MAHINDRA & MAHINDRA LTD, MUMBAI V. ADDL CIT RG 2(2), MUMBAI

ITA 3998/MUM/2010

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0641 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 11 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 27-06-2016
• Assessment Year: 2000-2001
• Appeal Filed On: 17-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N P SINGH
• Assessee Lawyers: M P MAHAJANI
• Keywords: Capital asset; Depreciation; Tax effect; Revenue expenditure
• Section: 14A; 2

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -BBENCH MUMBAI , . . , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND C. N. PRASAD,JUDICIAL MEMBER ./I.T.A./3998/MUM/2010 , /ASSESSMENT YEAR:2000-01 ./I.T.A./7581/MUM/2011 , /ASSESSMENT YEAR:2001-02 MAHINDRA & MAHINDRA LIMITED MAHINDRA TOWERS, GROUND FLOOR, CORPORATION TAXATION, WORLI ROAD NO.13, WORLI,MUMBAI-400 018. PAN:AAACM 3025 E VS. ADDL. CIT, RANGE-2(2) AAYAKAR BHAVAN, M.K. MARG MUMBAI-400 020. ( /APPELLANT) ( / RESPONDENT) ./I.T.A./4542/MUM/2010 , /ASSESSMENT YEAR:2000-01 ./I.T.A./7846/MUM/2011 , /ASSESSMENT YEAR:2001-02 ADDL. CIT, RANGE-2(2),AAYAKAR BHAVAN, M.K. MARG.MUMBAI-400 020. VS. MAHINDRA & MAHINDRA LIMITED WORLI,MUMBAI-400 018. ( /APPELLANT) ( / RESPONDENT) / REVENUE BY: SHRI N.P. SINGH-CIT-DR /ASSESSEE BY: SHRI M.P. MAHAJANI / DATE OF HEARING: 16/05/2017 / DATE OF PRONOUNCEMENT: 16/05/2017 , / PER RAJENDRA A.M. - CHALLENGING THE ORDERS DT.29.03.2010 AND 12.08.2011 OF THE CIT(A)-5, MUMBAI THE ASSESSEE AND THE ASSESSING OFFICERS(AO.S)HAVE FILED CROSS AP PEALS FOR THE ABOVE MENTIONED TWO AY.S . FOR THE SAKE OF CONVENIENCE WE ARE ADJUDICATING BOT H THE APPEALS BY A COMMON ORDER,AS MOST OF THE ISSUES ARE IDENTICAL FOR BOTH THE AY.S.ASSES SEE IS ENGAGED IN THE BUSINESS OF MANUFACTU -RING OF AUTOMOBILE VEHICLES ETC.DETAILS OF DATES OF FILING OF RETURNS,RETURNED INCOMES, ASSESSED INCOME ETC. CAN BE SUMMARIZED AS UNDER :- A.Y. ROI FILED ON RETURNED INCOME ASSESSMENT DT. AS SESSED INCOME 2000-01 20.11.2000 RS.15.94 CRORES 31.03.2003 RS.25 .17 CRORES 2001-02 30.10.2001 (-)RS.30,46,64,454/- 18.3.2004 R S.10.26 CRORES ITA/3998/MUM/2010 (AY 2000-01):- 2. FIRST GROUND OF APPEAL, RAISED BY THE ASSESSEE IS A BOUT DEVELOPMENT EXPENDITURE OF RS.12. 22 CRORES.IT WAS BROUGHT TO OUR NOTICE THAT WHILE D ECIDING THE APPEAL FOR THE AY.1999-2000 THE MATTER WAS RESTORED BACK TO THE FILE OF THE AO BY THE TRIBUNAL (ITA/2344/MUM/2009- PARA-6 AT PG-10 DT.24/07/2015 ),THAT SIMILAR DIRECT IONS WERE GIVEN BY THE TRIBUNAL FOR THE AY 2006-07 ALSO (ITA/8597/MUM/2010, DT.06/06/2012). RESPECTFULLY FOLLOWING THE ABOVE WE ARE RESTORING B ACK THE ISSUE TO THE FILE OF THE AO AND FOLLOW THE DIRECTION OF THE TRIBUNAL GIVEN FOR THE AY 2006-07. FIRST GROUND STANDS PARTLY ALLOWED. 