LINES AND COATED PIPES AND REVAMPING THE ERW MILL RESPECTIVELY. IN AY.1968-69 IN I.T.A. NO.2068/BOM/7 4-75 THE HONBLE ITAT IN ASSESSEES OWN CASE CONSIDERED EXPENDITURE ON REPOR T FOR INCREASING PRODUCTION CAPACITY AND FUTURE DEVELOPMENT. AFTER ELABORATE DISCUSSION, THE TRIBUNAL CAME TO THE CONCLUSION THAT EXPENDITURE WAS NOT A CAPITAL EXPENDITURE AND ALLOWED DEDUCTION OF SAME AS A REVENUE EXPENDITURE. FACTS AND CIRCUMSTANCES BEING IDENTICAL IN THIS YEAR, RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL, WE HOLD THA T THE EXPENDITURE IN QUESTION HAS TO BE ALLOWED AS A DEDUCTION BEING A REVENUE EXPENDITURE. GROUND NO. 12 IS ALLOWED. FOLLOWING THE ABOVE, WE DECIDE GROUND NO.1 6, BEFORE US, IN FAVOUR OF THE ASSESSEE. IN VIEW OF THE ABOVE,G.14/G.13 FOR THE AY. S UNDER APPEAL ARE DECIDED IN FAVOUR OF THE ASSESSEE. FOLLOWING OUR ORDERS FOR THE EARLIER YEAR S, WE DECIDE THE ISSUE OF PAYMENT OF FEES TO THE CONSULTANTS FOR CONDUCTING FEASIBILITY REPORT IN FA VOUR OF THE ASSESSEE. IN VIEW OF THE DECISION OF EARLIER YEAR S, GROUND NO.7 IS DECIDED IN FAVOUR OF THE ASSESSEE. FOLLOWING OUR ORDER FOR THE ASSESSMENT YEAR 1996-97, GROUNDS NO.9 (1997-98) AND 1 (FOR 1998-99 AND 2000-01) IS ALLOWED. CONSIDERING THE EARLIER YEARS ORDERS, FIRS T EFFECTIVE GROUND [GOA2 (A) & 2(B)]FOR THE YEAR UNDER APPEAL IS DECIDED AGAINST T HE AO. ITA NO. 3335 & 4825 MUM 2011-M/S TATA MOTORS LTD. 16 28. IT IS NOTED THAT SIMILAR DISALLOWANCE MADE BY AO IN ASSESSMENT YEAR 2003-04 ONWARDS WHICH WERE DELETED BY FIRST APPELLATE AUTHO RITY, AND THE REVENUE HAS NOT FILED FURTHER APPEAL BEFORE THE TRIBUNAL. THE ORDER S IN ALL SUBSEQUENT YEARS HAVE ATTAINED FINALITY. THE PRODUCT DEVELOPMENT EXPENSES INCLUDE EXPENSES ON DEVELOPMENT OF NEW PRODUCT AND VARIANTS OF EXISTING PRODUCT. IT HAS BEEN EXPLAINED THAT SUCH DEVELOPMENT TAKES A SPAN OF TIME BEFORE C OMMERCIAL PRODUCTION. IN OUR VIEW, SUCH AN EXPENDITURE IS A REGULAR DEVELOPMENTA L ACTIVITY UNDER TAKEN BY THE ASSESSEE IN ITS EXISTING COURSE OF BUSINESS AND NOT A NEW LINE OF BUSINESS. THUS, ON THE BASIS OF PARITY OF REASONING LAID DOWN IN THE C ASE OF TATA IRON AND STEEL COMPANY (SUPRA), SUCH EXPENDITURE IS REVENUE IN NAT URE. CONSIDERING THAT THE REVENUE HAS ACCEPTED SUCH AN ORDER OF CIT(A) FOR AS SESSMENT YEAR 2003-04 ONWARDS, THE IMPUGNED ORDER OF LD CIT(A) DESERVE TO BE UPHELD. IN VIEW OF THE AFORESAID DISCUSSION, AND FOR THE SAKE OF CONSISTEN CY THE ORDER OF LD CIT(A) IS AFFIRMED. THUS, THE GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 25. CONSIDERING THE CONSISTENT VIEW TAKEN BY DECISION I N ASSESSEES OWN CASE FOR EARLIER YEAR, WE DO NOT FIND ANY MERIT IN THE GROUN D OF APPEAL RAISED BY REVENUE. IN THE RESULT, THIS GROUND OF APPEAL IS DISMISSED. 