ACIT, Circle-1,LTU, New Delhi V. Nestle India Ltd., Gurgaon

ITA 4913/DEL/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8949 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2014-2015
• Appeal Filed On: 01-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRAMITA M BISWAS
• Keywords: Depreciation; Earning of tax free income; Rule 8D
• Section: 14A; 201; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIB UNAL DELHI BENCH: E: NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE, SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.4916/DEL/2014 (ASSESSMENT YEAR-2010-11) ITA NO.4816/DEL/2016 (ASSESSMENT YEAR-2011-12) DY.CIT CIRCLE-1, (LTU), DELHI VS. M/S NESTLE INDIA LTD. M BLOCK, NESTLE HOUSE DLF CITY, PHASE- II, JACARANDA MARG, GURGAON-122 002 PAN:AAACN 0757G (APPELLANT) (RESPONDENT) ITA NO.4911/DEL/2017 (ASSESSMENT YEAR-2012-13) ITA NO.4912/DEL/2017 (ASSESSMENT YEAR-2013-14) ITA NO.4913/DEL/2017 (ASSESSMENT YEAR-2014-15) ASST. CIT CIRCLE-1, (LTU), NEW DELHI VS. M/S NESTLE INDIA LTD. M BLOCK, NESTLE HOUSE DLF CITY, PHASE- II, JACARANDA MARG, GURGAON-122002 PAN:AAACN 0757G (APPELLANT) (RESPONDENT) 2. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON CROSS OBJECTION NO.37/DEL/ 2019 (ARISING OUT OF ITA NO.49 16/DEL/2017) (ASSESSMENT YEAR-2010-11) M/S NESTLE INDIA LTD. M BLOCK, NESTLE HOUSE DLF CITY, PHASE-II, JACARANDA MARG, GURGAON-122002 PAN:AAACN 0757G VS. DY.CIT (LTU), DELHI (CROSS OBJECTOR) (RESPONDENT) ITA NO.4121/DEL/2017 (ASSESSMENT YEAR-2012-13) ITA NO.4122/DEL/2017 (ASSESSMENT YEAR-2013-14) ITA NO.4123/DEL/2017 (ASSESSMENT YEAR-2014-15) ITA NO.4390/DEL/2016 (ASSESSMENT YEAR-2011-12) M/S NESTLE INDIA LTD. M-BLOCK, NESTLE HOUSE DLF CITY, PHASE-II, JACARANDA MARG, GURGAON-122002 PAN:AAACN 0757G VS. DY. CIT CIRCLE-1, (LTU), NEW DELHI (APPELLANT) (RESPONDENT) 3. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON APPELLANT BY SH. AJAY VOHRA, SR. ADV. SH. NEERAJ JAIN, CA SH. KARAN JAIN, CA SH. ANSUL SACHAR, ADV. RESPONDENT BY MS PRAMITA M. BISWAS, CIT-DR DATE OF HEARING 27.07.2020 DATE OF PRONOUNCEMENT 31.07.2020 ORDER PER BENCH: THIS GROUP OF TEN APPEALS/CROSS OBJECTION FOR ASSES SMENT YEARS (A.YS) 2010-11, 2011-12, 2012-13, 2013-14 & 2 014-15 INVOLVE IDENTICAL ISSUES. ACCORDINGLY, THEY WERE HEA RD TOGETHER AND ARE BEING DISPOSED OF THROUGH THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2.0 ITA NO.4916/DEL/2014 IS DEPARTMENTS APPEAL F OR ASST. YEAR 2010-11 AND IS PREFERRED AGAINST THE ORDER OF THE L D. COMMISSIONER OF INCOME TAX (APPEALS) {CIT (A)} DATED 14.07.2014. THE ASSESSEE HAS FILED CROSS OBJECTION BEARING C.O. NO.37/DEL/20 19 AGAINST THE DEPARTMENTS APPEAL. ITA NO.4390/DEL/2016 IS THE AS SESSEES APPEAL FOR ASST. YEAR: 2011-12 WHICH HAS BEEN PREFER RED AGAINST THE ORDER OF THE LD. CIT (A) DATED 21.06.2016 WHEREAS IT A 4. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON NO.4816/DEL/2017 IS THE DEPARTMENTS CROSS APPEAL F OR THE SAME YEAR. ITA NO.4122/DEL/2017 IS ASSESSEES APPEAL FOR ASST. YEAR: 2012-13 WHICH AGAINST THE ORDER OF THE LD. CIT (A) D ATED 01.05.2017 WHEREAS ITA NO.4911/DEL/2017 IS THE DEPAR TMENTS CROSS APPEAL FOR THE SAME YEAR. ITA NO.4122/DEL/201 7 IS ASSESSEES APPEAL FOR ASST. YEAR: 2013-14 WHICH CHAL LENGES THE ORDER OF THE LD. CIT (A) DATED 01.05.2017 AND ITA NO.4912/DEL/2017 IS THE DEPARTMENTS CROSS APPEAL F OR ASST. YEAR 2013-14. ITA NO. 4123/DEL/2017 IS ASSESSEES APPEAL FOR ASST. YEAR: 2014-15 AND CHALLENGES THE FINDINGS OF THE LD . CIT (A) AS CONTAINED IN ORDER DATED 01.05.2017. THE DEPARTMENT S CROSS APPEAL FOR ASST. YEAR: 2014-15 IS CAPTIONED AS ITA NO.4913/DEL/2017. 2.1 THE RESPECTIVE GROUNDS RAISED BY BOTH THE PAR TIES FOR THE CAPTIONED ASSESSMENT YEARS ARE AS UNDER: 2.2 ITA NO.4916/DEL/2014 FOR A.Y.2010-11 (DEPARTM ENTS APPEAL): 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD CIT (A) HAS ERRED IN DELETING THE ADDIT ION OF RS.73,40,98,815/- MADE BY AO ON ACCOUNT OF DISALLOW ANCE OF 40% OF GENERAL LICENCE FEE, HOLDING THE SAME AS NOT 5. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. 2. ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LA W, THE LD CIT (A) HAS ERRED IN REDUCING THE DISALLOWAN CE MADE U/S 14A FROM RS.16,95,310/- TO RS.2,43,995/- THEREB Y GRANTING RELIEF TO THE EXTENT OF RS.14,51,315/-. 3. ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LA W, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.2,80,321/- MADE BY AO BY RESTRICTING THE DEPRECI ATION ON UPS @15% AS AGAINST ASSESSEES CLAIM @60%. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.17,27,059/- MADE BY AO BY DENYING THE CLAIM OF DEPRECIATION IN RESPECT OF ENERGY SAVING AND POLLUT ION CONTROL EQUIPMENT ON THE GROUND THAT IT WAS NOT PUT TO USE. 5. THE APPELLANT CRAVES LEAVE TO, ADD TO, ALTER, AMEND OR VARY FROM THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING. 2.3 ITA NO.4816/DEL/2016 FOR A.Y.2011-12 (DEPAR TMENTS APPEAL): 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD CIT (A) HAS ERRED IN DELETING THE AD DITION OF RS.90,77,99,068/- MADE BY AO ON ACCOUNT OF DISALLOW ANCE OF 40% OF GENERAL LICENCE FEE, HOLDING THE SAME AS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. 2. ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LA W, THE LD CIT (A) HAS ERRED IN REDUCING THE DISALLOWAN CE MADE 6. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON U/S 14A FROM RS.18,33,783/- TO RS.17,58,758/- THERE BY GRANTING RELIEF TO THE EXTENT OF RS.75,025/-. 3. ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LA W, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.50,82,770/- MADE BY AO DENYING THE CLAIM OF DEPRECIATION IN RESPECT OF POLLUTION CONTROL EQUIPM ENT AS THERE WAS NO EVIDENCE SUBMITTED TO INDICATE THAT THEY WER E POLLUTION CONTROL EQUIPMENTS. 4. THE APPELLANT CRAVES LEAVE TO, ADD TO, ALTER, AMEND OR VARY FROM THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING. 2.4 ITA NO.4911/DEL/2017 FOR A.Y.2012-13 (DEPARTMEN TS APPEAL): 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT (A) HAS ERRED IN DELETING ADDITION OF RS.1,06,54,85,768/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF 40% OF GENERAL LICENSE FEE, HOLDING THAT THE SAME AS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT (A) HAS ERRED IN REDUCING THE DISA LLOWANCE MADE U/S 14A FROM RS.31,21,639/- TO 30,72,696/- THEREBY GRANTING RELIEF TO THE EXTENT OF RS.48,943/ - 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDI TION OF RS.2,59,26,734/- MADE BY AO DENYING THE CLAIM OF DEPRECIATING IN RESPECT OR POLLUTION CONTROL EQUIPM ENT AS THERE WAS NO EVIDENCE SUBMITTED TO INDICATE THAT TH EY WERE POLLUTION CONTROL EQUIPMENTS. 7. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON 4. THE APPELLANT CRAVES LEAVE TO, ADD TO, ALTER, AMEND OR VARY FROM THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE T IME OF HEARING. 2.5 ITA NO.4912/DEL/2017 FOR A.Y.2013-14 (DEPART MENTS APPEAL): 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT (A) HAS ERRED IN DELETING ADDITION OF RS.1,17,83,98,395/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF 40% OF GENERAL LICENSE FEE, HOLDING THAT THE SAME AS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT (A) HAS ERRED IN REDUCING THE DISA LLOWANCE MADE U/S 14A FROM RS.32,42,193/- TO 31,20,127/- THEREBY GRANTING RELIEF TO THE EXTENT OF RS.1,11,03 3/- 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDI TION OF RS.4,50,01,287/- MADE BY AO DENYING THE CLAIM OF DEPRECIATING IN RESPECT OR POLLUTION CONTROL EQUIPM ENT AS THERE WAS NO EVIDENCE SUBMITTED TO INDICATE THAT TH EY WERE POLLUTION CONTROL EQUIPMENTS. 4. THE APPELLANT CRAVES LEAVE TO, ADD TO, ALTER, AMEND OR VARY FROM THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE T IME OF HEARING. 8. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON 2.6 ITA NO.4913/DEL/2017 FOR A.Y.2014-15 (DEPART MENTS APPEAL): 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT (A) HAS ERRED IN DELETING ADDITION OF RS.1,25,91,03,440/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF 40% OF GENERAL LICENSE FEE, HOLDING THAT THE SAME AS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT (A) HAS ERRED IN REDUCING THE DISA LLOWANCE MADE U/S 14A FROM RS.21,18,404/- TO 20,30,404/- THEREBY GRANTING RELIEF TO THE EXTENT OF RS.88,002/ - 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDI TION OF RS.41,66,502/- MADE BY AO DENYING THE CLAIM OF DEPRECIATING IN RESPECT OR POLLUTION CONTROL EQUIPM ENT AS THERE WAS NO EVIDENCE SUBMITTED TO INDICATE THAT TH EY WERE POLLUTION CONTROL EQUIPMENTS. 4. THE APPELLANT CRAVES LEAVE TO, ADD TO, ALTER, AMEND OR VARY FROM THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE T IME OF HEARING. 2.7 CROSS OBJECTION NO.37/DEL/2019 FOR ASST. Y EAR: 2010-11 FILED BY THE ASSESSEE: A. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT (A)] ERRED ON FACTS AND IN LAW IN UPHOLDING THE ACTION O F THE ASSESSING OFFICER [AO] IN CONFIRMING THE DISALLOW ANCE OF RS.14,51,315/- UNDER SECTION 14A OF THE INCOME-TAX ACT, 9. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON 1961 [THE ACT] READ WITH RULE 8D(2)(III) OF THE I NCOME-TAX RULES, 1962 [THE RULES]. B. THAT THE CIT (A) ERRED ON FACTS AND IN LAW IN CONFI RMING THE AFORESAID DISALLOWANCE WITHOUT APPRECIATING THAT NO EXPENDITURE WAS ACTUALLY INCURRED IN EARNING THE EX EMPT DIVIDEND INCOME. C. THAT THE CIT (A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT NO SATISFACTION AS REQUIRED BY LA W BEFORE RESORTING TO RULE 8D OF THE RULES FOR PURPOSES OF M AKING DISALLOWANCE UNDER SECTION 14A OF THE ACT WAS RECOR DED BY THE AO. D. THE RESPONDENT CRAVES LEAVE TO ADD, AMEND, ALTER OR VARY FROM THE ABOVE GROUNDS AT OR BEFORE THE TIME OF HEA RING. 2.8 ITA NO.4121/DEL/2017 FOR A.Y.2012-13 (ASSE SSEES APPEAL): 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] ERRED ON FACTS AND IN LAW IN UPHOLDING T HE ACTION OF THE ASSESSING OFFICER [AO] IN DISALLOWING EXPE NDITURE OF RS.30,72,696 UNDER SECTION 14A OF THE INCOME-TAX AC T, 1961 [THE ACT] READ WITH RULE 8D(2)(III) OF THE I NCOME-TAX RULES, 1962 [THE RULES]. 