ACIT, Coimbatore V. CRI Pumps Pvt. Ltd., Coimbatore

ITA 67/CHNY/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4609 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2017
• Appeal Filed By: Department
• Bench Allotted: D
• Next Hearing Date: 26-04-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 10-01-2017
• Court: TRIBUNAL
• Department Lawyers: A S SRIRAMAN
• Keywords: Depreciation; Transfer pricing; Additional depreciation; Revenue expenditure
• Section: 143(3); 32

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , . , # $ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO. 3496/MDS/2016 / ASSESSMENT YEAR : 2012-13 M/S. CRI PUMPS P. LTD. 7/46-1, KEERANANTHAM ROAD, SARAVANAMPATTY, COIMBATORE 641 035. [PAN: AAACG 9497N] VS. THE ADDITIONAL COMMISSIONER OF INCOME TAX, CORPORATE RANGE, COIMBATORE. ./ I.T.A. NO. 67/MDS/2017 / ASSESSMENT YEAR : 2012-13 THE ADDITIONAL COMMISSIONER OF INCOME TAX, CORPORATE RANGE, COIMBATORE. VS. M/S. CRI PUMPS P. LTD. 7/46-1, KEERANANTHAM ROAD, SARAVANAMPATTY, COIMBATORE 641 035. [PAN: AAACG 9497N] ( / APPELLANT) ( / RESPONDENT) & ' / APPELLANT BY : SHRI A.S. SRIRAMAN, ADVOCATE *+& ' / RESPONDENT BY : SHRI GURUBASHYAM, JCIT ' /DATE OF HEARING : 26.04.2017 ' /DATE OF PRONOUNCEMENT : 04.05.2017 :-2-: I.T.A. NO. 3496/MDS/2016 & 67/MDS/2017 /O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THESE ARE THE CROSS APPEALS FILED BY THE ASSESSEE A ND THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1, COIMBATORE IN ITA NO. 199/15-16 DATED 28.10.2016 PA SSED U/S. 143(3) R..W.S. 92CA(3) OF THE INCOME TAX ACT. SINCE, THE ISSUES A RE COMMON, THE APPEALS ARE HEARD TOGETHER AND DISPOSED OFF BY THE COMMON O RDER. FOR THE SAKE OF CONVENIENCE, WE TAKE UP THE ASSESSEES APPEAL IN IT A NO. 3496/MDS/2016 AND FACTS NARRATED. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 2. THE CIT (APPEALS) ERRED IN SUSTAINING THE DISALL OWANCE OF THE CLAIM OF ADDITIONAL DEPRECIATION TO THE EXTENT OF R S.9,40,35,661/- IN TERMS OF SECTION 32(1)(IIA) OF THE ACT AND CONSEQUE NTLY ERRED IN SUSTAINING THE ADDITION OF SUCH SUM IN THE COMPUTAT ION OF TAXABLE TOTAL INCOME WITHOUT ASSIGNING PROPER REASONS AND J USTIFICATION. 3. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE CONDITIONS PRESCRIBED U/S 32(1)(IIA) OF THE ACT WERE COMPLIED WITH CONCURRENTLY AND OUGHT TO HAVE APPRECIATED THAT THE APPELLATE OR DERS FOR THE EARLIER ASSESSMENT YEARS IN THE PRESENT CASE HAD NO T REACHED FINALITY, THEREBY VITIATING THE MECHANICAL DISALLOW ANCE OF SUCH CLAIM IN THE COMPUTATION OF TAXABLE TOTAL INCOME. :-3-: I.T.A. NO. 3496/MDS/2016 & 67/MDS/2017 4. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE MISCONSTRUCTION OF THE AMENDMENT BOUGHT IN BY THE F INANCE ACT, 2015 IN PARA 5.7 OF THE IMPUGNED ORDER WOULD VITIAT E THE DECISION RENDERED IN RELATION THERETO. 5. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE RE WAS NO PROPER OPPORTUNITY GIVEN BEFORE PASSING OF THE IMPU GNED ORDER AND ANY ORDER PASSED IN VIOLATION OF THE PRINCIPLES NAT URAL JUSTICE WOULD BE NULLITY IN LAW. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS IN THE BUSINESS OF MANUFACTURING OF SALE OF PUMPS AND MATE RIALS IN THE BRAND NAME OF CRI AND FILED THE RETURN OF INCOME FOR THE ASSES SMENT YEAR 2012-13 ON 28.11.2013 WITH TOTAL INCOME OF RS. 15,39,53,460/-U NDER NORMAL PROVISIONS AND RS. 29,44,34,166/- UNDER MAT PROVISIONS. SUBSE QUENTLY, THE ASSESSEE FILED REVISED THE RETURN OF INCOME WITH THE TOTAL I NCOME OF RS. 15,92,18,540/- AND THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS A ND NOTICE U/S. 143(2) OF THE ACT WAS ISSUED. IN COMPLIANCE TO NOTICE, LD. A R APPEARED FROM TIME TO TIME AND PRODUCED BOOK OF ACCOUNTS AND SUBMITTED TH E RELEVANT DOCUMENTS AND THE ASSESSEE ALSO FILED THE WRITTEN SUBMISSIONS . THE ASSESSING OFFICER FOUND THAT THE ASSESSEE COMPANY HAS INTERNATIONAL T RANSACTIONS ON MARKETING AND CONSULTANCY CHARGES WITH ASSOCIATED ENTERPRISES FOR A VALUE OF RS. 42,16,68,136/- AND THE CASE WAS REFERRED TO TPO. T HE LD.TPO PASSED ORDER U/S. 92CA(3) OF THE ACT DATED 20.04.2015 AND FOUND THAT NO ADJUSTMENT IS :-4-: I.T.A. NO. 3496/MDS/2016 & 67/MDS/2017 NECESSARY FOR THE VALUE OF INTERNATIONAL TRANSACTIO NS AND ACCEPTED THE SUBMISSIONS OF THE ASSESSEE ON TRANSFER PRICING. 3.1 WHEREAS, THE ASSESSING OFFICER ON PERUSAL OF TH E FINANCIAL STATEMENTS FOUND THAT THE ASSESSEE HAS PAID AN AMOU NT OF RS. 3,45,40,146/- AS ROYALTY TO M/S. CRI AMALGAMATIONS PVT. LTD, THE HOLDING COMPANY. THE LD. AO FIND THAT THE ASSESSEE HAS PAID THE EXCESS ROYAL TY CHARGES TO ITS HOLDING COMPANY AND DISCUSSED AT PARA 4.1 TO 4.4 OF THE ORD ER AND DISALLOWED THE ROYALTY PAYMENT OF RS 3,45,40,146/- UNDER PROVISION S OF SECTION 40A(2)(B) OF THE ACT AND FURTHER MADE DISALLOWANCE OF ADDITIONAL DEPRECIATION CLAIMED BY THE ASSESSEE UNDER PROVISIONS OF SECTION 32(1)(IIA) OF THE ACT REFERRED AT PAGE 5 TO 9 OF HIS ORDER AND CONCLUDED THAT THE ASSESSEE IS NOT ENTITLED FOR ADDITIONAL DEPRECIATION ON THE OPENING BALANCE AS O N 01.04.2011 AND DISALLOWED RS. 9,40,35,661/- AND PASSED ASSESSMENT ORDER U/S. 143(3) R.W.S. 92CA OF THE ACT DATED 22.02.2016. 4. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN AP PEAL WITH THE CIT(A). IN THE APPELLATE PROCEEDINGS, THE LD. AR A RGUED THE GROUNDS AND SUBMITTED THAT THE ROYALTY PAYMENTS ARE MADE BY THE ASSESSEE TO ITS HOLDING COMPANY CRI AMALGAMATION LTD. FROM LAST THREE DECAD ES. THE LD. AR SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF TH E ASSESSEE IN ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEAR 2009-10 IN ITA NO. 1017/MDS/2012, :-5-: I.T.A. NO. 3496/MDS/2016 & 67/MDS/2017 2318/MDS/2014 & 1872/MDS/2013 DATED 16.11.2016 AND THE LD. CIT(A) RELIED ON THE ORDERS OF THE TRIBUNAL AND DECIDED THAT THE ROYALTY PAYMENT IS ELIGIBLE FOR DEDUCTION AND DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION. BUT, THE LD. CIT(A) CONFIRMED THE CLAIM OF ADDITIONAL DE PRECIATION WHICH WAS AGAINST THE ASSESSEES IN ITS OWN CASE FOR THE ASSE SSMENT YEAR 2009-10 IN APPEAL NO. 105/12-13 DATED 20.08.2013 FOR THE ASSES SMENT YEAR 2011-12, IN APPEAL NO. 62/14-15 DATED 20.02.2015 AND ASSESSMENT YEAR 2011-12 IN APPEAL NO. 23/15-16 DATED 28.01.2016 AND JUSTIFIED THE ACTION OF THE ASSESSING OFFICER AND PARTLY ALLOWED THE APPEAL. 5. AGGRIEVED BY THE CIT(A) ORDER, THE ASSESSEE FILE D AN APPEAL WITH THE TRIBUNAL. BEFORE US, THE LD. AR ARGUED THAT THE CI T(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF CLAIM ON ADDITIONAL DEPRECIATION RS. 9,40,35,661/- IN TERMS OF SECTION 32(1)(IIA) OF THE ACT AND ERRED IN SUSTAINING THE ADDITION AND FURTHER FAILED TO APPRECIATE THAT THE APPELLATE ORDER FOR THE SAID ASSESSMENT YEARS RELIED ARE NOT REACHED THE FI NALITY AND PRAYED FOR ALLOWING THE APPEAL. CONTRA, THE LD. DR RELIED ON THE ORDERS OF THE CIT(A) AND THE ASSESSEES OWN CASE, WHERE THE DISALLOWANCE OF ADDITIONAL DEPRECIATION WAS CONFIRMED. 6. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATE RIAL ON RECORD AND JUDICIAL DECISIONS. THE DISPUTED ISSUE ON ADDITION AL DEPRECIATION IS AGAINST THE ASSESSEE AS DECIDED BY THE CO-ORDINATE BENCH OF TH IS TRIBUNAL IN ASSESSEES :-6-: I.T.A. NO. 3496/MDS/2016 & 67/MDS/2017 OWN CASE IN ITA NO. 1017/MDS/2012 & OTHERS DATED 16 .11.2016 AT PAGE 6 PARA 2.7 AS UNDER: 2.7 WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIAL S ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HA VE ALSO PERUSED THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR TH E ASSESSMENT YEAR 2010-11 DATED 28.08.2015 WITH REGARD TO THE CLAIM O F ADDITIONAL DEPRECIATION, WHEREIN THE TRIBUNAL HAS OBSERVED AND HELD AS UNDER: 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS RELAT ING TO CLAIM OF ADDITIONAL DEPRECIATION. IN THE ASSESSMENT ORDER , THE ASSESSING OFFICER HAS OBSERVED AS UNDER: 4(II). THE ASSESSEE COMPANY HAS CLAIMED ADDITIONAL DEPRECIATION ON PLANT AND MACHINERY