26. GROUND NO.3 RELATES TO EXPENDITURE ON ISSUE OF FORE IGN CURRENCY. THE LD. AR OF THE ASSESSEE SUBMITS THAT THIS GROUND OF APPEAL IS ALSO COVERED BY THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2005-06, W HEREIN THE TRIBUNAL DECIDED THE APPEAL ON THE BASIS OF DECISION OF EARLIER YEAR S IN A.Y. 1987-88, 1989-90 AND 1990-91. 27. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE NOT D ISPUTED THE CONTENTION OF LD. AR OF THE ASSESSEE THAT SIMILAR ISSUES WERE DECIDED IN FAVOUR OF ASSESSEE IN EARLIER YEARS. 28. WE HAVE CONSIDERED THE SUBMISSION OF PARTIES AND FI ND THAT ON SIMILAR GROUND IN ASSESSEES OWN CASE FOR A.Y. 2005-06, THE CO-ORDINA TE BENCH OF TRIBUNAL BY ITA NO. 3335 & 4825 MUM 2011-M/S TATA MOTORS LTD. 17 FOLLOWING THE DECISION OF EARLIER YEARS DISMISSED T HE SIMILAR GROUND OF APPEAL RAISED BY REVENUE. THE CO-ORDINATE BENCH PASSED THE FOLLOWING ORDER: 10. WE HAVE CONSIDERED THE SUBMISSION OF LD. REPRE SENTATIVE OF THE PARTIES AND FIND THAT SIMILAR GROUND OF APPEAL WAS RAISED IN AS SESSEES GROUP COMPANIES IN TATA IRON & STEEL COMPANY LTD. VS. DCIT IN APPEAL F OR A.Y. 1987-88,M 1989- 90 & 1990-1991 IN ITAS NO. 3965-3967/MUM/2003 AND 3 982-3984/MUM/2003 AND THE TRIBUNAL VIDE ORDER DATED 07.03.2014 ALLOWE D THE SIMILAR RELIEF. THE LD. AR OF THE ASSESSEE HAS PLACED ON RECORD THE COPY OF DECISION ON RECORD (PAGE 98 TO 141 OF LEGAL PAPER BOOK). 11 . THE HONBLE RAJASTHAN HIGH COURT IN CASE OF CIT VS SECURE METERS LTD. (SUPRA) WHILE CONSIDERING THE ALLOWABILITY OF EXPEN DITURE IN RELATION TO CONVERSION OF DEBENTURES HELD THAT WHEN DEBENTURE I SSUED, WHETHER IT IS CONVERTIBLE OR NON-CONVERTIBLE, IT DOES NOT MILITAT E AGAINST THE NATURE OF DEBENTURE, BEING LOAN. THE EXPENDITURE INCURRED WOU LD BE ADMISSIBLE AS REVENUE EXPENDITURE. THE HONBLE COURT ALSO REFERRED AND RE LIED THE DECISION OF HONBLE CALCUTTA HIGH COURT IN CASE OF CIT VS EAST INDIA HO TELS (252 ITR 680). THE HONBLE RAJASTHAN HIGH COURT ALSO REFERRED AND RELI ED THE DECISION OF HONBLE SUPREME COURT IN INDIA CEMENT LTD. (SUPRA) WHEREIN IT WAS HELD THAT THE ASPECT FROM CONSIDERATION BY HOLDING THAT IT IS IRRELEVANT TO CONSIDER THE OBJECT, WITH WHICH THE LOAN WAS OBTAINED. WE HAVE NOTED THAT THE LD CIT(A) HAS ALLOWED THE RELIEF TO THE ASSESSEE BY FOLLOWING THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN CASE OF SECURE METERS (SUPRA), AGAINST WHICH THE APPEAL FILED BY REVENUE WAS DISMISSED BY THE HONBLE SUPREME COURT. 12. CONSIDERING THE ABOVE LEGAL AND FACTUAL DISCUSS ION, WE DO NOT FIND ANY MERIT IN THE GROUNDS OF APPEAL RAISED BY REVENUE. 