3998/M/10M&M & ORS. 2 3. SECOND GROUND IS ABOUT TECHNICAL SERVICES FEE PAID TO VARIOUS PARTIES, AMOUNTING TO RS.28. 98 CRORES THE REPRESENTATIVES OF BOTH THE SIDES STA TED THAT WHILE DECIDING THE APPEAL FOR AY.S 2006-07 AND 2007-08 (ITA/8597/MUM/2010, (SUPRA) PAR A 3-4 AT PAGES-12-23 AND ITA/7999/ MUM/2011, 08 TH JUNE 2012, PG-8)THE TRIBUNAL HAD HELD THAT EXPENDI TURE WAS CAPITAL IN NATURE AND THE ASSESSEE WAS ENTITLED TO DEPRECIATION.FOLLO WING THE ABOVE ORDERS OF THE TRIBUNAL WE HOLD THAT THE EXPENDITURE WAS OF CAPITAL NATURE AND THE ASSESSEE SHOULD BE ALLOWED DEPRECIA - TION,AS PER RULES. 4. NEXT GROUND IS REGARDING STAFF COST OF RS. 8.48 CRO RES INCURRED AS PART OF DEVELOPMENT PROJECTS. WE FIND THAT WHILE DECIDING THE APPEAL FO R ITA/8597/M/10; AY 2006-07(PGS.12-23 AT PARAS 3-4 AND ITA/7999/M11; 2007-08 (PG.8 GROUND NO.2) (SUPRA), THE TRIBUNAL HAS HELD THAT SIMILAR EXPENDITURE WAS REVENUE IN NATURE.FOLL OWING THE SAME DECIDE THE ISSUE BEFORE US IN FAVOUR OF THE ASSESSEE. 5. NEXT GROUND PERTAINS TO DEVELOPMENT EXPENDITURE OF RS.9.14 CRORES PAID BY THE ASSESSEE FOR DEVELOPMENT OF DIESEL ENGINES.IT WAS BROUGHT TO OUR NOTICE THAT AT PG NO.12-23 OF THE ORDER FOR AY 2006-07(SUPRA), THE TRIBUNAL HAD DECIDED THAT SI MILAR EXPENDITURE WAS CAPITAL IN NATURE AND THAT THE ASSESSEE WAS ENTITLED TO DEPRECIATION. THE AO IS DIRECTED TO FOLLOW THE DIRECTION OF THE TRIBUNAL FOR AY.2006-07. 6. FOURTH GROUND DEALS WITH PRIOR PERIOD EXPENSES OF R S.39.56 LAKHS . THE REPRESENTATIVES OF BOTH THE SIDES STATED THAT IN ITA 2523&3078/MUM/200 5-AY 1998-99(PAGE-4, PARA 10-11), THE TRIBUNAL HAD DIRECTED THE AO TO CONSIDER THE CL AIM AS PER LAW, THAT SIMILAR ISSUE WAS SENT BACK TO THE FILE OF AO FOR THE AY 1999-2000 ALSO. A S THE FACTS FOR THE YEAR UNDER CONSIDERA - TION ARE SIMILAR TO THE EARLIER YEARS,SO,WE DIRECT THE AO TO DECIDE THE ISSUE AFRESH, AFTER AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO TH E ASSESSEE.FOURTH GROUND STANDS PARTLY ALLOWED. 7. NEXT GROUND DEALS WITH EXPENDITURE ON EMPLOYEE WEL FARE OF RS.13.47 LAKHS. WE FIND THAT IN THE SECOND ROUND OF LITIGATION IDENTICAL ISSUE F OR AY 1996-97 AND 1998-99, THE TRIBUNAL HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE IN ITA/3660/MUM/2012 (PAGE-15 PARA-10 FOR AY 1997-98 AND ITA/3661/MUM/2012;PAGE-23, PARA-15 F OR AY 1998-99).RESPECTFULLY FOLLOWING THE ABOVE, 5 TH GROUND IS DECIDED IN FAVOUR OF THE ASSESSEE. 