ACQUIRED AND INSTALLED IN THE PRECEDING YEARS OTHER THAN THE NEW MACHINERY ACQUIRED AND INSTALLED DURING THE PREVIOUS YEAR. AS PER THE PROVISIONS OF SECTION 32 (1)(II)(A), NO DEDUCTION IS ALLOWABLE T O ANY PLANT AND MACHINERY, THE WHOLE OR THE ACTUAL COST OF WHICH IS ALLOWED AS DEDUCTION WHETHER BY WAY OF DEPRECIATION OR OTHERWISE, IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION OF ANY ONE PREVIOUS YEAR . THE ADDITIONAL DEPRECIATION U/S 32 IS ELIGIBLE ONLY TO ANY NEW MACHINERY OR PLANT ACQUIRED AND INSTALLED BY AN ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURE AND PRODUCTION OF ANY ARTICLE OR THING IN THE PREVIOUS YEAR RELEVANT TO THE RESPECTIVE ASSESSMENT YEAR. ONCE A NEW MACHINERY OR PLANT ACQUIRED AND INSTALLED IN A YEAR AND CLAIMED :-7-: I.T.A. NO. 3496/MDS/2016 & 67/MDS/2017 DEPRECIATION AND ADDITIONAL DEPRECIATION FOR THE YE AR OF INSTALLATION, THE ASSESSEE IS NOT ELIGIBLE FOR ADDITIONAL DEPRECIATION IN THE SUBSEQUENT YEAR SINC E THE PLANT AND MACHINERY LOST ITS CHARACTER OF NEW PLANT AND MACHINERY. THE ASSESSEE IS ELIGIBLE FOR ADDITIONAL DEPRECIATION ONLY TO THE NEW PLANT AND MACHINERY ACQUIRED AND INSTALLED DURING THE PREVIOU S YEAR. THE ADDITIONAL DEPRECIATION IS ONLY ELIGIBLE TO THE NEW PLANT AND MACHINERY ACQUIRED AND INSTALLED DURING A GIVEN YEAR AND CANNOT BE EXTENDED TO SUBSEQUENT YEARS AS SUCH PLANT AND MACHINERY WILL NOT QUALIFY FOR ADDITIONAL DEPRECIATION SINCE IT WA S NO LONGER NEW MACHINERY IN THE SUBSEQUENT YEARS. THE ADDITIONAL DEPRECIATION IS INTRODUCED BY THE LEGISLATURE IN ORDER TO PROMOTE INDUSTRIES AS ONE TIME MEASURE IN THE YEAR OF INSTALLATION BY PROVIDI NG OVER AND ABOVE THE NORMAL ENTITLED DEPRECIATION ON PLANT AND MACHINERY. THE FINANCE ACT 2002 PROVIDED ADDITIONAL DEPRECIATION AT THE RATE OF 15% AND THE FINANCE (NO.2) ACT 2004 PROVIDED 20% ADDITIONAL DEPRECIATION TO THE NEW PLANT AND MACHINERY ACQUIRED AND INSTALLED. THE VERY SAME WAY THE FINANCE ACT 2005 ALSO PROVIDED 20% ADDITIONAL DEPRECIATION TO THE NEW PLANT AND MACHINERY. ALL TH E ABOVE REFERRED AMENDMENTS INSISTED AND HIGHLIGHTED THE ACQUISITION AND INSTALLATION OF NEW MACHINERY O R PLANT AN SPECIFICALLY POINTED OUT THAT NO DEDUCTION IS ELIGIBLE TO ANY PLANT OR MACHINERY, WHOLE OF THE ACTUAL COST TO WHICH IS ALLOWED AS A DEDUCTION :-8-: I.T.A. NO. 3496/MDS/2016 & 67/MDS/2017 (WHETHER BY WAY OF DEPRECIATION OR OTHERWISE) IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION OF AN Y ONE PREVIOUS YEAR. IT IS PERTINENT TO POINT OUT THA T THE ADDITIONAL DEPRECIATION IS ELIGIBLE ONLY TO NEW MACHINERY, OR PLANT ACQUIRED OR INSTALLED AND NOT AVAILED ANY DEDUCTION BY