29. IN VIEW OF THE CONSISTENT DECISION OF TRIBUNAL ON T HE IDENTICAL ISSUE ON IDENTICAL FACT, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER PASSED BY LD. CIT(A). IN THE RESULT, THIS GROUND OF APPEAL IS DISMISSED. 30. GROUND NO.4 RELATES TO PRIOR PERIOD EXPENDITURE. TH E LD. AR OF THE ASSESSEE SUBMITS THAT DUE TO COMPLEXITY AND DIVERSITY IN OPE RATIONS OF THE ASSESSEE, IN ITA NO. 3335 & 4825 MUM 2011-M/S TATA MOTORS LTD. 18 CERTAIN CASES, EXACT ASCERTAINMENT OF APPROVAL OF E XPENSES BEFORE CLOSING OF ACCOUNTS INVOLVED ESTIMATE AND IN SUCH CASES AT THE TIME OF SETTLEMENT OF LIABILITY OR CREDIT, THE EXACT AMOUNT TO DIFFER. THERE ARE CE RTAIN EXPENSES RELATING TO EARLIER YEARS IN RESPECT OF WHICH THE LIABILITY CRYSTALLIZE S DURING THE YEAR UNDER CONSIDERATION. THESE EXPENSES ARE DISCLOSED AS EXC ESS DEBITS OR SHORT CREDITS IN RESPECT OF PREVIOUS YEARS AND RELEVANT DISCLOSURES ARE MADE IN THE FINANCIAL STATEMENT. THE AO DISALLOWED THE EXPENSES HOLDING T HAT EXPENSES RELATES TO EARLIER YEARS. THE LD. CIT(A) ALLOWED THE RELIEF TO THE ASSESSEE BY FOLLOWING THE ORDER OF LD. CIT(A) FOR A.Y. 1997-98, WHICH WAS CON FIRMED BY TRIBUNAL, THUS, THIS GROUND OF APPEAL IS ALSO COVERED IN FAVOUR OF ASSESSEE. THE LD. AR SUBMITS THAT ORDER OF LD. CIT(A) FOR A.Y. 1997-98, WHICH WA S AFFIRMED BY TRIBUNAL IN ITA NO. 5368/MUM/2005 DATED 08.05.2008 IS PLACED ON RECORD. THE LD. AR ALSO RELIED UPON THE DECISION OF HONBLE APEX COURT IN E XCEL INDUSTRIES LTD. (358 ITR 295 (SC). 31. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. 32. THE ASSESSING OFFICER DISALLOWED THE EXPENSES HOLDI NG THAT EXPENSES RELATES TO EARLIER YEARS. THE LD. CIT(A) GRANTED THE RELIEF TO THE ASSESSEE ON THE BASIS OF ORDER OF LD. CIT(A) FOR A.Y. 1996-97 & 1997-98, HOL DING THAT A DETAILED ORDER WAS PASSED BY HIS PREDECESSOR ON IDENTICAL GROUNDS. WE HAVE NOTED THAT SIMILAR RELIEF WAS GRANTED TO THE ASSESSEE BY LD. CIT(A) IN A.Y. 1996-97 VIDE ORDER DATED 23.12.2004 VIDE APPEAL REFERENCE TATA MOTORS A.Y. 1996-97 NO.CIT(A)- II/R-2(1)/IT-1/04-05 , HOWEVER, NO APPEAL WAS FILED BY REVENUE AGAINST T HE SAID ITA NO. 3335 & 4825 MUM 2011-M/S TATA MOTORS LTD. 19 ORDER. NO CONTRARY FACT IS BROUGHT TO OUR NOTICE TO TAKE A CONTRARY VIEW, THEREFORE, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE O RDER PASSED BY LD. CIT(A). IN THE RESULT, THIS GROUND OF APPEAL IS DISMISSED. 33. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH DAY OF JANUARY 2019. SD/- SD/- (G. MANJUNATHA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 07/01/2019 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/