8. SIXTH GROUND IS ABOUT PROVISION FOR WARRANTY COST A MOUNTING TO RS.16.02 CRORES. WE FIND THAT WHILE DECIDING THE APPEAL FOR 2006-07 (IN ITA NO.8597/M/10; PAGES 29-41 AT PARA 9-9.4) AND 2007-08(IN ITA NO.7999/M/11;PAGE-9, GR.NO.5) (S UPRA), THE ISSUE WAS RESTORED BACK TO 3998/M/10M&M & ORS. 3 THE FILE OF AO TO DECIDE AFRESH.THE AO IS DIRECTED TO DECIDE THE ISSUE AFRESH AFTER AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE.G ROUND NO.6 IS DECIDED IN FAVOUR OF THE ASSESSEE,IN PART. 9. NEXT GROUND IS ABOUT INTEREST ON IT REFUND OF RS. 1.37 CRORES. THE AR FAIRLY CONCEDED THAT ISSUE STANDS COVERED AGAINST THE ASSESSEE BY THE S PECIAL BENCH DECISION IN THE CASE OF AVADH TRADING (100ITD131).RESPECTFULLY FOLLOWING THE ABOV E ORDER OF THE SPECIAL BENCH SEVENTH GROUND IS DECIDED AGAINST THE ASSESSEE. 10. NEXT GROUND IS ABOUT DISALLOWANCE MADE U/S. 14A OF THE ACT AMOUNTING TO RS.21.87 CRORES.DURING THE ASSESSMENT PROCEEDINGS THE AO HAD DISALLOWED RS.7.72 CRORES WHILE COMPUTING THE DISALLOWANCE UNDER THE SAID SECTION. IN THE APPELLATE PROCEEDINGS THE FIRST APPELLATE AUTHORITY (FAA) INVOKED THE PROVISIONS OF RULE 8D OF THE INCOME TAX RULE, 1962 (RULES)AND DIRECTED AO TO ENHANCE THE DISALLOWANCE BY APPLYING THE DECISION OF DAGA CAPITAL. 10.1. BEFORE US, THE AR ARGUED THAT RULE 8D WAS NOT APPLI CABLE FOR THE YEAR UNDER CONSIDERATION IN VIEW OF THE JUDGMENT OF HON'BLE BO MBAY HIGH COURT DELIVERED IN THE CASE OF GODREJ AND BOYCE MFG. CO. LTD.(328ITR81), THAT ENHA NCEMENT MADE BY FAA SHOULD BE DISALLOWED,THAT IN THE SUBSEQUENT YEARS THE MATTER WAS SENT BACK TO THE AO, THAT THE INVESTMENT IN SUBSIDIARIES, BEING STRATEGIC INVESTM ENT SHOULD BE EXCLUDED FROM INVESTMENTS. HE RELIED UPON THE CASES OF JM FINANCIAL LTD. (ITA/ 4521/MUM/2012) AND GARWARE WALL ROPES LTD. (ITA/5408/MUM/2012).THE DR SUPPORTED THE ORDER OF THE FAA. 10.2. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE ARE OF T HE OPINION THAT MATTER HAS TO BE RESTORED BACK TO THE FILE OF AO FOR FRESH ADJUDICAT ION. THERE IS NO NEED TO CITE ANY AUTHORITY TO HOLD THAT THE PROVISIONS OF RULE 8D OF THE RULES WO ULD NOT BE APPLICABLE FOR THE YEAR UNDER APPEAL.THE AO WOULD DECIDE THE ISSUE AFTER HEARING THE ASSESSEE AND CONSIDERING THE CASE LAWS RELIED UPON BY IT BEFOR US.EIGHTH GROUND IS DE CIDED IN FAVOUR OF THE ASSESSEE,IN PART. 11. GROUND NO.9 (EURO ISSUE EXPENSES) WAS NOT ADDRESSED BY THE ASSESSEE BEFORE US, HENCE, SAME STANDS DISMISSED AS NOT PRESSED. 