WAY OF DEPRECIATION OR OTHERWISE IN THE YEAR OF SUCH MACHINERY OR PLANT PU T INTO USE BY AN ASSESSEE. THIS ISSUE WAS PRESENT IN THE A.Y. 2008-09 & 2009-10 ALSO IN THE CASE OF ASSESSEE COMPANY AND DISALLOWANCE WAS MADE. FURTHER, CIT (A) AS WELL AS ITAT, CHENNAI BENCH HAS UPHELD THIS DISALLOWANCE AND ASSESSEE COMPANY HAS PREFERRED APPEAL BEFORE THE HIGH COURT OF MADRAS. THEREFORE, FOR THE CURRENT YEAR ALSO DISALLOWANCE O F CLAIM OF ADDITIONAL DEPRECIATION IS MADE. 3. ON APPEAL, THE LD. CIT(A), BY FOLLOWING HIS OWN DECISIONS FOR THE EARLIER ASSESSMENT YEARS 2008-09 AND 2009- 10 IN ASSESSEES OWN CASE, DISMISSED THE GROUND RAI SED BY THE ASSESSEE. 4. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW. THE LD. CIT(A), BY FOLLOWING HIS OWN DECISIONS FOR THE EARLIER ASSESSMENT YEARS, HAS OBSERVED AS UNDER: 9. I HAVE GONE THROUGH THE SUBMISSIONS MADE BY THE APPELLANT AND ALSO THE ORDER OF THE ASSESSING OFFICER. FOR THE ASST. YEAR 2008-09 THE SAME ISSUE WAS DEALT ELABORATE BY ME IN MY APPELLATE ORDER IN ITA NO. 213/10-11 DATED 08.03.2012 AND DECIDED IN :-9-: I.T.A. NO. 3496/MDS/2016 & 67/MDS/2017 FAVOUR OF THE REVENUE. SUBSEQUENTLY FOR THE ASST. YEAR 2009-10, ON THE SAME ISSUE IN ITA NO. 105/12- 13 DATED 20.08.2013, THE GROUND OF APPEAL WAS DECIDED AGAINST THE ASSESSEE. FOLLOWING MY EARLIER ORDERS FOR THE ASST. YEAR 2008-09 AND 2009-10, I CONFIRM THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WITH REGARD TO ADDITIONAL DEPRECIATION. THI S GROUND OF APPEAL IS DISMISSED. 5. SIMILAR ISSUE HAS BEEN RAISED BEFORE THE TRIBUNA L IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007-08 IN I.T.A. NO.1824 & 1825/MDS/2010 VIDE ORDER DATED 04.04.2013, WHEREIN THE TRIBUNAL HAS OBSERVED AS UN DER: 8. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. THERE IS NO DISPUTE THAT THE ADDITIONA L DEPRECIATION CLAIMED BY THE ASSESSEES, FOR IMPUGNED ASSESSMENT YEAR, WERE ON MACHINERY ALREADY ACQUIRED DURING THE YEARS 2002-03 TO 2004-05 AND 2005-06. THUS, IN THE PREVIOUS YEAR RELEVANT TO IMPUGNED ASSESSMENT YEAR, THE MACHINERY WERE NO MORE NEW. CLAIM OF THE ASSESSEES IS THAT UNDER SECTION 32(1)( IIA) OF THE ACT, ADDITIONAL DEPRECIATION FOR NEW PLANT A ND MACHINERY ACQUIRED WAS AVAILABLE IN EVERY YEAR AFTE R ITS INSTALLATION IF SUCH INSTALLATION HAPPENED AFTE R 31ST MARCH, 2005. SAID CLAUSE (IIA) OF SECTION 32(1) IS REPRODUCED HEREUNDER:- 32 (1) IN RESPECT OF DEPRECIATION OF . . . . . . . . . . . . . . . .. . .. .. .. .. . . . . . . . . . .. .. . . . . . . . . . . :-10-: I.T.A. NO. 3496/MDS/2016 & 67/MDS/2017 (IIA) IN THE CASE OF ANY NEW MACHINERY OR PLANT (OTHER THAN SHIPS AND AIRCRAFT), WHICH