1.1 THAT THE CIT (A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE AFORESAID DISALLOWANCE WITHOUT APPRE CIATING THAT NO EXPENDITURE WAS ACTUALLY INCURRED IN EARNIN G THE EXEMPT DIVIDEND INCOME. 1.2 THAT THE CIT (A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT NO SATISFACTION AS REQUIRED BY LA W WAS RECORDED BY THE AO BEFORE RESORTING TO RULE 8D OF T HE RULES FOR PURPOSES OF MAKING DISALLOWANCE UNDER SEC TION 14A OF THE ACT. 10. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON 1.3 THAT WITHOUT PREJUDICE, THE CIT (A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT DISALLOWANCE, IF AN Y, UNDER SECTION 14A OF THE ACT, HAD TO BE RESTRICTED TO RS.9,64,928/- AS PER COMPUTATION PROVIDED BY THE APPELLANT. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR VARY THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HE ARING. 2.9 ITA NO.4122/DEL/2017 FOR A.Y.2013-14 (ASSESS EES APPEAL): 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT (A)] ERRED ON FACTS AND IN LAW IN UPHOLDING THE ACTION O F THE ASSESSING OFFICER [AO] IN DISALLOWING EXPENDITURE OF RS.32,31,160/- UNDER SECTION 14A OF THE INCOME-TAX ACT, 1961 [THE ACT] READ WITH RULE 8D(2)(III) OF THE I NCOME-TAX RULES, 1962 [THE RULES]. 1.1 THAT THE CIT (A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE AFORESAID DISALLOWANCE WITHOUT APPRE CIATING THAT NO EXPENDITURE WAS ACTUALLY INCURRED IN EARNIN G THE EXEMPT DIVIDEND INCOME. 1.2 THAT THE CIT (A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT NO SATISFACTION AS REQUIRED BY LA W WAS RECORDED BY THE AO BEFORE RESORTING TO RULE 8D OF T HE RULES FOR PURPOSES OF MAKING DISALLOWANCE UNDER SECTION 1 4A OF THE ACT. 1.3 THAT WITHOUT PREJUDICE, THE CIT (A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT DISALLOWANCE, IF AN Y, UNDER SECTION 14A OF THE ACT, HAD TO BE RESTRICTED TO RS. 20,13,989/- AS PER COMPUTATION PROVIDED BY THE APPELLANT. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR VARY THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HE ARING. 11. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON 2.10 ITA NO.4123/DEL/2017 FOR A.Y.2014-15 (ASSESS EES APPEAL): 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT (A)] ERRED ON FACTS AND IN LAW IN UPHOLDING THE ACTION O F THE ASSESSING OFFICER [AO] IN DISALLOWING EXPENDITURE OF RS.20,30,402/- UNDER SECTION 14A OF THE INCOME-TAX ACT, 1961 [THE ACT] READ WITH RULE 8D(2)(III) OF THE I NCOME-TAX RULES, 1962 [THE RULES]. 1.1 THAT THE CIT (A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE AFORESAID DISALLOWANCE WITHOUT APPRE CIATING THAT NO EXPENDITURE WAS ACTUALLY INCURRED IN EARNIN G THE EXEMPT DIVIDEND INCOME. 1.2 THAT THE CIT (A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT NO SATISFACTION AS REQUIRED BY LA W WAS RECORDED BY THE AO BEFORE RESORTING TO RULE 8D OF T HE RULES FOR PURPOSES OF MAKING DISALLOWANCE UNDER SECTION 1 4A OF THE ACT. 1.3 THAT WITHOUT PREJUDICE, THE CIT (A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT DISALLOWANCE, IF AN Y, UNDER SECTION 14A OF THE ACT, HAD TO BE RESTRICTED TO RS. 17,02,026/- AS PER COMPUTATION PROVIDED BY THE APPELLANT. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR VARY THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HE ARING. 2.11 ITA NO.4390/DEL/2016 FOR A.Y.2011-12 (ASSES SEES APPEAL) : 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT (A)] ERRED ON FACTS AND IN LAW IN UPHOLDING THE ACTION O F THE ASSESSING OFFICER [AO] IN DISALLOWING EXPENDITURE OF 12. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON RS.17,58,758/- UNDER SECTION 14A OF THE INCOME-TAX ACT, 1961 [THE ACT] READ WITH RULE 8D (2)(III) OF THE INCOME-TAX RULES, 1962 [THE RULES]. 1.1 THAT THE CIT (A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE AFORESAID DISALLOWANCE WITHOUT APPRE CIATING THAT NO EXPENDITURE WAS ACTUALLY INCURRED IN EARNIN G THE EXEMPT DIVIDEND INCOME. 1.2 THAT THE CIT (A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT NO SATISFACTION AS REQUIRED BY LA W WAS RECORDED BY THE AO BEFORE RESORTING TO RULE 8D OF T HE RULES FOR PURPOSES OF MAKING DISALLOWANCE UNDER SECTION 1 4A OF THE ACT. 1.3 THAT WITHOUT PREJUDICE, THE CIT (A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT DISALLOWANCE, IF AN Y, UNDER SECTION 14A OF THE ACT, HAD TO BE RESTRICTED TO RS. 10,02,954/- AS PER COMPUTATION PROVIDED BY THE APPELLANT. 2. THAT THE CIT (A) ERRED ON FACTS AND IN LAW IN U PHOLDING THE ACTION OF THE AO IN ALLOWING DEPRECIATION ON UP S @ 15% INSTEAD OF 60% AS CLAIMED BY THE APPELLANT, HOLDING THAT UPS IS NEITHER A COMPUTER NOR A COMPUTER ACCESSORY. 2.1. THAT THE CIT (A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE AFORESAID DISALLOWANCE WITHOUT APPRECIATING THA T THE UPS WERE USED BY THE APPELLANT ALONG WITH COMPUTER SYSTEMS AT DIFFERENT LOCATIONS. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR VARY THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HE ARING. 13. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON 2.12 THUS, IT IS SEEN THAT THE ASSESSEE IS CHALLEN GING DISALLOWANCE U/S 14A OF THE INCOME TAX ACT, 1961 (HE REINAFTER CALLED THE ACT) READ WITH RULE-8D OF THE INCOME TAX RULES, 1962 (THE RULES) IN ALL THE ASSESSMENT YEARS UNDER CON SIDERATION. THE DEPARTMENT ALSO HAS CHALLENGED THE PART - RELIEF AL LOWED BY THE LD. CIT (A) WITH RESPECT TO DISALLOWANCE UNDER RULE-14A MADE BY THE ASSESSING OFFICER. APART FROM THIS, THE ASSESSEE IS ALSO CHALLENGING THE ACTION OF THE LD. CIT (A) IN UPHOLDING THE ACTI ON OF THE AO IN NOT ALLOWING DEPRECIATION ON UPS @ 60% IN AY 2011-12 WHER EAS THE DEPARTMENT IS IN APPEAL IN AY 2010-11 ON THE SAME I SSUE CHALLENGING THE ACTION OF THE LD. CIT (A) IN DIRECT ING THAT DEPRECIATION ON UPS BE ALLOWED @ 60%. APART FROM TH IS, THE DEPARTMENT IS CHALLENGING THE RELIEF GRANTED BY THE LD. CIT (A) WITH RESPECT TO DISALLOWANCE OF LICENSE FEE AND DEPRECIAT ION ON POLLUTION CONTROL EQUIPMENT/ ENERGY SAVING DEVICES IN ALL THE YEARS UNDER APPEAL. 3.0 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSE SSEE COMPANY IS MANUFACTURER OF WIDE RANGE OF FOOD ITEMS COVERIN G BEVERAGES, 14. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON BABY FOOD POWDERS, CHOCOLATES AND CONFECTIONERY, CU LINARY PRODUCTS, ETC. 3.1 THE RETURNS OF INCOME FOR THE VARIOUS YEARS UN DER CONSIDERATION, THE ADDITIONS/DISALLOWANCES MADE BY T HE ASSESING OFFICER (AO) AND THE INCOME ASSESSED AS PER THE ASS ESSMENT ORDERS ARE AS UNDER: (I) ASSESSMENT YEAR: 2010-11 (A) RETURNED INCOME - RS.7,79,66,41,380/- (B) DISALLOWANCE OF LICENSE FEE - RS.73,40,98,815/- (C) DISALLOWANCE U/S 14A - RS.16,95,310/- (D) DISALLOWANCE OF DEPRECIATION - RS.20,28,005/- (E) TOTAL ADDITIONS - RS.73,78,22,130/- (F) ASSESSED INCOME - RS.8,53,44,63,510/- (II) ASSESSMENT YEAR: 2011-12 (A) RETURNED INCOME - RS.10,10,12,81,200/- (B) DISALLOWANCE OF LICENSE FEE - RS.90,77,99,068/- (C) DISALLOWANCE U/S 14A - RS.18,33,783/- (D) DISALLOWANCE OF DEPRECIATION - RS.52,55,604/- (E) TOTAL ADDITIONS - RS.91,48,88,455/- (F) ASSESSED INCOME - RS.11,01,61,69,655/- 15. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON (III) ASSESSMENT YEAR: 2012-13 (A) RETURNED INCOME - RS.12,53,68,36,330/- (B) DISALLOWANCE OF LICENSE FEE - RS.1,06,54,85,768/- (C) DISALLOWANCE U/S 14A - RS.31,21,639/- (D) DISALLOWANCE OF DEPRECIATION - RS.2,59,26,734/- (E) TOTAL ADDITIONS - RS.1,09,45,34,141/- (F) ASSESSED INCOME - RS.13,63,13,70,471/- (IV) ASSESSMENT YEAR:2013-14 (A) RETURNED INCOME - RS.12,40,55,72,280/- (B) DISALLOWANCE OF LICENSE FEE - RS.1,17,83,98,395/- (C) DISALLOWANCE U/S 14A - RS.33,42,193/- (D) DISALLOWANCE OF DEPRECIATION - RS.4,50,01,287/- (E) TOTAL DISALLOWANCE - RS.1,22,67,41,872/- (F) ASSESSED INCOME - RS.13,63,23,14,155/- (V) ASSESSMENT YEAR: 2014-15 (A) RETURNED INCOME - RS.15,43,73,93,380/- (B) DISALLOWANCE OF LICENSE FEE - RS.1,25,91,03,440/- (C) DISALLOWANCE U/S 14A - RS.21,18,404/- (D) DISALLOWANCE OF DEPRECIATION - RS.41,66,502/- (E) TOTAL DISALLOWANCE - RS.1,26,53,88,346/- (F) ASSESSED INCOME - RS.16,70,27,81,726/- 16. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON 3.2 IN ALL THE CAPTIONED YEARS, THE ASSESSEE HAD A PPROACHED THE LD. FIRST APPELLATE AUTHORITY AGAINST THE ADDITIONS/DISALLOWANCES MADE IN THE ASSESSMENT ORDER AS STATED IN THE PREVIOUS PARAGRAPHS. 3.3 WITH RESPECT TO THE DISALLOWANCE OF LICENSE FEE , THE LD. CIT (A) HAS DELETED THE ADDITION MADE BY THE ASSESS ING OFFICER IN ALL THE YEARS UNDER APPEAL. THE ASSESSING OFFICER HAD M ADE A DISALLOWANCE OF 40% ON AD HOC BASIS OF THE ROYALTY PAID BY THE ASSESSEE TO SOCIETE DES PRODUITS NESTLE SA FOR THE USE KNOW-HOW AND PROVISION OF TECHNICAL ASSISTANCE ALLEGING TO S AME TO BE EXCESSIVE AND UNREASONABLE AND NOT HAVING BEEN INCU RRED FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE. THE LD. CI T (A) HAS DELETED THE ADDITION BY RELYING ON THE ORDERS OF THE TRIBUN AL AND THE HONBLE DELHI HIGH COURT IN ASSESSEES OWN CASE IN E ARLIER ASST. YEARS. THE DEPARTMENT IS IN APPEAL AGAINST THIS DEL ETION OF DISALLOWANCE BY THE LD. CIT (A) IN ALL THE YEARS BEF ORE US. 3.4 THE SECOND ISSUE UNDER CHALLENGE BY THE DEPART MENT IN ASST. YEARS 2010-11, 2011-12, 2012-13 2013-14 & 201 4-15 IS ACTION OF THE LD. CIT (A) IN DELETING THE ADDITION WITH RESPECT TO 17. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON DEPRECIATION IN RESPECT OF ENERGY SAVING AND POLLUT ION CONTROL EQUIPMENT WHICH HAD BEEN DISALLOWED BY THE AO ON THE GROUND THAT THE EQUIPMENT AND THE DEVICES HAD NOT BEEN PUT TO U SE. 3.5 THE THIRD CONTROVERSY IN THIS BUNCH OF APPEALS IS WHETHER DEPRECIATION ON UPS IS TO BE ALLOWED @ 60% OR 15%. T HE AO HAS TAKEN A VIEW THAT UPS IS A PART OF PLANT AND MACHINE RY AND IS, THEREFORE, ELIGIBLE TO DEPRECIATION ONLY @ 15% WHERE AS IT HAS BEEN THE CONTENTION AND CLAIM OF THE ASSESSEE THAT UPS, BEING AN INTEGRAL PART OF THE COMPUTER, IS ELIGIBLE TO DEPRECIATION @ 60%. IN AY 10-11, THE LD. CIT (A) ALLOWED THE CLAIM OF THE ASSESSEE A ND THE DEPARTMENT IS IN APPEAL BEFORE US WHEREAS IN ASST. Y EAR: 2011-12, THE LD. CIT (A) UPHELD THE ACTION OF THE ASSESSING OFFICER IN RESTRICTING THE DEPRECIATION ON UPS TO 15% AND THE ASSESSEE IN APPEAL AGAINST THE SAID FINDING OF THE LD. CIT (A). 