12. GROUND NO.10 IS WITH REGARD TO PRIOR PERIOD EXPENSE S OF RS.11.03 LAKHS. WE FIND THAT WHILE DECIDING THE APPEAL FOR AY 1998-99 AND 1999-2 000 (ITA/2523&3078/MUM/2005 AND ITA/2344/MUM/2009) .THE MATTER WAS RESTORED BACK TO THE FILE OF AO. HE WOULD DECIDE THE ISSUE AFRESH AFTER AFFORDING A REASONABLE OPPORTUNI TY TO THE ASSESSEE .GROUND NO.10 IS DECIDED IN FAVOUR OF THE ASSESSEE ,IN PART. 3998/M/10M&M & ORS. 4 ITA/4542/MUM/2010 -AY 2000-2001: 13. FIRST EFFECTIVE GROUND OF APPEAL, RAISED BY AO IS A BOUT PAYMENT MADE TO CLUBS AMOUNTING TO RS.59.97 LAKHS. IT WAS BROUGHT TO OUR NOTICE THAT WHILE DECIDING THE APPEALS OF 1997-98(ITA/7845 &8140/M/2004; PG-34-PARA56-58) AND 1998-99 (ITA/2523 &3078/MUM/ 2005; PG-5,PARA 12-13) THE TRIBUNAL HAD DECIDED THE ISSUE AGAINST THE AO FOLLOWING OUR ORDER FOR THE EARLIER YEAR ,WE DECIDE FIRST GROUND OF APPEAL AGAINST THE AO. 14. NEXT GROUND DEALS WITH PREMIUM ON REDEMPTION OF DEB ENTURE OF RS.3.36 LAKHS. REPRESENTATIVES OF BOTH THE SIDES AGREED THAT THE I SSUE STANDS COVERED AGAINST THE AO BY THE JUDGMENT DELIVERED IN THE CASE OF MADRAS INDUSTRIAL INVESTMENT CORPORATION (225ITR802).RESPECTFULLY FOLLOWING THE ABOVE JUDGME NT OF HONBLE SUPREME COURT WE DISMISS THE GROUND RAISED BY THE AO. 15. OLD BALANCE OF RS.4.11 LAKHS IS THE SUBJECT MATTER OF GR.NO.4AND 5. WE FIND THAT SIMILAR ISSUE HAD ARISEN IN THE EARLIER YEARS AND MATTER WA S SET ASIDE TO THE FILE OF THE AO.FOLLOWING THE SAME, MATTER IS REMITTED BACK TO FILE OF AO FOR FRESH ADJUDICATION. 16. SIXTH GROUND IS ABOUT PROVISION FOR LIABILITY ARISI NG OUT OF LABOUR DEMANDS OF RS.11.77 CRORES.WE FIND THAT WHILE DECIDING THE APPEAL FOR A Y 2006-07 THE TRIBUNAL AT PARA -10 , 10.2 PG-41 HAS DECIDED THE ISSUE AGAINST THE AO.RESPECTF ULLY FOLLOWING THE ABOVE, WE DECIDE THE ISSUE AGAINST THE AO. 17. NEXT GROUND DEALS WITH REMISSION OF LIABILITY ON PR EPAYMENT OF TRADE ADVANCES OF RS.4.54 CRORES IN RESPECT OF CAPITAL ASSETS.IT WAS BROUGHT TO OUR NOTICE THAT THE TRIBUNAL WHILE DECIDING THE APPEAL FOR AY 1999-2000 (ITA 3070/MUM/2009- PAR A 14 14.3 PG14-17) HAS DISMISSED THE SAID GROUND .RESPECTFULLY FOLLOWING ABOVE WE DI SMISS GROUND NO.7. 18. GROUND NO.8 IS IN RESPECT OF LIABILITY ON ACCOUNT OF SPECIAL PENSION OF RS.2.93 CRORES. BOTH THE REPRESENTATIVES AGREED THAT IDENTICAL ISSU E WAS DECIDED AGAINST THE AO BY THE TRIBUNAL, (AT PARA -16 OF PG-18-19 ,ITA/3070/MUM/20 09) WHILE DECIDING THE APPEAL FOR 1999- 2000.FOLLOWING THE SAME GROUND NO. 8 IS DECIDED AS AGAINST THE AO. ITA/7846/MUM/2011-AY.01-02: 19. FIRST GROUND OF APPEAL, RAISED BY THE ASSESSEE, WAS NOT PRESSED BEFORE US IN VIEW OF THE SMALLNESS OF TAX EFFECT.HENCE, SAME STANDS DISMISSE D AS NOT PRESSED. 