HAS BEEN ACQUIRED AND INSTALLED AFTER THE 31 ST DAY OF MARCH, 2005, BY AN ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURE AND PRODUCTION OF ANY ARTICLE OR THING, A FURTHER SUM EQUAL TO TWENTY PER CENT OF THE ACTUAL COST OF SUCH MACHINERY OR PLANT SHALL BE ALLOWED AS DEDUCTION UNDER CLAUSE (II): PROVIDED THAT NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF - (A) ANY MACHINERY OR PLANT WHICH, BEFORE ITS INSTALLATION BY THE ASSESSEE, WAS USED EITHER WITHIN OR OUTSIDE INDIA BY ANY OTHER PERSON; OR (B) ANY MACHINERY OR PLANT INSTALLED IN ANY OFFICE PREMISES OR ANY RESIDENTIAL ACCOMMODATION, INCLUDING ACCOMMODATION IN THE NATURE OF A GUEST- HOUSE; OR (C) ANY OFFICE APPLIANCES OR ROAD TRANSPORT VEHICLES; OR ANY MACHINERY OR PLANT, THE WHOLE OF THE ACTUAL COST OF WHICH IS ALLOWED AS A DEDUCTION (WHETHER BY WAY OF DEPRECIATION OR OTHERWISE) IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION OF ANY ONE PREVIOUS YEAR; 9. FIRST REQUIREMENT FOR BEING ELIGIBLE FOR THE CL AIM OF ADDITIONAL DEPRECIATION IS THAT IT SHOULD BE ON A NEW MACHINERY OR PLANT. A MACHINERY IS NEW ONLY WHEN IT IS FIRST PUT TO USE. ONCE IT IS USED, IT IS NO LONGER A NEW MACHINERY. ADMITTEDLY, THE MACHINERY, ON WHICH ADDITIONAL DEPRECIATION HAS BEEN CLAIMED, :-11-: I.T.A. NO. 3496/MDS/2016 & 67/MDS/2017 WAS ALREADY USED IN VARIOUS PRECEDING PREVIOUS YEAR S. THEREFORE, FOR THE IMPUGNED ASSESSMENT YEAR, IT IS NO MORE A NEW MACHINERY OR PLANT. ONCE IT IS NOT A NEW MACHINERY OR PLANT, ALLOWANCE UNDER SECTION 32(1)(IIA) CANNOT BE ALLOWED. ADDITIONAL DEPRECIATI ON ITSELF IS ONLY FOR A NEW MACHINERY OR PLANT. A CLAI M OF ADDITIONAL DEPRECIATION AS MADE BY THE ASSESSEE, IF ALLOWED, WILL NOT BE AN ALLOWANCE FOR A NEW MACHINE RY OR PLANT. INTENTION OF THE LEGISLATURE WAS TO GIVE SUCH ADDITIONAL DEPRECIATION IN THE YEAR IN WHICH ASSETS WERE PUT TO USE AND NOT FOR ANY SUCCEEDING YEAR. THERE IS NOTHING IN THE STATUTE WHICH ALLOWS SUCH CLAIM OF ADDITIONAL DEPRECIATION EVERY YEAR ON MACHINERY ACQUIRED IN EARLIER YEAR. THERE CANNOT BE ANY PRESUMPTION THAT UNLESS A CLAIM IS SPECIFICALLY DENIED, IT HAS TO BE ALLOWED. IN THE CASE OF BRAKES INDIA LTD. (SUPRA) WHERE ASSESSEE CLAIMED CARRY FORWARD OF ADDITIONAL DEPRECIATION, THIS TRIBUNAL H AD HELD AS UNDER AT PARA 15 OF ITS ORDER:- 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE PROVISIONS OF SECTION 32 AS APPLICABLE FOR THE RELEVANT ASSESSMENT YEAR CLEARLY SHOWS THAT ADDITIONAL DEPRECIATION IS ALLOWABLE ON THE PLANT AND MACHINERY ONLY FOR THE YEAR IN WHICH THE CAPACITY EXPANSION HAS TAKEN PLACE WHICH HAS RESULTED IN THE SUBSTANTIAL INCREASE IN THE