3.6 DISALLOWANCE U/S 14A OF THE ACT READ WITH RULE-8 D IS SUBJECT TO CHALLENGE BY BOTH THE PARTIES DURING THE YEARS UNDER APPEAL. THE DETAILS OF DIVIDEND EARNED BY THE ASSES SEE, SUO MOTO DISALLOWANCE OFFERED BY THE ASSESSEE COMPANY, DISALL OWANCE MADE 18. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON U/S 14A BY THE ASSESSING OFFICER, DISALLOWANCE DELET ED BY LD. CIT (A) AND DISALLOWANCE SUSTAINED BY THE LD. CIT (A) A RE DEPICTED IN THE FOLLOWING CHART: ASST. YEARS DIVIDEND INCOME (IN RS.) DISALLOWANCE OFFERED BY THE COMPANY, ON SUO MOTO BASIS (IN RS.) DISALLOWANCE UNDER 14A MADE BY THE ASSESSING OFFICER [A+B] (IN RS.) DISALLOWANCE OF 14A UNDER RULE 8D(2)(III), DELETED BY CIT(A) [A] DISALLOWANCE OF 14A UNDER RULE 8D(2) (III), SUSTAINED BY CIT(A) [B] (IN RS.) 2010 - 11 3 , 27 , 60,532 11,52,656 16 , 95,310 2 , 43,995 14 , 51,315 2011 - 12 5 , 15 , 55,446 10,02,954 18 , 33,783 75,025 17 , 58,785 2012 - 13 7 , 97 , 78,187 9,64,928 31 , 21,639 48,943 30 , 72,696 2013 - 14 9 , 29 , 02,863 20,13,989 33 , 42,193 1 , 11,033 32 , 31,160 2014 - 15 12 , 02 , 94,974 17,02,026 21 , 18,404 88,002 20 , 30,402 3.6.1 THE BASIC CONTENTION OF THE ASSESSEE AGAINST THE DISALLOWANCE U/S 14A AS SUSTAINED BY THE LD. CIT (A) IS THAT SINCE THE ASSESSEE HAD MADE A SUO MOTO DISALLOWANCE UNDER THE PROVISIONS OF SECTION 14A, THE ASSESSING OFFICER CO ULD NOT HAVE MADE A DISALLOWANCE IN EXCESS OF THE SAID SUO MOTO DISALLOWANCE WITHOUT RECORDING A SATISFACTION AS TO HOW THE ASSESS EES SUO MOTO DISALLOWANCE WAS DEFECTIVE. IT IS ALSO THE ASSESSEES PLEA THAT THE ASSESSING OFFICER COULD NOT HAVE MADE THE DISALLOWAN CE IN ABSENCE OF HIM HAVING ESTABLISHED ANY NEXUS BETWEEN THE AMO UNT OF EXPENDITURE AND THE EXEMPT INCOME EARNED BY THE ASS ESSEE. 3.6.2 ON THE OTHER HAND, THE DEPARTMENT IS CHALL ENGING THE ACTION OF THE LD. CIT (A) IN DELETING THE DISAL LOWANCE MADE IN 19. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON TERMS OF RULE-8D (2)(II) ON THE GROUND THAT SINCE T HE ASSEESEE HAD SURPLUS FUNDS AVAILABLE WITH IT, IT COULD NOT BE INF ERRED THAT THE ASSESSEE HAD UTILIZED BORROWED FUNDS FOR THE PURPOS ES OF MAKING INVESTMENT AND, THEREFORE, NO DISALLOWANCE COULD BE MADE FOR THE INTEREST EXPENDITURE. 4.0 AT THE OUTSET, IT HAS BEEN SUBMITTED BY THE L D. AR THAT ALL THE ISSUES BEFORE US I.E. BOTH IN THE ASSESSEE S APPEALS/ CROSS OBJECTION AND THE DEPARTMENTS APPEALS WERE SQUAREL Y COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR I.E. ASST. YE AR: 2009-10 IN ASSESSEES OWN CASE VIDE ORDER DATED 22.07.2020 IN I TA NO.1954/DEL/2014 BEING THE ASSESSEES APPEAL AND IN ITA 2020/DEL/2014 BEING THE DEPARTMENTS APPEAL. THE LD . AR HAS ARGUED THAT ON IDENTICAL FACTS, THE TRIBUNAL HAS HE LD ALL THE ISSUES IN FAVOUR OF THE ASSESSEE AND, THEREFORE, DETAILED ARGUMENTS WERE NOT REQUIRED ON ANY OF THE ISSUES IN THIS BUNCH OF APPEALS. THE LD. AR DREW THE BENCHES ATTENTION TO THE RELEVANT PARAGR APHS OF THE SAID ORDER OF THE TRIBUNAL AND SUBMITTED THAT THE F INDINGS RECORDED 20. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON BY THE TRIBUNAL IN THE IMMEDIATELY PRECEDING ASST. YEAR: 2009-10 KINDLY BE FOLLOWED IN THESE FIVE YEARS UNDER APPEAL ALSO. 5.0 PER CONTRA, THE LD. CIT-DR FAIRLY ACCEPTED THA T BY AND LARGE ALL THE ISSUES IN THIS BUNCH OF APPEALS STOOD COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL AS AFO RESAID. THE LD. CIT-DR, HOWEVER SUBMITTED THAT SO FAR AS THE FINDIN G OF THE TRIBUNAL WITH RESPECT TO NON RECORDING OF SATISFACTI ON BY THE ASSESSING OFFICER PRIOR TO MAKING THE DISALLOWANCE U /S 14A OF THE ACT WAS CONCERNED, EACH ASST. YEAR WOULD HAVE TO BE E XAMINED SEPARATELY AS THERE IS NO RES-JUDICATA IN INCOME TAX PROCEEDINGS. THE LD. CIT-DR ALSO FAIRLY ACCEPTED THAT DEPRECIATI ON ON UPS WAS ALLOWABLE @ 60% EVEN AS PER THE AMENDED RATES PROVID ED IN THE DEPRECIATION SCHEDULE. 6.0 WE HAVE GONE THROUGH THE RECORDS AND HAVE ALSO PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND HAVE ALSO PERUS ED THE ORDER OF THE ITAT IN ASSESSEES OWN CASE FOR ASST. YEAR: 2009 -10. SO FAR AS THE ISSUE OF DISALLOWANCE U/S 14A READ WITH RULE-8D I S CONCERNED, WHICH IS ALSO RELATED TO THE DEPARTMENTS CHALLENGE TO A PART 21. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON DELETION OF THE DISALLOWANCE BY THE LD. FIRST APPEL LATE AUTHORITY BY HOLDING THAT NO DISALLOWANCE COULD HAVE BEEN MADE IN RESPECT OF INTEREST EXPENSES AS THE ASSESSEE HAD ACCUMULATED S URPLUS, WE FIND THAT THIS ISSUE STANDS COVERED IN FAVOUR OF THE ASS ESEE BY THE ORDER OF THE TRIBUNAL IN ASST. YEAR: 2009-10. THE RELEVAN T OBSERVATIONS OF THE TRIBUNAL ARE CONTAINED IN PARAGRAPHS 7.1, 7.1.1 . THE SAME ARE BEING REPRODUCED HEREIN UNDER FOR A READY REFERENCE : 7.1 AS FAR AS THE ASSESSEES APPEAL IS CONCERNED, GROUND NOS.1, 1.1, 1.2, 1.3 ARE RELATED TO GROUND N O.2 OF THE DEPARTMENTS APPEAL WHEREIN THE ISSUE UNDER DISPUTE PERTAINS TO DISALLOWANCE U/S 14A OF THE ACT. THE AS SESSING OFFICER HAD MADE A DISALLOWANCE OF RS. 39,25,411/- U/S 14A OF THE ACT R.W.RULE-8D OF THE RULES, 1962 AND T HE LD. CIT (A) RESTRICTED THE DISALLOWANCE TO RS.32,93,106 /- BY HOLDING THAT NO DISALLOWANCE COULD HAVE BEEN MADE U NDER THE PROVISIONS OF RULE 8D(2) (II) IN RESPECT OF INT EREST EXPENSES AS THE ASSESSEE COMPANY HAD ACCUMULATED SURPLUS AMOUNTING TO RS.302 CRORES AND GENERAL RESE RVE OF 276 CRORES. THE LD. CIT (A) ALSO OBSERVED THAT THE OPENING BALANCE OF INVESTMENTS WAS RS.85.67 CRORES, AND, TH US, INVESTMENTS SUBJECTED TO RULE-8D WERE NOT BROUGHT F ORWARD FROM EARLIER YEARS. IT WAS ALSO OBSERVED BY THE LD. CIT (A) THAT THE ASSESSING OFFICER COULD NOT DEMONSTRATE TH AT LOANS 22. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON WERE BORROWED FOR MAKING INVESTMENTS IN DIVIDEND YI ELDING ASSETS ONLY. WE FIND NO REASON TO INTERFERE WITH TH IS FACTUAL FINDING OF THE LD. CIT (A). 7.1.1 HOWEVER, IT HAS FURTHER BEEN BROUGHT TO OUR NOTICE THAT IN THE ALTERNATE, THE ASSESSEE HAD SUBMITTED A COMPUTATION BEFORE THE ASSESSING OFFICER WHEREIN IT WAS SUBMITTED THAT THE DISALLOWANCE, IF ANY, COULD NOT EXCEED RS.8,34,934/- BEING THE COSTS OF TREASURY OPERATION S. HOWEVER, IT IS SEEN THAT NEITHER THE ASSESSING OFFI CER NOR THE LD. CIT (A) HAS COMMENTED ON THIS COMPUTATION OF TH E ASSESSEE. THUS, APPARENTLY, THE SATISFACTION, AS CONTEMPLATED AND LAID DOWN BY THE HONBLE DELHI HIG H COURT IN THE CASE OF MAXOPP INVESTMENT LTD. (SUPRA) TO BE RECORDED BY THE ASSESSING OFFICER IS COMPLETELY ABSENT AND, THEREFORE, IN ABSENCE OF THE REQUIRED SATISFACTION, SUCH DISAL LOWANCE COULD NOT HAVE BEEN MADE. HOWEVER, SINCE, THE LD. A R HAS ARGUED THAT THE DISALLOWANCE MAY BE RESTRICTED TO RS.8,34,934/-, WE, ACCORDINGLY, RESTRICT THE DISALL OWANCE TO RS.8,34,934/- AND DIRECT THE AO TO DELETE THE REMAI NING DISALLOWANCE. THUS, GROUND NO.1 OF THE ASSESSEES A PPEAL STANDS PARTLY ALLOWED. 23. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON 6.0.1 WE ALSO NOTE THAT ALTHOUGH THE LD. CIT-DR H AS SUBMITTED THAT THE ISSUE OF RECORDING THE SATISFACT ION HAS TO BE EXAMINED EVERY YEAR AND THAT THERE IS NO RES-JUDICATA IN INCOME TAX PROCEEDINGS, ALL THE SAME, A PERUSAL OF THE ASST. O RDERS FOR THE YEARS UNDER APPEAL SHOWS THAT THE ASSESSING OFFICER HAS MA DE IDENTICAL OBSERVATIONS IN ALL THE YEARS UNDER APPEAL AND IN ALL THE YEARS THE FACTUM OF RECORDING OF SATISFACTION IS COMPLETELY A BSENT. WE ALSO NOTE THAT THE ASSESSEE HAD MADE SUO MOTO DISALLOWANCES IN THE YEARS UNDER APPEAL AS UNDER: 2010-11 RS.11,52,656/- 2011-12 RS.10,02,954/- 2012-13 RS.9,64,928/- 2013-14 RS.20,13,989/- 2014-15 RS.17,02,026/- 6.0.2 THE ABOVE SUO MOTO DISALLOWANCES WERE NOT COMMENTED UPON BY THE ASSESSING OFFICER BUT WERE COM PLETELY DISREGARDED AND NO SATISFACTION FOR NOT ACCEPTING T HE SUO MOTO DISALLOWANCES WAS RECORDED BY THE AO. THE LD. AR HAS ALSO SUBMITTED THAT THE DISALLOWANCES MAY BE RESTRICTED T O THE SUO MOTO DISALLOWANCE OFFERED BY THE ASSESSEE COMPANY. THEREF ORE, WE 24. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON SUSTAIN THE DISALLOWANCE U/S 14A, AS OFFERED BY THE ASSESSEE COMPANY FOR THE VARIOUS YEARS UNDER APPEAL AS UNDER : 2010-11 RS.11,52,656/- 2011-12 RS.10,02,954/- 2012-13 RS.9,64,928/- 2013-14 RS.20,13,989/- 2014-15 RS.17,02,026/- 6.0.3 ACCORDINGLY, THE GROUND RAISED BY THE ASSES SEE STANDS PARTLY ALLOWED AND GROUNDS RAISED BY THE DEP ARTMENT ARE DISMISSED WITH RESPECT TO DISALLOWANCE U/S 14A IN AL L THE FIVE YEARS UNDER CONSIDERATION. 6.1 THE NEXT ISSUE UNDER CHALLENGE BY THE DEPARTM ENT IS THE ACTION OF THE LD. CIT (A) IN DELETING THE AD HOC DISALLOWANCE @ 40 % OF THE LICENSE FEE PAID BY THE ASSESSEE COMPAN Y TO M/S SOCIETE DES PRODUTIS NESTLE, SA SWITZERLAND. THE ASSESSING O FFICER MADE THE FOLLOWING DISALLOWANCE IN RESPECT OF THE LICENSE FEE FOR THE DIFFERENT YEARS UNDER CONSIDERATION: ASST. YEARS. LICENSE FEE 2010-11 RS.73,40,98,815/- 2011-12 RS.90,77,99,068/- 2012-13 RS.1,06,54,85,768/- 2013-14 RS.1,17,83,98,395/- 2014-15 RS.1,25,91,03,440/- 25. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON 6.2 THE LD. CIT (A), HOWEVER, DELETED THE DISALLOWA NCE BY RELYING ON VARIOUS ORDERS OF THE HONBLE HIGH COURT AND THE TRIBUNAL IN ASSESSEES OWN CASE. IT IS SEEN THAT THI S ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE O RDERS OF THE HONBLE HIGH COURT AND THE TRIBUNAL IN ASSESSEES O WN CASE IN EARLIER ASST. YEARS. WE ALSO NOTE THAT THIS ISSUE WA S ALSO DECIDED IN FAVOUR OF THE ASSESSEE BY DISMISSING THE DEPARTMENT S GROUND IN IMMEDIATELY PRECEDING ASST. YEAR: 2009-10 BY A CO-O RDINATE BENCH OF THIS TRIBUNAL. THE RELEVANT OBSERVATIONS OF THE ITAT IN THIS REGARD ARE CONTAINED IN PARAGRAPHS 7.4, 7.4.1 & 7.4.2 OF T HE SAID ORDER AND THE SAME ARE REPRODUCED HERE IN UNDER FOR A READY R EFERENCE: 7.4 COMING TO THE REMAINING ISSUES IN THE DEPARTMENTS APPEAL, GROUND NO.1 CHALLENGES THE ACT ION OF THE LD. CIT (A) IN DELETING THE ADDITION OF RS.61,01,74 ,000/- MADE ON ACCOUNT OF LICENSE FEE. IT IS SEEN THAT THE ASSE SSING OFFICER, FOLLOWING THE ORDER OF HIS PREDECESSOR FOR THE IMME DIATELY PRECEDING ASSESSMENT YEAR 2008-09, DISALLOWED ON AD HOC BASIS 40% OF THE GENERAL LICENSE FEE PAID BY THE AS SESSEE TO M/S SOCIETE DES PRODUTIS NESTLE, S.A. SWITZERLAND F OR USE FOR KNOW-HOW AND TECHNICAL ASSISTANCE, ALLEGING THAT TH E SAME WAS EXCESSIVE AND NOT REASONABLE AND HAD NOT BEEN INCUR RED FOR THE 26. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON PURPOSES OF BUSINESS OF THE ASSESSEE. THE LD. CIT ( A) ON APPEAL, RELYING ON THE VARIOUS ORDERS OF THE HONBLE HIGH C OURT AND THE TRIBUNAL IN ASSESSEES OWN CASE DELETED THE DISALLO WANCE. 7.4.1 IT IS SEEN THAT THIS ISSUE IS COVERED IN FA VOUR OF THE ASSESSEE BY THE FOLLOWING ORDERS OF THE HONBLE HIGH COURT AND THE TRIBUNAL RENDERED IN ASSESSEES CASE IN THE EARLIER ASSESSMENT YEARS AS UNDER: ASSESSMENT YEARS AUTHORITY PASSING ORDER APPEAL NO. DATE OF ORDER 1997-98 ITAT ITA NO.4545/DEL/2000 10.01.2005 1998-99 ITAT ITA NO.2239/DEL/2002 10.01.2005 1999-00 ITAT ITA NO.2755/DEL/2003 30.04.2007 2000-01 ITAT ITA NO.2714/DEL/2004 15.06.2007 2001-02 ITAT ITA NO.1979/DEL/2006 27.03.2009 2002-03 ITAT ITA NO.1980/DEL/2006 27.03.2009 2003-04 ITAT ITA NO.1612/DEL/2007 24.07.2009 2004-05 ITAT ITA NO.3096/DEL/2007 24.07.2009 2005-06 ITAT ITA NO.319/DEL/2010 22.03.2010 2006-07 ITAT ITA NO.4477/DEL/2010 18.11.2011 2007-08 ITAT ITA NO.4669/DEL/2012 03.01.2014 2008-09 ITAT ITA NO.4670/DEL/2012 03.01.2014 1997-98 TO 2000-01 AND 2005-06 DELHI HIGH COURT ITA NO.662/2005, ITA NO.1202/2005, ITA NO.96/2008, ITA NO.294/2008, ITA NO.288/2011, 11.05.2011 2006-07 DELHI HIGH COURT ITA NO.644/2012 21.11.2012 2007-08 DELHI HIGH COURT ITA NO.502/2014 10.09.2014 2008-09 DELHI HIGH COURT ITA NO.532/2014 10.09.2014 7.4.2 THE LD. CIT-DR ALSO COULD NOT CONTROVERT THI S FACT. THEREFORE, IN VIEW OF THE BINDING JUDICIAL PRECEDEN TS IN ASSSESSEES OWN CASE AS ENUMERATED ABOVE, WE FIND N O REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT (A) O N THE ISSUE. 27. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON ACCORDINGLY, GROUND NO.1, OF THE DEPARTMENTS APPEA L STANDS DISMISSED. 6.2.1 ACCORDINGLY, IN VIEW OF THE ABOVE BINDING JUD ICIAL PRECEDENTS IN ASSEESSEES OWN CASE AND ON IDENTICAL FACTS, WE UPHOLD THE FINDINGS OF THE LD. CIT (A) ON THE ISSUE AND DISMISS THE GROUND RAISED BY THE DEPARTMENT VIS A VIS LICENSE FEE IN ALL THE YEARS UNDER CONSIDERATION. 6.3 THE NEXT ISSUE BEFORE US IS THE RATE OF D EPRECIATION TO BE ALLOWED ON UPS. THE ASSESSEE HAS CLAIMED DEPRECA TION @ 60% IN ALL THE YEARS UNDER APPEAL WHEREAS THE AO HAS RESTRI CTED THE SAME TO 15% IN AY 2010-11 AND 2011-12. IN ASST. YEARS: 2010-11, THE LD. CIT (A) DELETED THE DISALLOWANCE BUT IN ASST. YE AR 2011-12 THE LD. CIT (A) HAS UPHELD THE DISALLOWANCE. WE NOTE THA T THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY NUMER OUS ORDERS OF THE TRIBUNAL AS WELL AS OF THE HONBLE DELHI HIGH CO URT. EVEN IN ASST. YEAR: 2009-10, THE TRIBUNAL, IN ASSESSEES OWN CASE HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY UPHOLDIN G THE ORDER OF THE LD. CIT (A) ON THE ISSUE. THE RELEVANT OBSERVAT IONS OF THE 28. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON TRIBUNAL ARE CONTAINED IN PARAGRAPH 7.5 OF THE SAID ORDER WHICH ARE AS UNDER: 7.5 GROUND NO.3 OF THE DEPARTMENTS APPEAL CHALLENGES THE ACTION OF THE LD. CIT (A) IN DELETIN G THE DISALLOWANCE OF RS.1,39,152/- MADE BY THE ASSESSING OFFICER BY RESTRICTING THE CLAIM OF DEPRECIATION IN RESPECT OF UPS FROM 60% TO 15%. THE LD. CIT-DR AS FAIRLY ACCEP TED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. BSES RAJDHANI POWER LIMITED IN ITA NO.1266/2010 VIDE ORDER DATED 31.08.2010 AND CIT VS. BSES YAMUNA POWE R LTD. VIDE ORDER DATED 31.08.2010. IT IS SEEN THAT T HE HONBLE DELHI HIGH COURT HAS HELD THAT UPS IS TO BE CONSIDE RED AS AN INTEGRAL PART OF THE COMPUTERS AND DEPRECIATION IS TO BE ALLOWED @ 60%. ACCORDINGLY, IN VIEW OF THE SETTLED LEGAL POSITION, WE FIND NO REASON TO INTERFERE WITH THE F INDINGS OF THE LD. CIT (A) ON THIS ISSUE ALSO AND DISMISS GROU ND NO.3 OF THE DEPARTMENTS APPEAL. 6.3.1 WE ALSO NOTE THAT NOW EVEN THE DEPRECIATION SCHEDULE PROVIDES DEPRECIATION ON UPS @ 60%. THUS, THE CONTROVERSY IS NOW SETTLED BY THE AMENDMENT IN THE D EPRECIATION SCHEDULE ITSELF. ACCORDINGLY, IN ASST. YEAR 2010-11 WE DISMISS THE GROUND RAISED BY THE DEPARTMENT AND IN ASST. YEAR: 2011-12 WE ALLOW THE GROUND RAISED BY THE ASSESEE WITH RESPECT T O DEPRECIATION 29. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON ON UPS AND DIRECT THAT THE ASSESSEE SHOULD BE GIVEN BENEFIT OF DEPRECIATION ON UPS @ 60%. 