20. NEXT GROUND IS ABOUT DEVELOPMENT EXPENDITURE OF RS. 17.93 CRORES AND STAFF COST OF RS. 3.49 CRORES. FOLLOWING OUR ORDER FOR THE EARLIER YE AR,WE RESTORE BACK THE MATTER TO THE FILE OF THE AO. 3998/M/10M&M & ORS. 5 21. DEVELOPMENT EXPENDITURE OF RS. 8.10 CRORES IS THE S UBJECT MATTER OF THIRD GROUND OF APPEAL.FOLLOWING THE ORDER FOR THE EARLIER YEAR, WE HOLD THAT DISPUTED EXPENDITURE WAS CAPITAL IN NATURE AND THE ASSESSEE WAS ENTITLED TO DEPRECIA TION. 22. FOURTH GROUND OF APPEAL IS ABOUT TECHNICAL SERVICE FEES PAID TO VARIOUS PARTIES, AMOUNTING TO RS.34.17 CRORES,STAFF COST OF RS. 3.89 CRORES AN D MATERIAL CONSUMPTION OF RS. 6.92 CRORES AS PART OF DEVELOPMENT PROJECTS. FOLLOWING THE ORDER O F THE TRIBUNAL FOR THE AY.S 2006 -07 AND 2007-08,WE HOLD THAT EXPENDITURE WAS REVENUE IN NAT URE. GROUND NUMBER 4 STANDS ALLOWED. 23. NEXT GROUND IS ABOUT EXPENDITURE ON IMPLEMENTATION OF SAP ERP SYSTEM OF RS. 1.08 CRORES. DURING THE ASSESSMENT PROCEEDINGS, THE AO H ELD THAT EXPENDITURE WAS CAPITAL IN NATURE AND ALLOWED DEPRECIATION THEREON AT THE RATE OF 25% AS APPLICABLE TO INTANGIBLE ASSETS. IN THE APPELLATE PROCEEDINGS, THE FAA UPHELD THE DI SALLOWANCE MADE BY THE AO, FOLLOWING THE ORDER OF TRIBUNAL IN THE CASE OF AMWAY. 23.1. BEFORE US, IT WAS STATED THAT WHILE DECIDING THE AP PEAL FOR THE AY.1997-98(SECOND ROUND OF LITIGATION), THE TRIBUNAL HAD FOLLOWED THE JUDGM ENT OF THE HONORABLE BOMBAY HIGH COURT IN THE CASE OF RAYCHEM RPG LTD. (346 ITR 138) AND T HAT THE TRIBUNAL HAD ALLOWED THE CLAIM AS REVENUE EXPENDITURE. THE DR LEFT THE ISSUE TO TH E DISCRETION OF THE BENCH. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL FOR THE AY. 199 7-98(SUPRA),WE HOLD THAT EXPENDITURE INCURRED ON IMPLEMENTATION OF SAP ERP SYSTEMS WAS R EVENUE IN NATURE.FIFTH GROUND IS DECIDED IN FAVOUR OF THE ASSESSEE. 24. NEXT GROUND IS ABOUT LICENCE FEES PAID TO SDRC INDI A PRIVATE LTD.,AMOUNTING RS. 1.09 CRORES. THE AO HELD THAT IT WAS A CAPITAL EXPENDITU RE. ACCORDINGLY, HE ALLOWED DEPRECIATION THEREON AT THE RATE OF 25%. THE FAA, DURING THE APP ELLATE PROCEEDINGS, FOLLOWED HIS DECISION IN CONTEXT OF SAP ERP EXPENDITURE AND UPHELD THE OR DER OF THE AO. 24.1. BEFORE US IT WAS ARGUED THAT PAYMENT MADE BY THE AS SESSEE WAS LICENSEE FOR AN OPERATIONAL SOFTWARE AND SAME WAS REVENUE IN NATURE . FOLLOWING THE RATIO OF RAYCHEM RPG LTD.(SUPRA),GROUND NUMBER 6 STANDS ALLOWED. 25. SEVENTH GROUND DEALS WITH CONSULTANCY CHARGES PAID IN CONNECTION WITH TRANSPORT SOLUTION GROUP, AMOUNTING RS. 1.73 CRORES. THE AO, AFTER CON SIDERING THE SUBMISSION OF THE ASSESSEE, HELD THAT EXPENDITURE INCURRED WITH REGARD TO CONSU LTANCY CHARGES WAS OF CAPITAL NATURE AND WAS ENTITLED FOR DEPRECIATION AT THE RATE OF 25%. T HE FAA, DURING THE APPELLATE PROCEEDINGS, HELD THAT EXPENDITURE ON ACQUIRING SOFTWARE WAS A C APITAL EXPENDITURE, THAT THE ASSESSEE COULD NOT HAVE DIFFERING TREATMENT FOR ITS BOOKS OF ACCOU NTS AND FOR TAX COMPUTATION. 3998/M/10M&M & ORS. 6 25.1. DURING THE COURSE OF HEARING BEFORE US, THE AR ARG UED THAT THE PAYMENTS MADE BY THE ASSESSEE WERE PURE CONSULTANCY CHARGES FOR BUSINESS -RELATED ADVICE, THAT IT DID NOT RESULT IN ACQUISITION OF ANY IPR OR TANGIBLE ASSET, THAT SAME WERE REVENUE IN NATURE, THAT IN THE CASE OF SHREYAS SHIPPING EXPENDITURE ON DRYDOCK REPAIRS AND SURVEY EXPENSES WERE HELD ALLOWABLE OVER 2.5 YEARS IN THE MANNER ACCOUNTED BY THE ASSES SEE, THAT IN THE CASE OF TAPARIA TOOLS LTD. (372 ITR 605) THE HONORABLE SUPREME COURT HAD REJEC TED THE SPREAD OVER THEORY AND HELD EXPENDITURE ALLOWABLE IN THE YEAR OF IMMIGRANTS, TH AT THE ACCOUNTING ENTRIES COULD NOT DETERMINE AMBIT OF TAXABLE INCOME. THE DR RELIED UP ON THE ORDER OF THE FAA. 25.2. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT T HE ASSESSEE HAD MADE PAYMENT IN CONNECTION WITH TRANSPORT SOLUTION GROUP FOR CONSUL TANCY.THE AO HAS NOT BROUGHT ON RECORD ANYTHING TO PROVE THAT THE ASSESSEE HAD ACQUIRED AN Y IPR/TANGIBLE ASSETS. IT WAS PLAIN AND SIMPLE CONSULTANCY.THEREFORE, THERE WAS NO JUSTIFIC ATION FOR THE FAA TO HOLD THAT EXPENDITURE WAS OF CAPITAL NATURE.WE ALLOW GROUND NUMBER 7, FIL ED BY THE ASSESSEE. 26. NEXT GROUND PERTAINS TO CONSULTANCY CHARGES PAID I N CONNECTION WITH ASSESSEES BUSINESS CUSTOMER CENTER. THE REVENUE AUTHORITIES HAD HELD T HAT EXPENDITURE WAS OF CAPITAL NATURE AND HAD ALLOWED DEPRECIATION ACCORDING. FOLLOWING OUR O RDER WITH REGARD TO CONSULTANCY CHARGES PAID IN CONNECTION WITH TRANSPORT SOLUTION GROUP, W E DECIDE EIGHTH GROUND IN FAVOUR OF THE ASSESSEE. 27. GROUND NO.9 IS ABOUT EXPENDITURE ON EMPLOYEES WELFA RE,AMOUNTING TO RS. 12.07 LAKHS. FOLLOWING OUR ORDER FOR THE EARLIER YEAR (GOA-5), W E DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 28. NEXT GROUND DEALS WITH PROVISION FOR WARRANTY COSTS OF RUBY 7.91 CRORES. WHILE DEALING WITH GROUND OF APPEAL NO.6, WE HAD RESTORED BACK TH E ISSUE TO THE FILE OF THE AO.FOLLOWING THE ORDER FOR THE EARLIER YEAR,WE SET ASIDE THE ISSUE TO THE FILE OF THE AO. 10 TH GROUND IS ALLOWED IN FAVOUR OF THE ASSESSEE, IN PART. 29 . INTEREST ON IT REFUND OF RS. 4.14 CRORES IS THE S UBJECT MATTER OF NEXT GROUND OF APPEAL. WE HAD DECIDED THE IDENTICAL ISSUE (GOA-7), WHILE ADJU DICATING THE APPEAL FOR THE EARLIER YEAR. FOLLOWING THE SAME, WE DISMISS GROUND THE GROUND RA ISED BY THE ASSESSEE. 30. SPECIAL PENSION BASED ON ACTUARIAL VALUATION OF RS. 2.97 CRORES HAS BEEN DISCUSSED IN THE 12 TH GROUND OF APPEAL. SIMILAR ISSUE WAS DECIDED BY THE TRIBUNAL, WHILE ADJUDICATING THE 3998/M/10M&M & ORS. 7 APPEAL FOR EARLIER AY.S.FOLLOWING THE SAME,WE ALLO W TWELVETH GROUND IN FAVOUR OF THE ASSESSEE. 31. NEXT GROUND IS ABOUT DISALLOWANCE MADE U/S.14 A OF THE ACT,AMOUNTING TO RS. 7.85 CRORES. BEFORE THE AO, THE ASSESSEE ARGUED THAT THE RE WAS NO NEXUS BETWEEN INVESTMENT MADE AND THE BORROWINGS. THE FAA UPHELD THE ORDER OF THE AO. IDENTICAL GROUND HAS BEEN RESTORED BACK TO THE FILE OF THE AO BY US,WHILE DECIDING THE APPEAL FOR THE EARLIER YEAR. WE DIRECT THE AO TO FOLLOW THE INSTRUCTIONS GIVEN BY US IN THAT Y EAR.13 TH GROUND RAISED BY THE ASSESSEE, STANDS PARTLY ALLOWED. 32. LAST GROUND OF APPEAL IS ABOUT ADDITION OF DISALLOW ANCE TO BOOK PROFIT. IN OUR OPINION THE AO/FAA WERE NOT JUSTIFIED TO MAKE SAID ADDITION WHI LE COMPUTING THE BOOK PROFIT. AS PER THE PROVISIONS OF THE ACT CERTAIN ADDITIONS CAN BE MADE FOR MAT PURPOSES. DISALLOWANCE UNDER SECTION 14A IS NOT PART OF THE SECTION 115 JB. WE A LLOW THE GROUND RAISED BY THE ASSESSEE. ITA/4524/MUM/2010-AY. 2001-02: 33. GROUNDS OF APPEAL NO.S 2,3 AND 4 DEAL WITH PAYMENT TO CLUBS, PROVISION FOR RELIABILITY ARISING OUT OF LABOUR DEMANDS UNDER NEGOTIATION AND ADMISSION OF LIABILITY ON PREPAYMENT OF TRADE ADVANCES OF RS. 35.80 LAKHS, RS. 6.46 CRORES AND RS. 3.97 CRORES RESPECTIVELY. IDENTICAL ISSUES HAVE BEEN DECIDED BY US IN THE EARLIER YEAR( GOA-2,6 AND7). FOLLOWING EARLIER YEARS ORDER,WE DECIDE ALL THE 3 GROUNDS AGAINST THE AO. 34 . LAST GROUND OF APPEAL IS ABOUT DEPRECIATION ON IT EM SOLD AS SLUM SALE DURING THE AY.S 1995-96 AND 1996-97.IT IS WERE PURELY CONSEQUENTIAL CLAIM FOLLOWING THE ORDERS OF THE TRIBUNAL FOR THE ABOVE-MENTIONED TWO AY..WE FIND TH AT TO GIVE CONSEQUENTIAL EFFECT TO THE ORDER OF THE TRIBUNAL,THE FAA DIRECTED THE AO TO EX CLUDE THE SALE PROCEEDS OF ASSETS FROM BLOCK OF ASSETS WHILE CALCULATING DEPRECIATION. WE ARE OF THE OPINION THAT THERE IS NO NEED TO DISTURB THE FINDING GIVEN BY THE FAA.GOA-5A STANDS DISMISSED. AS A RESULT,APPEALS FILED BY THE ASSESSEE FOR BOTH THE AY.S.STAND PARTLY ALLOWED.APPEAL OF THE AO FOR THE AY.2000-01 IS PARTLY ALLOWED AND APPEAL FOR 2001-02 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH ,MAY , 2017. 16 , 2017 SD/- SD/- S ( . . / C.N.PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 16.05. .2017. JV.SR.PS. 3998/M/10M&M & ORS. 8 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.