INSTALLED CAPACITY. IN THE ASSESSEES CASE THIS TOOK PLACE IN THE ASSESSMENT YEAR 2005-06 AND THE ASSESSEE HAS ALSO CLAIMED :-12-: I.T.A. NO. 3496/MDS/2016 & 67/MDS/2017 THE ADDITIONAL DEPRECIATION DURING THAT YEAR AND TH E SAME HAS ALSO BEEN ALLOWED. EACH ASSESSMENT YEAR IS SEPA RATE AND INDEPENDENT ASSESSMENT YEAR. THE PROVISIONS OF SECTION 32 OF THE ACT DO NOT PROVIDE FOR CARRY FORW ARD OF THE RESIDUAL ADDITIONAL DEPRECIATION, IF ANY. IN TH E CIRCUMSTANCES, THE FINDING OF THE LEARNED CIT(A) ON THIS ISSUE IS ON A RIGHT FOOTING AND DOES NOT CALL FOR A NY INTERFERENCE. CONSEQUENTLY, GROUND NO.1 OF THE ASSESSEES APPEAL STANDS DISMISSED. 10. WHEN AN ALLOWANCE WHICH IS ORDINARILY NOT AVAIL ABLE UNDER NORMAL COMMERCIAL PRINCIPLES OF ACCOUNTING, I S MADE SPECIFICALLY ALLOWABLE, THROUGH ENACTMENT OF C ERTAIN SPECIFIC PROVISIONS OF THE ACT, IT IS ALSO A REQUIR EMENT THAT THERE SHOULD BE SIMILAR SPECIFIC PROVISION WHICH SH OWS ITS APPLICABILITY EVERY YEAR, UNLESS THE CONTEXT STRONG LY CALLS FOR SUCH AN INTERPRETATION. WE ARE THUS OF THE OPIN ION THAT CIT(APPEALS) WAS JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF ADDITIONAL DEPRECIATION. NO INTERFE RENCE IS WARRANTED. 6. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007-08 ON SIMILAR ISSUE RAISED, FOR THE ASSESSMENT YEAR 2010-11 ALSO, THE GROUND RAISED BY THE ASSESSEE STANDS DISMISSED. 2.8 RESPECTFULLY FOLLOWING THE ABOVE DECISION OF TH E TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2010-11 , THE SIMILAR GROUND RAISED BY THE ASSESSEE IN THE ASSESSMENT YEA R 2008-09 IS DISMISSED. WE FOLLOW THE CO-ORDINATE BENCH DECISION AND THE IS SUE IS SQUARELY COVERED IN FAVOUR OF THE REVENUE AND DISMISS THE GROUND OF THE ASSESSEE. :-13-: I.T.A. NO. 3496/MDS/2016 & 67/MDS/2017 IN THE RESULT, ASSESSEE APPEAL IS DISMISSED. 7. NOW WE TAKE UP THE REVENUE APPEAL IN ITA NO. 67/ MDS/2017. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-I , COIMBATORE HAS ERRED IN DELETING THE ROYALTY PAYMENT OF RS. 3, 45,40,146/- MADE TO M/S. CRI AMALGAMATIONS P. LTD ON THE GROUND THAT THE ASSESSEE IS THE OWNER OF THE TRADE MARK CRI. 3. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) OU GHT TO HAVE CONSIDERED THAT THE TRADE MARK CRI WAS GIVEN AWAY F OR A MEAGRE CONSIDERATION OF RS. 1000/- ONLY BY A FAMILY SETTLE MENT THOUGH AN AGREEMENT DEED WAS NOT JUSTIFIABLE. 4. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) OU GHT TO HAVE OBSERVED THAT THOUGH THE PAYMENT FOR TRADE MARK CRI FIXED BY THE DIRECTORS OF THE TRANSFEROR COMPANY WAS ONLY RS. 10 00/- THEN THE PAYMENT OF RS.3,45,40,146/- TO THE HOLDING COMPANY IS EXCESSIVE AND UNREASONABLE. 8. THE LD. DR ARGUED THAT THE LD. CIT(A) ERRED IN D ELETING THE ROYALTY PAYMENT TO M/S. CRI AMALGAMATION, WHICH IS EXCESSIV E U/S. 40(2)(B) OF THE ACT AND ASSESSEE IS A OWNER OF TRADEMARK AND PRAYED FOR SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE AO ORDER. CONTRA, TH E LD. AR RELIED ON THE ORDERS OF THE CIT(A) AND ASSESSEE OWN CASE. :-14-: I.T.A. NO. 3496/MDS/2016 & 67/MDS/2017 9. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATE RIAL ON RECORD AND JUDICIAL DECISIONS. THE LD. DR ARGUED THAT THE ROY ALTY PAYMENT IS EXCESSIVE, WHEREAS, THE LD. AR SUBMITTED THAT THE ISSUE IS SQU ARELY COVERED IN FAVOUR OF THE ASSESSEES OWN CASE IN ITA NO. 1017/MDS/2012 DA TED 16.11.2016 PAGE 24 AT PARA 4.10 TO 4.11 AS UNDER: 4.10 IN THE CASE OF CIT V. SHARDA MOTOR INDUSTRIAL LTD. 319 ITR 109, THE HONBLE DELHI HIGH COURT HAS HELD THAT THE FINDING OF THE LD. CIT(A) THAT THE PAYMENT OF ROYAL TY WAS PURELY A REVENUE EXPENDITURE, WHICH WAS ANNUAL EXPENDITURE D EPENDING UPON THE QUANTUM OF PRODUCTION IN THE RELEVANT YEAR WAS A FINDING OF FACT RIGHTLY ARRIVED AT. IN THE PRESENT CASE ALSO, THE USER BEING ASSESSEE SHALL PAY A ROYALTY TO THE PROP RIETOR [M/S. C.R.I. AMALGAMATIONS PVT. LTD.] WITH EFFECT FROM 01 .04.2007, A SUM EQUAL TO 0.50% OF MONTHLY TURNOVER ARISING OUT OF THE SALE OF THE USER GOODS DURING THE TERM OF THE AGREEMENT. 4.11 UNDER THE ABOVE FACTS AND CIRCUMSTANCES AND IN VIEW OF VARIOUS DECISIONS (SUPRA), WE HOLD THAT THE ROYA LTY PAID BY THE ASSESSEE IS OF REVENUE IN NATURE, WHICH IS AN ALLOW ABLE EXPENDITURE IN THE HANDS OF THE ASSESSEE. THEREFORE , THE LD. CIT(A) HAS RIGHTLY DIRECTED THE ASSESSING OFFICER T O ALLOW THE EXPENDITURE PAID AS ROYALTY. THUS, THE GROUND RAISE D BY THE REVENUE IS DISMISSED. WE FOUND THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND WE RESPECTFULLY FOLLOW JUDICIAL PRECEDENCE, AND WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE CIT(A) AND UPHELD THE ACTION OF THE CIT(A) WHO HAS :-15-: I.T.A. NO. 3496/MDS/2016 & 67/MDS/2017 DELETED THE ADDITION AND ACCORDINGLY THE ACTION OF THE CIT(A) IS UPHELD AND DISMISS THE GROUNDS OF THE APPEAL OF REVENUE. IN THE RESULT, THE REVENUE APPEAL IS DISMISSED. 10. IN THE RESULT, ASSESSEE APPEAL IN ITA NO. 3496/ MDS/2016 AND REVENUE APPEAL IN ITA NO. 67/MDS/2017 ARE DISMISSED . ORDER PRONOUNCED ON THURSDAY, THE 4 TH DAY OF MAY, 2017 AT CHENNAI. SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER SD/- ( . ) (G. PAVAN KUMAR) $ /JUDICIAL MEMBER /CHENNAI, 1 /DATED: 4 TH MAY, 2017. JPV ' *#34 54 /COPY TO: 1. &/ APPELLANT 2. *+& /RESPONDENT 3. 6 ( )/CIT(A) 4. 6 /CIT 5. 4 *## /DR 6. 9 /GF