6.4 THE ONLY ISSUE NOW REMAINING IN THE BUNCH OF APPEALS IS DEPRECIATION ON POLLUTION CONTROL EQUIPMENT AND ENERGY SAVING DEVICES. THE ASSESSING OFFICER HAS DENIED DEPRECIAT ION ON POLLUTION CONTROL EQUIPMENT AND ENERGY SAVING DEVICES ON THE GROUND THAT THE ASSESSEE COULD NOT ESTABLISH THAT THE POLLUTION CON TROL EQUIPMENT AND ENERGY SAVING DEVICES WERE PUT TO USE BY THE AS SESSEE. THE FOLLOWING DISALLOWANCES WERE MADE BY THE ASSESSING OF FICER IN RESPECT OF DEPRECIATION ON SUCH EQUIPMENT AND DEVIC ES IN THE YEARS UNDER APPEAL AS UNDER: ASST. YEARS. DISALLOWANCE OF LICENSE FEE DISALLOWANCE OF DEPRECIATION ON POLLUTION CONTROL EQUIPMENT (IN RS.) 2010-11 73,40,98,815 17,27,059 2011-12 90,77,99,068 17,27,059 2012-13 1,06,54,85,768 2,59,26,734 2013-14 1,17,83,98,395 4,50,01,287 2014-15 1,25,91,03,440 41,66,502 30. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON 6.4.1 HOWEVER, THE LD. CIT (A) HAS DELETED THESE DISALLOWANCES IN ALL THE YEARS UNDER CONSIDERATION B EFORE US. WE NOTE THAT THIS ISSUE IS ALSO COVERED IN FAVOUR OF T HE ASSESSEE BY THE ORDER OF THE CO-ORDINATE BENCH OF THE ITAT IN ASSES SEES OWN CASE FOR ASST. YEAR: 2009-10 WHEREIN THE TRIBUNAL HAS UPH ELD THE FINDINGS OF THE LD. CIT (A) IN DELETING THE SAID DE PRECIATION DISALLOWANCE MADE BY THE ASSESSING OFFICER. THE RELE VANT FINDINGS OF THE TRIBUNAL ARE CONTAINED IN PARAGRAPH 7.6 OF THE ORDER OF THE ITAT AND THE SAME IS BEING REPRODUCED HEREIN UNDER FOR A READY REFERENCE: 7.6 GROUND NO.4 OF THE DEPARTMENTS APPEAL CHALLENGES THE ACTION OF THE LD. CIT (A) IN DELETIN G THE DISALLOWANCE OF RS. 33,90,330/- MADE BY THE ASSESSI NG OFFICER BY DENYING THE CLAIM OF THE DEPRECIATION IN RESPECT OF ENERGY SAVING AND POLLUTION CONTROL EQUIPMENT ON TH E GROUND THAT IT WAS NOT PUT TO USE. IT IS SEEN THAT THE ASS ESSING OFFICER DISALLOWED THE CLAIM OF DEPRECIATION BY ALLEGING TH AT THE ASSESSEE HAS ONLY ESTABLISHED THE FACTUM OF PURCHAS E OF ASSETS AND NOT THE CONDITION OF ASSESTS BEING PUT T O USE. THE ASSESSING OFFICER FURTHER OBSERVED THAT COMPARATIVE RESULTS WERE NOT SUBMITTED TO ESTABLISH THAT ASSETS WERE EN ERGY SAVING AND POLLUTION CONTROL EQUIPMENT. IT IS ALSO SEEN THAT NO ADVERSE OBSERVATION HAD BEEN MADE BY THE ASSESSING OFFICER WITH RESPECT TO THE PURCHASE AND INSTALLATION OF SU CH ASSETS. IN ADDITION TO THIS, THE ASSESSEE HAD ALSO SUBMITTE D 31. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON CERTIFICATES FROM CHARTERED ENGINEERS TO THE EFFECT THAT THE ASSETS PURCHASED FALL WITHIN THE CATEGORY OF AIR PO LLUTION CONTROL EQUIPMENT, WATER CONTROL EQUIPMENT, ENERGY SAVING DEVICES AND RENEWABLE ENERGY DEVICES. THESE CERTIFI CATES SUBMITTED BY THE ASSESSEE HAVE BEEN TAKEN NOTE OF B Y THE ASSESSING OFFICER BUT HAVE NOT BEEN COMMENTED UPON. IT IS NOT IN DISPUTE THAT THE ASSETS FALL WITHIN THE DESCRIPT ION OF THE ASSETS REFERRED TO IN THE INCOME TAX RULES WHICH CO NTAINS THE DEPRECATION SCHEDULE. THE ONLY OBJECTION OF THE ASS ESSING OFFICER SEEMS TO BE THAT THE ASSETS HAD NOT BEEN PU T TO USE AND THAT THE ASSESSEE COULD NOT FURNISH COMPARATIVE RESULTS. HOWEVER, PROVISIONS OF SEC.32 OF THE ACT DO NOT MAN DATE SUCH REQUIREMENT. TO ASSUME THAT HAVING PURCHASED AND IN STALLED THE ENERGY SAVING DEVICES AND POLLUTION CONTROL EQU IPMENT BUT NOT PUTTING THE SAME TO USE IS, THUS, JUST A BASELE SS SURMISE AND CONJECTURE WHICH STANDS NEGATED BY THE CERTIFIC ATES FROM THE CHARTERED ENGINEERS. THEREFORE, IT IS OUR CONSI DERED OPINION THAT THE LD. CIT (A) WAS ABSOLUTELY CORRECT IN HOLDING THAT HAVING INSTALLED THE DEVICES, THE ASSESSEE HAD EXTENSIVELY PUT THE ASSETS TO USE FOR THE PURPOSES OF BUSINESS AND THAT UNDER THE LAW, THE ASSESSEE WAS NOT REQUIR ED TO MONITOR THE OUTCOME OF USE OF SUCH ITEMS IN ITS BUS INESS. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. INS ILCO LTD. REPORTED IN 2009 ITOL 115-HC-DEL HAD HELD THAT IT W OULD BE MORE APPROPRIATE TO UNDERSTAND THE EXPRESSION USE AS COMPREHENDING CASES WHERE THE MACHINERY IS KEPT REA DY BY THE OWNER FOR ITS USE IN ITS BUSINESS. THEREFORE, W E FIND NO REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CI T (A) ON THIS ISSUE ALSO AND WE DISMISS GROUND NO.4 OF THE DEPART MENTS APPEAL. 32. ITA NO.4916 /DEL/2014 & ORS DCIT (LTU) VS. NES TLE INDIA LTD. GURGAON 6.4.2 THEREFORE, IN VIEW OF THE FINDINGS OF THE CO -ORDINATE BENCH IN ASSESSEES OWN CASE FOR ASST. YEAR: 2009-10 AS AFORESAID, WE DISMISS THE GROUND RAISED BY THE DEPARTMENT ON TH E ISSUE OF DISALLOWANCE OF DEPRECIATION ON POLLUTION CONTROL EQ UIPMENT AND ENERGY SAVING DEVICES IN ALL THE FIVE YEARS UNDER A PPEAL. 7.0 IN THE FINAL RESULT, THE FOUR APPEALS OF T HE ASSESSEE AND THE CROSS OBJECTION OF THE ASSESSEE STANDS PARTLY A LLOWED AND ALL THE FIVE APPEALS OF THE DEPARTMENT STAND DISMISSED. ORDER PRONOUNCED ON 31/07/2020. SD/- SD/- (R.K.PANDA) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31/07/2020 PK/PS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI