Bosch Limited, Bangalore V. ACIT, Bangalore

ITA 671/BANG/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9400 (ITAT-BANGALORE)
• Duration Of Justice: 5 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-06-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 21-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Transfer pricing; Opportunity of being heard; Rule of consistency; Revenue expenditure; Capital expenditure
• Section: 32; 37; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A, BANGALORE BEFORE SHRI A.K.GARODIA, ACCOUNANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NOS. A.Y. APPELLANT V S RESPONDENT 1 671(BANG)/2011 2005-06 M/S BOSC H LIMITED, HOSUR ROAD, ADUGODI, B ANGALORE ACIT, LTU, BANGALORE 2 IT(TP) NO. 719(BANG)/2011 2005-06 ACIT, LTU, BANGALORE M/S BOSCH LIMITED, HOSUR ROAD, BANGALORE 3 672(BANG)/2011 2006-07 M/S BOSC H LIMITED, HOSUR ROAD, BANGALORE ACIT, LTU, BANGALORE 4 665(BANG)/2011 2006-07 DCIT, LTU, BANGALORE M/S BOSC H LIMITED, HOSUR ROAD, BANGALORE 5 1211(BANG)/2015 2006-07 M/S BOSC H LIMITED, HOSUR ROAD, BANGALORE DCIT, LTU, BANGALORE ASSESSEE : SHRI PERCY PARDIW ALA, SR COUNSEL REVENUE BY : SHRI G.R.REDDY, CIT-I DATE OF HEARING : 19-07-2016 DATE OF PRONOUNCEMENT : 08-09-2016 O R D E R PER BENCH OUT OF THIS BUNCH OF FIVE APPEALS, FOUR APPEALS ARE CROSS APPEAL OF THE ASSESSEE AND REVENUE FOR ASSESSMENT YEARS 2005-06 & 2006-07 AND THE REMAINING ONE APPEAL IS BY THE ASSESSEE FOR ASSESSM ENT YEAR 2006-07 ARISING OUT OF ORDER PASSED BY THE LD. CIT(A) U/S 154 OF TH E IT ACT, 1961. 2. ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BE ING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENC E. ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 2 3. FIRST WE TAKE UP THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2005-06 IN ITA NO.671(B)/2011. GROUND NO.1 TO 5 ARE IN RESPECT OF TP ISSUES AND TH ESE GROUNDS ARE AS UNDER; 1. THE LD. CIT (A), LTU, BANGALORE ERRED IN DISMIS SING THE APPELLANTS CLAIM FOR EXCLUDING CERTAIN COMPARA BLES ON THE GROUND THAT HIGH PROFIT OR HIGH LOSS MAKING COMPANIES SHOULD NOT BE TAKEN INTO ACCOUNT AS COMPARABLES. 2. THE LD. CIT(A) ERRED IN NOT ACCEPTING THE APPELL ANTS PLEA THAT IT IS INSULATED FROM ALL BUSINESS AND OPERATIONAL RISKS, PARTICULARLY HAVING REGARD TO FA CTS IN APPELLANTS CASE AND DID NOT AGREE FOR ANY SUITABLE ADJUSTMENTS FOR THE DIFFERENCES IN RISK PROFILE. 3. THE LEARNED CIT (A) LTU ERRED IN DIRECTING THE D CIT TO LOOK INTO THE FEASIBILITY OF SELECTING COMPANIES SUCH AS ALPHA GEO LTD., AND VIMTA LABS WHICH ARE FUNCTIONALLY DIFFERENT. 4. WITHOUT PREJUDICE, THE LD. CIT (A) HAS ERRED IN LAW AND IN FACTS, IN CONFIRMING WITH THE TPO/AO IN NOT APPLYING THE PROVISIONS OF PROVISO TO SECTION 92C(2 ) OF THE ACT. 5. WITHOUT PREJUDICE TO GROUNDS 1 TO 4 ABOVE, THE LEARNED CIT(A) OUGHT TO HAVE DIRECTED THE TPO TO AP PLY THE ARMS LENGTH PRICE DETERMINED BY THE TPO DURING EARLIER AY: 2004-05 FOR THE CURRENT AY: 2005-06 ALS O, PARTICULARLY HAVING REGARD TO THE FACT THAT THE APP ELLANT HAD ENTERED INTO A FIXED PRICE CONTRACT FOR 4 YEARS BEGINNING ON 01-04-2003 (RELEVANT TO AY: 2004-05) ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 3 4. IT WAS SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT IT CAN BE SEEN IN PARA-9 TO 9.1 OF THE ORDER OF THE LD. CIT(A) THAT T HE ASSESSEE HAS RAISED AN ISSUE BEFORE THE LD. CIT(A) REGARDING REVISED BENCH -MARKING RESULT FURNISHED BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS VIDE LETTER DATED 07-10-2008 AND THE LD. CIT(A) DECIDED THE ISSUE IN A VERY CRYP TIC MANNER WITHOUT GIVING ANY REASON FOR UPHOLDING THE ORDER OF THE TPO AND H ENCE, THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE LD. CIT(A) FOR A FRESH DECISION BY WAY OF SPEAKING AND REASONED ORDER. HE FURTHER SUBMITTED T HAT IF THE MATTER IS RESTORED BACK TO THE FILE OF THE LD. CIT(A) FOR A F RESH DECISION REGARDING TP ISSUES THEN NO SPECIFIC ADJUDICATION IS CALLED FOR ON ANY T P ISSUES AT THE PRESENT STAGE. 5. THE LD. DR OF THE REVENUE SUPPORTED THE ORDER OF THE LD. CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FOR THE SAKE OF READY REFERENCE, WE REPRODUCE PARA-9 & 9.1 OF THE LD. CIT (A)S ORDER OF PAGES- 20-21 OF HIS ORDER. 9. GROUND NO.7.7 WHICH IS IN A SIMILAR VEIN, AND RAISES THE ISSUE RELATING TO THE REVISED BENCH-MARKING RES ULT FURNISHED BY THE APPELLANT DURING ASSESSMENT PROCEE DINGS VIDE ITS LETTER DATED 18-09-2007 AND REITERATED VID E LETTER DATED 07-10-2008 IS REPRODUCED BELOW; 7.2 WITHOUT PREJUDICE, THE TPO/DCIT, OUGHT TO HAVE ACCEPTED THE APPELLANTS REVISED BENCH-MARKING RESU LT FURNISHED DURING THE ASSESSMENT PROCEEDINGS WHICH A LSO SATISFIED ALP. 9.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE APPELLANT VIDE ITS LETTER DATED 18-09-2007 & 07-10- 2008 ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 4 SUBMITTED THAT IT WAS ENGAGED IN PROVIDING BASIC DE SIGN AND APPLICATION DEVELOPMENT SERVICES WHICH WAS IN THE F IELD OF RESEARCH &DEVELOPMENT IN THE AUTOMOTIVE MANUFACTURI NG INDUSTRY I.E. STARTER MOTORS AND ALTERNATORS, WHICH WAS ITS MAIN BUSINESS. THE APPELLANT REQUESTED THE AO TO A DOPT SEVEN COMPARABLES SELECTED BY IT BASED ON THE FINAN CIALS OF FY: 2004-05, WHICH IS REPRODUCED BELOW; TABLE -7 SL.NO. COMPARABLES WITHOUT ADJUSTMENTS MARK-UP ON OP. COST 1 CALIFORNIA SOFTWARE CO.,LTD., 9% 2 ENGINEERS INDIA LTD., 10% 3 GEOMETRIC SOFTWARE SOLUTIONS CO.LTD., 19% 4 ONWARD TECHNOLOGIES LTD., 12% 5 EASUN ENGINEERING COMPANY LTD., - 7% 6 POWERSOFT GLOBAL SOLUTIONS LTD., 22% 7 QUINTEGRA SOLUTIONS LTD., 8% ARITHMETIC MEAN 10% HOWEVER, VIDE PARA-11.1 OF THE ORDER U/S 92CA DATED 31-10- 2008 THE TPO REJECTED CALIFORNIA SOFTWARE CO. LTD. ,& ONWARD TECHNOLOGIES LTD., ON THE GROUND THAT THEY H AD RPTS IN EXCESS OF 25% WHEREAS ENGINEERS INDIA LTD., & EA SUN ENGG. CO.LTD., FAILED THE EXPORT EARNINGS FILTER WH ILE GEOMETRIC SOFTWARE SOLUTIONS LTD., WAS REJECTED FOR THE REASO N THAT IT WAS A SOFTWARE DEVELOPMENT COMPANY. HENCE, THE REMA INING COMPANIES SELECTED BY THE APPELLANT ITSELF NAMELY, POWERSOFT GLOBAL SOLUTIONS LTD., & QUINTEGRA SOLUTIONS LTD., ARE RETAINED AS SUITABLE COMPARABLES. FROM THE ABOVE PARAS REPRODUCED FROM THE ORDER OF THE D. CIT(A), IT IS SEEN THAT THERE IS NO REASON GIVEN BY THE LD. CIT( A) REGARDING REJECTION OF VARIOUS COMPARABLES BY THE TPO AND HENCE, WE FEEL I T PROPER TO RESTORE THE ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 5 ENTIRE MATTER ON TP ISSUES TO THE FILE OF THE LD. C IT(A) FOR FRESH DECISION BY WAY OF SPEAKING AND REASONED ORDER AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. WE ORDER ACCORDINGLY. 7. THESE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWE D FOR STATISTICAL PURPOSES. GROUND NO.6 RAISED BY THE ASSESSEE IS AS UNDER; 6. THE LD., CIT(A)LTU ERRED IN UPHOLDING THE ACTIO N OF THE AO IN NOT ALLOWING A DEDUCTION FOR THE PROVISION MADE TOWARDS INTEREST PAYABLE TO CENTRAL EXCISE DEPT. SALES TAX ETC., DEPT. AMOUNTING TO RS.2,96,24,753/- ALTHOUGH THE APPELLANT HAS FOLLOWED MERCANTILE SYSTEM OF ACCOUNTING. 8. IT WAS FAIRLY CONCEDED BY THE LD. AR OF THE ASS ESSEE THAT THIS ISSUE IS DECIDED AGAINST THE ASSESSEE BY THE TRIBUNAL IN ASS ESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004-05 IN IT(TP)A NO.670(B)/2011 D ATED 20-08-2015. HE SUBMITTED A COPY OF THIS TRIBUNAL ORDER AND HAS DRA WN OUR ATTENTION TO PARA-4 ON PAGE-10 OF THE TRIBUNAL ORDER. FOR THE S AKE OF READY REFERENCE, WE REPRODUCE PARA-4 OF THIS TRIBUNAL ORDER AS UNDER; AS REGARDS OF APPEAL NO.8 IS CONCERNED, AGAINST THE ORDER OF THE CIT(A) IN UPHOLDING THE ORDER OF THE A O IN NOT ALLOWING DEDUCTION FOR PROVISION MADE TOWARDS INTEREST PAYABLE TO CENTRAL EXCISE DEPARTMENT AND SATES TAX DEPARTMENT AT RS.4,29,67,460/- THE LEARNE D COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF THI S TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2000-01 AND 2001-02 WHICH IS PLACED AT PAGES 3 TO 5 8 OF THE CASE LAWS PAPER BOOK FILED BEFORE US. THE ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 6 TRIBUNAL, AT PARA-6 OF ITS ORDER, HAS OBSERVED THAT THIS ISSUE STANDS COVERED BY THE DECISION OF THIS BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 1994-05 AND 1999-00 WHEREIN THE ACTION OF THE CIT(A) ON DISALLOWING INTEREST PAYABLE TO CENTRAL E XCISE DEPARTMENT HAS BEEN UPHELD BY THE TRIBUNAL. RESPECTFULLY FOLLOWING THE SAME, HIS GROUND OF APPE AL (NO.8) OF THE ASSESSEE IS REJECTED. FROM THE ABOVE PARA, WHAT IS SEEN THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE TRIBUNAL ORDER IN ASSESSEES OW N CASE FOR THE ASSESSMENT YEARS 2000-01 & 2001-02 AND HENCE, THIS GROUND OF T HE ASSESSEE IS REJECTED BY RESPECTFULLY FOLLOWING THIS TRIBUNAL ORDER. GROUND NO.7 RAISED BY THE ASSESSEE IS AS UNDER; 7.1 THE LD. CIT(A), LTU ERRED IN UPHOLDING THE EXPENDITURE TOWARDS TRADEMARK AS CAPITAL EXPENDITURE AND GRANTING DEPRECIATION AS AGAINST TH E APPELLANTS CLAIM OF AMORTIZATION OVER 36 MONTHS GI VEN THE FACTS AND CIRCUMSTANCES IN THE APPELLANTS CASE . 7.2 THE LD. CIT(A), LTU ERRED IN UPHOLDING THE ACTION OF THE DCIT IN CHANGING THE CHARACTER OF THE EXPENDITURE FROM REVENUE TO CAPITAL AFTER TWO YEARS OF ITS INCURRENCE. 9. IT WAS SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT IT IS NOTED BY THE LD. CIT(A) IN PARA-13.1.1. AND 13.1.2 ON PAGES-28& 29 OF HIS ORDER THAT AS PER THE ASSESSEES SUBMISSIONS IN ASSESSMENT YEAR 2 003-04 & 2004-05, SIMILAR CLAIM WAS ALLOWED AS REVENUE EXPENDITURE AN D THEREFORE, AS PER THE RULE OF CONSISTENCY, IN THE PRESENT YEAR ALSO, THE CLAIM SHOULD BE ALLOW ED AS REVENUE EXPENDITURE. HE SUBMITTED THAT THE CLAIM O F THE ASSESSEE WAS ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 7 REJECTED BY THE LD, CIT(A) ON THIS BASIS THAT MEREL Y A MISTAKE WAS COMMITTED IN THE EARLIER YEAR AND IT CANNOT BE ALLOWED TO BE COMMITTED IN PERPETUITY. 10. HE FURTHER SUBMITTED ON PAGE-16 TO 24 OF THE PAPER BOOK IS THE COPY OF THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 20 04-05 AND PAGE-18 OF THE PAPER BOOK IS RELEVANT WHERE THE ISSUE WAS DECI DED BY THE AO IN THAT YEAR AND THE CLAIM WAS DISALLOWED IN RESPECT OF DEP RECIATION CLAIMED IN THAT YEAR ON TRADE MARK LICENSE FEE OF RS.16,55,938/-. HE SUBMITTED THAT IN THAT YEAR, THE CLAIM OF AMORTIZATION OF RS.25,23,333/- W AS ALLOWED BY THE AO BEING 1/3 RD OF RS.75.70 LAKHS PAID TOWARDS EXCLUSIVE AND INDI VISIBLE RIGHT TO USE THEIR TRADE MARK. HE SUBMITTED THAT HAVING ALL OWED THE CLAIM IN EARLIER TWO YEARS, IT IS NOT PROPER TO DISALLOW THE SAME CL AIM IN THE PRESENT YEAR. HE SUBMITTED A COPY OF AGREEMENT FOR PURCHASE OF BUSIN ESS FROM M/S PHILIP INDIA LTD., AS AVAILABLE ON PAGES-168 175 OF THE PAPER BOOK AND OUR ATTENTION WAS DRAWN TO PAGE-175 OF THE PAPER BOOK W HERE IT IS STATED THAT SEC.3.25 OF TRADE MARK LICENSE, ASSIGNMENT, AGREEME NT SHALL APPLY. HE FURTHER SUBMITTED THAT AS PER THE SAME, THE ASSESSE E IS ELIGIBLE TO USE THE TRADE MARK FOR THREE YEARS. THEREAFTER, HE HAS DRA WN OUR ATTENTION TO PAGES 176 -183 OF THE PAPER BOOK AND POINTED OUT THAT VAL UE OF TRADE MARK USER WAS RS.75.70 LAKHS. AT THIS JUNCTURE, THE BENCH W ANTED TO SEE SPECIFIC CLAUSE OF AGREEMENT OR TRADE MARK LICENSE ASSIGNMEN T AGREEMENT AS PER WHICH THE ASSESSEE WAS ELIGIBLE TO USE THE TRADE MA RK ONLY FOR THREE YEARS BUT THE SAME COULD NOT BE MADE AVAILABLE. BUT IT WAS SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT IT IS NOT DISPUTED BY ANY A UTHORITY BELOW THAT THERE IS LIMITED USER OF AGREEMENT FOR 36 MONTHS. HE PLA CED RELIANCE ON THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF DCIT VS ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 8 GUJARAT NARMADA VALLEY FERTILIZERS CO. LTD. AS REPO RTED IN 356 ITR 460(GUJ.). HE ALSO PLACED RELIANCE ON THE JUDGMENT OF THE HON BLE BOMBAY HIGH COURT RENDERED IN THE CASE OF CIT VS M/S ADHIKARI BROTHER S TELEVISION NETWORKS LTD., IN ITA NO.142 OF 2013 DATED 17-01-2013. HE SU BMITTED A COPY OF THIS JUDGMENT. HE ALSO PLACED RELIANCE ON THE JUDGMENT OF THE HONBLE APEX COURT RENDERED IN THE CASE OF DEVIDAS VITHALDAS & CO., VS CIT AS REPORTED IN 84 ITR 277(SC). 11. THE LD. DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BLOW. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIR ST OF ALL WE REPRODUCE PARA-13, 13.1, 13.1.1 AND 13.1.2 FROM THE ORDER OF LD. CIT(A) ON PAGES-26 TO 29 OF HIS ORDER. THESE PARAS ARE AS U NDER; 13. GROUNDS 3.1. TO 3.3 ON THE OTHER HAND, DEAL WITH THE ISSUE REGARDING THE AOS TREATMENT OF EXPENDITURE INCURRED TOWARDS TRADEMARK AS CAPITAL EXPENDITURE AND ALLOWING DEPRECIATION @25% ON INTANGIBLE ASSETS AS AGAINST THE APPELLANTS CLAIM OF TREATING THE SAME AS REVENUE EXPENDITURE AND AMORTIZING THE SAME OVER A PERIOD OF THREE YEARS. THE SAME ARE REPRODUCED AS UNDER; 3.1 THAT THE DCIT ERRED IN TREATING THE EXPENDITURE TOWARDS TRADEMARK AS CAPITAL EXPENDITUR E AND GRANTING DEPRECIATION AS AGAINST THE APPELLANT S CLAIM OF AMORTIZATION OVER 36 MONTHS GIVEN THE FAC TS AND CIRCUMSTANCES OF THE CASE. ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 9 3.2 THAT THE DCIT IGNORED THE FACT THAT IN THE YEAR IN WHICH THE EXPENDITURE WAS INCURRED, IT WAS ACCEP TED AS REVENUE EXPENSE AND AMORTIZATION OVER 36 MONTHS WAS ALLOWED. 3.3 THAT THE DCIT ERRED IN CHANGING THE CHARACTER OF THE EXPENDITURE FROM REVENUE TO CAPITAL AFTER TW O YEARS OF ITS INCURRENCE. 13.1 IT APPEARS THAT THE APPELLANT HAD ACQUIRED A BUSINESS FROM PHILIPS INDIA LTD., FOR A CONSIDERATI ON OF RS.75.7 LAKHS TOWARDS NON-EXCLUSIVE AND INDIVISIBLE RIGHT TO APPLY THE TRADEMARK TO THE PRODUCTS AND TH E RIGHT TO SELL THE PRODUCT UNDER THE TRADEMARK IT W AS CLAIMED THAT THE RIGHT TO USE THE TRADEMARK WAS LIM ITED TO A PERIOD OF 3 YEARS AND NOT IN PERPETUITY AND, ACCORDINGLY, A DEDUCTION OF RS.25,23,333/- (BEING 1 /3 RD OF RS.75.7 LAKHS) WAS CLAIMED U/S 37 FOR A PERIOD O F 3 YEARS STARTING FROM AY: 2004-05. THE AO DISALLOWED THE APPELLANTS CLAIM ON THE FOLLOWING GROUNDS:- THE DEDUCTION FOR ACQUISITION OF TRADEMARK WAS CLEARLY COVERED U/S 32(1)(II), SPECIFICALLY EXPLANA TION 3 TO SEC.32(1) WHEREIN THE EXPRESSION BLOCK F ASSETS SHALL MEAN INTANGIBLE ASSETS, BEING KNOW HOW, PATENTS, COPYRIGHTS, TRADE MARKS.. IN OTHER WORDS, THE DEDUCTION FOR ACQUISITION OF TRADEMARK WAS ALLOWABLE ONLY U/S 32 FOR WHICH THE DEPRECIATION @25% WAS ALLOWABLE ON INTANGIBLE ASSETS . FURTHERMORE, THE PROVISIONS OF SEC.43(6) WERE QUITE CLEAR THAT THE WDV OF AN ASSET PURCHASED IN A N EARLIER YEAR WAS COST LESS DEPRECIATION ACTUALLY ALLOWED. IN THE INSTANT CASE, THE DEDUCTION WAS CLAIMED AND ALLOWED, THE OPENING WDV WOULD BE THE BALANCE REMAINING TO BE WRITTEN OFF. I.E. ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 10 RS.25,23,333/- ON WHICH DEPRECIATION @ 25% WOULD WORK OUT TORS.6,30,834/-. THE AO REJECTED THE APPELLANTS CONTENTION REGARDING THE LIMITED USAGE OF THE TRADE MARK FOR 3 YEARS ON THE GROUND THAT WHEN AN ASSET IS ACQUIRED, IT HAD TO SIMPLY BE ADDED TO THE CONCERNED BLOCK OF ASSETS IRRESPECTIVE OF THE LIFE OF THE ASSET. MOREOVER, WHEN THE IT ACT, ALLOWS DEDUCTION UNDER A PARTICULAR SECTION, THEN THE CLAIM SHOULD B E UNDER THAT SECTION ALONE AND NOT UNDER ANY OTHER PROVISIONS. ACCORDINGLY, THE AO DISALLOWED THE APPELLANTS CLAIM FOR AMORTIZATION OF TRADEMARKS AMOUNTING TO RS.25,23,333/- AND ALLOWED DEPRECIATION OF RS.6,30,834/- RESULTING IN A NET ADDITION OF THE DIFFERENCE OF RS.18,92,500/- 13.1.1. VIDE WRITTEN SUBMISSIONS FILED ON 28-03-201 1, THE APPELLANT MERELY STATED THAT THE AO OUGHT TO HA VE ACCEPTED ITS CLAIM AND ALLOWED THE SAME AS REVENUE EXPENDITURE AS WAS DONE IN AYS 2003-04 & 2004-05 BASED ON THE RULE OF CONSISTENCY INSTEAD OF TREATIN G THE SAME AS CAPITAL EXPENDITURE IN AY: 2005-06. INCIDENTALLY, A PERUSAL OF THE EARLIER YEARS RECOR DS CLEARLY INDICATE THAT THE APPELLANT HAD CLAIMED DEDUCTION OF RS.25.23,333/- AS EXPENDITURE PAYABLE TO PHILIPS INDIA LTD., TO USE THEIR TRADEMARK TO SELL THEIR PRODUCTS AS WELL AS CLAIMED DEPRECIATION OF RS.16,55,938/-. THE AO MERELY CONCLUDED THAT SINCE THE APPELLANT CANNOT CLAIM THE DEDUCTION OF RS.25,23,333/- AS WELL AS DEPRECIATION OF RS.16,55,938/- AT LEAST ONE OF THE CLAIM HAS TO BE DISALLOWED. ACCORDINGLY, THE CLAIM OF THE DEPRECI ATION WAS DISALLOWED. ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 11 13.1.2. I AM INCLINED TO DISAGREE WITH THE APPELLANTS STAND REPRODUCED INPARA-13.1.1 ABOVE. FIRSTLY, THERE IS NO CLEAR CUT FINDING GIVEN BY THE AO THAT THE DEDUCTION CLAIMED CONSTITUTED CAPITAL OR REVENUE EXPENDITURE AS HE MERELY DISALLOWED ONE OF THE TWO CLAIMS MADE BY THE APPELLANT ON THE GROUND THAT ONLY ONE OF THE DEDUCTIONS WAS ALLOWABLE. SECONDLY, MERELY BECAUSE A MISTAKE WAS COMMITTED IN THE EARLIER YEARS DOES NOT MEAN THAT IT SHOULD BE COMMITTED IN PERPETUITY. THE AO IS WELL WITHIN HIS RIGHT TO GO INTO THESE ISSUES AND ALLOW THE CORRECT DEDUCTION IN THE EARLIER YEARS IN ACCORDANCE WITH L AW. FOR THE DETAILED REASONS REPRODUCED IN PARA 13.1 ABOVE, I AM OF THE CONSIDERED VIEW THAT THE AO HAS RIGHTLY DISALLOWED THE APPELLANTS CLAIM FOR AMORTIZATION OF TRADEMARKS AMOUNTING TO RS.25,23,333/- AND ALLOWED DEPRECIATION OF RS.6,30,834/-. THE NET ADDITION OF THE DIFFERENCE O F RS.18,92,500/- IS THEREFORE, UPHELD. GROUNDS 3.1 T O 3.3 ALSO FAIL. FROM THE ABOVE PARAS REPRODUCED FROM THE ORDER OF T HE LD. CIT(A), WE FIND THAT AS PER SEC.32(1)(II) AND EXPLANATION-3 TO SEC. 32(1), EXPRESSION BLOCK OF ASSETS ALSO INCLUDES INTANGIBLE ASSETS INC LUDING TRADE MARK AND DEPRECIATION OF 25% IS PRESCRIBED ON SUCH INTANGIB LE ASSETS. 13. REGARDING THIS ARGUMENT THAT THE ASSESSEE IS EN TITLED TO USE THE TRADE MARK ONLY FOR THREE YEARS, IT IS NOTED BY THE AO THAT WHEN AN ASSET IS PURCHASED, IT HAS TO BE ADDED TO THE BLOCK OF ASSET IRRESPECTIVE OF LIFE OF ASSET. WE FIND FORCE IN THIS OBSERVATION OF THE AO BECAUSE, THIS IS TRUE THAT ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 12 EVERY ASSET HAS GOT A LIFE BUT THE SAME IS NOT RELE VANT FOR THE PURPOSE OF DECIDING THE CHARACTER OF EXPENDITURE AS TO WHETHER IT IS CAPITAL OR REVENUE EXPENDITURE. AN ASSET MAY HAVE A LIFE OF THREE YEA RS AND SOME ASSET MAY HAVE A LIFE OF 30 YEARS AND THEN IT CANNOT BE SAID THAT THE ASSET HAVING A LIFE OF 30 YEARS IS CAPITAL ASSET AND THE OTHER ASSET HA VING A LIFE OF THREE YEARS ONLY IS NOT A CAPITAL ASSET SIMPLY BECAUSE THE LIFE OF ASSET IS ONLY THREE YEARS. IF THE LIFE OF A CONCERNED ASSET IS LESS T HAN ONE YEAR THEN THERE MAY BE A CASE THAT IT IS AN ITEM OF STORES CONSUMPTION AND THEREFORE, IT IS REVENUE EXPENDITURE BUT WHERE SUCH LIFE OF ASSET IS MORE THAN ONE YEAR THEN THE QUANTUM OF LIFE OF CAPITAL ASSET IS NOT RELEVAN T. IF WE GO BY THE LIFE OF ASSET AND WE AMORTIZE THE COST OF ASSET ON THE BASI S OF THE LIFE OF THE ASSET AS BEING CLAIMED IN THE PRESENT CASE THEN THERE WAS NO NEED TO PRESCRIBE RATE OF DEPRECIATION FOR AN ASSET IN THE STATUTE BO OK AND SUCH TREATMENT ON THE BASIS OF LIFE OF ASSET WILL MAKE DEPRECIATION P ROVISION REDUNDANT. THEREFORE, THIS CANNOT BE A VALID INTERPRETATION OF LAW WHICH WILL RESULT INTO MAKING THE PROVISIONS OF THE ACT ABOUT DEPRECIATION REDUNDANT. 14. NOW WE EXAMINE THE CLAIM OF ASSESSEE REGARDING THE RULE OF CONSISTENCY. IN OUR CONSIDERED OPINION, IF THE VIEW TAKEN BY THE AO IN EARLIER YEAR IS A POSSIBLE VIEW AS PER LAW AND IN A SUBSEQUENT YEAR, THE AO IS PROPOSING TO TAKE ANOTHER POSSIBLE VIEW THEN THE RULE OF CONSISTENCY WILL COME INTO PLAY. IF THE VIEW TAKEN BY THE AO IN THE EARLIER YEAR IS NOT A POSSIBLE VIEW AS PER LAW THEN IT CANNOT BE SAID THA T THE MISTAKE COMMITTED BY THE AO IN AN EARLIER YEAR SHOULD BE ALLOWED TO B E PERPETUATED. IN THE PRESENT CASE, WE FIND THAT THE VIEW TAKEN BY THE AO IN THE EARLIER YEARS IS ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 13 NOT A POSSIBLE VIEW AS PER LAW AND THEREFORE, THE RULE OF CONSISTENCY WILL NOT COME TO THE AID OF THE ASSESSEE IN THE PRESENT CASE . 15. NOW WE EXAMINE THE APPLICABILITY OF VARIOUS JUD GMENTS CITED BY THE LD.AR OF THE ASSESSEE. THE FIRST JUDGMENT CITE D BY HIM IS THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT RENDERED IN THE C ASE OF DCIT VS GUJARAT NARMADA VALLEY FERTILIZERS CO.LTD., (SUPRA). IN THA T CASE, THE FACTS WERE THAT THE ASSESSEE CLAIMED DEDUCTION OF A SUM SPENT TOWARDS RESTRUCTURING OF TERM LOAN. THE REVENUE IN THAT CASE WANTED TO T REAT SUCH EXPENDITURE AS A CAPITAL EXPENDITURE. BUT IT WAS HELD BY THE TRI BUNAL IN THAT CASE THAT SUCH EXPENDITURE IS REVENUE EXPENDITURE. THE DECI SION OF THE TRIBUNAL IN THAT CASE WAS THAT THE ASSESSEE HAS ALREADY OBTAINE D A LOAN AND THE SAME COULD NOT BE TREATED AS AN ASSET OR AS AN ADVANTAGE OF ENDURING NATURE AND ANY EXPENDITURE INCURRED WAS TO BE ALLOWED AS REVEN UE EXPENDITURE. THE TRIBUNAL ORDER WAS CHALLENGED BY THE REVENUE BEFORE THE HONBLE GUJARAT HIGH COURT BUT THE HONBLE GUJARAT HIGH COURT APPRO VED THE TRIBUNAL ORDER IN THAT CASE. IN OUR CONSIDERED OPINION, THE FACTS IN THE PRESENT CASE ARE TOTALLY DIFFERENT AND THEREFORE, THIS JUDGMENT IS N OT APPLICABLE IN THE PRESENT CASE. IN THAT CASE, THE ISSUE IS DISPUTE WAS REGAR DING THE EXPENSES INCURRED FOR BORROWING MONEY AND THE TRIBUNAL HAD FOLLOWED T HE JUDGMENT OF THE HONBLE APEX COURT RENDERED IN THE CASE OF INDIA CE MENTS LTD., VS CIT 60 ITR 52 WHEREIN IT WAS HELD BY THE HONBLE APEX COUR T THAT THE ACT OF BORROWING MONEY WAS INCIDENTAL TO CARRYING ON OF TH E BUSINESS AND THE LOAN OBTAINED WAS NOT AN ASSET OR AN ADVANTAGE OF ENDURI NG NATURE. IN THE PRESENT CASE, THE TRADE MARK WAS ACQUIRED BY THE AS SESSEE WHICH IS AN ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 14 ASSET BEING INTANGIBLE ASSET AS PER THE PROVISIONS OF SEC.32(1)(II) OF THE ACT, 1961 AND THEREFORE, THIS JUDGMENT OF THE HONBLE GU JARAT HIGH COURT IS NOT APPLICABLE IN THE PRESENT CASE. 16. THE SECOND JUDGMENT CITED BY THE LD. AR OF THE ASSESSEE IS THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF M/S ADHIKARI BROTHERS TELEVISION NETWORKS LTD. (SUPRA). IN THAT CASE, THE ISSUE IS DISPUTE WAS NOT WITH REGARD TO DEPRECIATION ON I NTANGIBLE ASSET BUT THE ISSUE IN DISPUTE WAS REGARDING AMORTIZATION OF EXPE NDITURE U/S 35D OF THE ACT. THIS IS AN ADMITTED POSITION OF LAW THAT SHAR E ISSUE EXPENSES CAN BE AMORTIZED U/S 35D OF THE ACT IF THE CONDITIONS PRES CRIBED IN THAT SEC. ARE EXISTING BUT THIS IS NOT A CASE THAT SHARE ISSUE EX PENSES ARE ELIGIBLE FOR DEPRECIATION U/S 32 OF THE ACT. HENCE, THIS JUDG MENT OF THE HONBLE BOMBAY HIGH COURT IS ALSO NOT APPLICABLE IN THE PRE SENT CASE. 17. THE THIRD JUDGMENT CITED BY HIM IS THE JUDGMENT OF THE HONBLE APEX COURT RENDERED IN THE CASE OF DEVIDAS VITHALDA S & CO. VS CIT (SUPRA). IN THAT CASE, ONE PADAMSI HARIDAS CARRIED ON PROFES SION AS A CHARTERED ACCOUNTANT IN THE NAME OF DEVIDAS VITHALDAS & CO., AND HE TOOK ONE AMRITLAL PARIKH AS A PARTNER, RESERVING HOWEVER, TO HIMSELF ALL THE RIGHTS AND INTERESTS IN THE GOODWILL OF THAT BUSINESS. SUBSE QUENTLY, HE RETIRED FROM THE SAID PARTNERSHIP AND AS PER THE DEED OF RETIREM ENT THE GOODWILL WAS SOLD TO THE SAID SHRI AMRATLAL AND IT WAS AGREED THAT SH RI AMRATLAL SHALL PAY TO THE SAID PADAMSI FOR AND DURING THE TERM OF HIS ENT IRE LIFE OF 50% SHARE IN THE NET PROFIT OR SHARE IN THE PROFESSION IF CARRIE D ON BY SHRI AMRATLAL IN THE NAME OF DEVIDAS VITHALDAS & CO. THE DISPUTE IN THAT CASE WAS REGARDING THE NATURE OF SUCH PAYMENT AND IT WAS HELD THAT DISBURS EMENT TO RETIRING ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 15 PARTNER AS PER DEED OF RETIREMENT IS IN THE NATURE OF ROYALTY AND NOT RELATED TO ANY ALLOWANCE AND PURCHASE OF TRADE MARK AND THE REFORE, ADMISSIBLE AS REVENUE EXPENDITURE. IN THE PRESENT CASE, THE PAYM ENT IN QUESTION CANNOT BE SAID TO BE A PAYMENT IN THE NATURE OF ROYALTY BE CAUSE, IN THE PRESENT CASE, FIXED LUMP SUM WAS PAID FOR PURCHASE OF TRADE MARK AND THEREFORE, THIS JUDGMENT OF THE HONBLE APEX COURT IS NOT APPL ICABLE IN THE PRESENT CASE. 17.1 AS PER THE ABOVE DISCUSSION, WE HAVE SEEN THAT NONE OF THE JUDGMENTS CITED BY THE LD AR OF THE ASSESSEE IS REN DERING ANY HELP TO THE ASSESSEE IN THE PRESENT CASE AND SINCE THE NATURE O F ASSET ACQUIRED IS A CAPITAL ASSET ELIGIBLE FOR DEPRECIATION U/S 32 OF T HE ACT, IT CANNOT BE ALLOWED AS A REVENUE EXPENDITURE AND THEREFORE, THIS GROUND OF THE ASSESSEE IS REJECTED. GROUND NO.8 IS AS UNDER; 8. THE LD, CIT(A) LTU ERRED IN UPHOLDING THE ACTION OF THE DCIT IN NOT GRANTING THE DEDUCTION U/S 80JJAA IN RESPECT OF THE WORKMEN WHO WERE EMPLOYED Y THE APPELLANT DURING THE YEAR BUT WHOSE DURATION OF WORKING IN THAT YEAR WAS LESS THAN 300 DAYS. 18. THE LD. AR OF THE ASSESSEE PLACED RELIANCE ON T HE JUDGMENT OF THE HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS J.H.GOTLA AS REPORTED IN 156 ITR 323. HE ALSO PLACED RELIANCE ON A CIRCULA R NO.772 AS REPORTED IN 235 ITR9 (ST.) 35 AND SUBMITTED THAT PARA-45 OF THE SAID CIRCULAR IS RELEVANT. ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 16 19. THE LD. DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 20. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THIS ISSUE WAS DECIDED BY THE LD. CIT(A) AS PER PARA-15 OF HIS ORDER AS AVAILABLE ON PAGES 31 TO 34 OF THE ORDER. THESE PARAS ARE REPR ODUCED FOR THE SAKE OF READY REFERENCE; 15. GROUND 5 PERTAINING TO NON-GRANTING OF DEDUCTI ON U/S 80JJAA IN RESPECT OF WORKMEN EMPLOYED BY THE APPELL ANT WORKING FOR LESS THAN 300 DAYS IN THE YEAR IS REPRO DUCED BELOW: 5. THAT THE DCIT ERRED IN NOT GRANTING THE DEDUCTIO N U/S 80JJAA IN RESPECT OF THE WORKMEN WHO WERE EMPLOYED BY THE APPELLANT DURING THE YEAR BUT WHOSE DURATION OF WORKING IN THAT YEAR WAS LESS THAN 300 DAYS. 15.1 OUT OF THE DEDUCTION CLAIMED OF RS.12,37,509/- U/S 80JJAA, THE AO ALLOWED ONLY RS.4,68,078/- AND DISALLOWED THE BALANCE OF RS.4,68,078/- ON THE GROU ND THAT AS PER THE DEFINITION OF REGULAR WORKMEN IN EXPLA NATION(II) TO SEC.80JJAA, REGULAR WORKMEN DID NOT INCLUDE A NY OTHER WORKMEN EMPLOYED FOR A PERIOD OF LESS THAN TH REE HUNDRED DAYS DURING THE PREVIOUS YEAR. THE APPELL ANT PLEA THAT THIS DEFINITION APPLIED TO ONLY CASUAL LA BOURERS AND NOT PERMANENT EMPLOYEES WAS REJECTED ON THE ROU ND THAT DEDUCTION U/S 80JJAA WAS RESTRICTED TO ADDITIO NAL WAGES PAID TO EMPLOYEES WHO HAVE WORKED FOR MORE TH AN 300 DAYS DURING THE RELEVANT PERIOD IRRESPECTIVE OF WHETHER THEY WERE EMPLOYED ON A PERMANENT BASIS OR OTHERWIS E. THE AO, ACCORDINGLY, ASCERTAINED THAT ADDITIONAL WA GES PAID TO THOSE WHO HAD WORKED FOR LESS THAN 300 DAYS WAS RS.25,64,771/- 30% OF WHICH WORKED OUT TO RS.7,69,4 31/- ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 17 WHICH WAS REQUIRED TO BE DISALLOWED. AT THE APPEL LATE STAGE, THE APPELLANT REITERATED THAT IN THE CASE OF PERMANENT WORKMEN, THE QUESTION OF WHETHER THEY WOR KED FOR 300 DAYS OR MORE DID NOT ARISE. 15.1.1. IN VIEW OF THE FACTS OF THE CASE AS DISCUSS ED IN THE PRECEDING PARAGRAPHS, THE AO GAVE A CATEGORICAL FIN DING THAT THE WAGES PAID TO EMPLOYEES WHO HAD WORKED FOR LESS THAN 300 DAYS IN THIS YEAR CANNOT BE CONSIDERED FOR THE PURPOSES OF DEDUCTION U/S 80JJAA. IT IS OF RELEVA NCE THAT SEC.80JJAA SPECIFICALLY DEFINES THE TERM REGULAR W ORKMEN IN CLAUSE (II) OF THE EXPLANATION TO THE SECTION. I T IS A CARDINAL RULE OF INTERPRETATION THAT WHERE THE LANG UAGE USED BY THE LEGISLATURE IS CLEAR AND UNAMBIGUOUS, T HE PLAIN AND NATURAL MEANING OF THE WORDS SHOULD BE SU PPLIED TO THE LANGUAGE USED AND RESORT TO ANY RULE OF INTERPRETATION TO UNFOLD THE INTENTION IS PERMISSIB LE ONLY WHERE THE LANGUAGE IS AMBIGUOUS. THERE ARE A PLET HORA OF DECISIONS OF THE APEX COURT WHICH SUPPORT THIS PROP OSITION NAMELY; SMT. TARULATA SHYAM VS CIT 108 ITR 345 (SC) KESHAVJI RAVJI VS CIT (1990) 183 ITR 1 GURU DEVDATA VKSSS MARYADIT VS STATE OF MAHARASHTRA AIR 2001 SC 1980. CIT VS ANJUM M.H. GHASWALA (2001) 252 ITR 1 PRAKASH NATH KHANNA AND ANR VS CIT & ANR 266 ITR 1. THE ABOVE JUDGMENTS MAKE IT CLEAR BEYOND A SHADOW O F DOUBT THAT COURTS ARE NOT REQUIRED TO LOOK INTO THE OBJECT OR INTENTION OF THE LEGISLATURE BY RESORTING TO AIDS T O INTERPRETATION WHERE THE LANGUAGE OF THE PROVISION IS CLEAR ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 18 AND UNAMBIGUOUS. CONSEQUENTLY, THE MEANING OF EACH WORD USED BY THE LEGISLATURE IS TO BE GIVEN ITS PLA IN AND NATURAL MEANING AND NO WORD SHOULD BE IGNORED WHILE INTERPRETING A PROVISION OF A STATUTE. IT IS PERTIN ENT TO NOTE THAT THE AO HAS ALSO RELIED ON SEVERAL DECISIONS WH ICH MAKE IT ABUNDANTLY CLEAR THAT WHEN THE WORDINGS IN A SECTION ARE CLEAR AND SPECIFIC, IT HAS TO BE FOLLOW ED WITHOUT IMPUTING OR ASSIGNING ANY OTHER MEANING OR INTENTIO N. I) KARNATAKA FOREST PLANTATIONS CORPN.LTD., VS CIT 156 ITR 275 (KAR.) II) KARNATAKA STATE FINANCIAL CORPN. VS CIT 174 IT R 206(KAR.) III)RAMACHANDRA MARDARAJA DEO VS CIT 27 ITR 667(OR I) IV) R GAO ELECTRODES LTD., VS CIT 173 ITR 351 (KER .) V) HAJI MOHAMMAD USMAN & SONS VS CIT 25 ITR 2252 (NAG.) IT IS QUITE APPARENT FROM THE ABOVE ANALYSIS THAT T HE APPELLANTS ELIGIBILITY FOR THE SAID DEDUCTION FROM THE STANDPOINT OF WHETHER THE APPELLANTS EMPLOYEES QUA LIFIED AS WORKMEN WITHIN THE MEANING OF SEC.80JJAA OR NO T SHOULD BE EXAMINED FROM THE POINT OF VIEW OF TENURE OF WORK BY THE SAID EMPLOYEES WITHIN THE MEANING OF TH E DEFINITION OF THE TERM REGULAR WORKMEN CONTAINED IN EXPLANATION (II) WHEREBY THOSE WHO WERE EMPLOYED F OR A PERIOD OF LESS THAN 300 DAYS DURING THE PREVIOUS YE AR WERE EXCLUDED FROM THE DEFINITION. I AM OF THE FIRM VIE W THAT THE AO HAS RIGHTLY DENIED THE DEDUCTION TO THE EXTENT I T HAS BEEN CLAIMED FOR EMPLOYEES WHO HAVE WORKED FOR MORE THAN 300 DAYS IN THE PREVIOUS YEAR IN CONTRAVENTION OF EXPLANATION (II) TO SEC.80JJAA. CONSEQUENTLY, GR OUND 5 FAILS. ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 19 21. WE FIND THAT THE DISPUTE IN THE PRESENT CASE IS REGARDING ALLOWABILITY OF DEDUCTION U/S 80JJAA AND HENCE, WE HEREBY REPRODUCE THE PROVISIONS OF SEC.80JJAA OF THE ACT FOR THE SAKE OF READY REFERENCE; SECTION 80JJAA ][DEDUCTION IN RESPECT OF EMPLOYMENT OF NEW EMPLOYE ES. (1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE TO WHOM SECTION 44AB APPLIES, INCLUDES ANY PROFITS AND GAIN S DERIVED FROM BUSINESS, THERE SHALL, SUBJECT TO THE CONDITIONS SPECIFIED IN SUB-SECTION (2), BE ALLOWED A DEDUCTIO N OF AN AMOUNT EQUAL TO THIRTY PER CENT, OF ADDITIONAL EMPL OYEE COST INCURRED IN THE COURSE OF SUCH BUSINESS IN THE PREV IOUS YEAR, FOR THREE ASSESSMENT YEARS INCLUDING THE ASSE SSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH EMPLOYMENT IS PROVIDED. (2) NO DEDUCTION UNDER SUB-SECTION (1) SHALL BE ALLOWED, (A) IF THE BUSINESS IS FORMED BY SPLITTING UP, OR THE RECONSTRUCTION, OF AN EXISTING BUSINESS: PROVIDED THAT NOTHING CONTAINED IN THIS C LAUSE SHALL APPLY IN RESPECT OF A BUSINESS WHICH IS FORMED AS A RESULT OF RE-ESTABLISHMENT, RECONSTRUCTION OR REVIVAL BY T HE ASSESSEE OF THE BUSINESS IN THE CIRCUMSTANCES AND W ITHIN THE PERIOD SPECIFIED IN SECTION 33B; (B) IF THE BUSINESS IS ACQUIRED BY THE ASSESSEE BY WAY OF TRANSFER FROM ANY OTHER PERSON OR AS A RESULT OF AN Y BUSINESS REORGANISATION; (C) UNLESS THE ASSESSEE FURNISHES ALONG WITH T HE RETURN OF INCOME THE REPORT OF THE ACCOUNTANT, AS DEFINED IN THE ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 20 EXPLANATION TO SECTION 288 GIVING SUCH PARTICULARS IN THE REPORT AS MAY BE PRESCRIBED. EXPLANATION.FOR THE PURPOSES OF THIS SEC TION, (I) 'ADDITIONAL EMPLOYEE COST' MEANS TOTAL EMO LUMENTS PAID OR PAYABLE TO ADDITIONAL EMPLOYEES EMPLOYED DU RING THE PREVIOUS YEAR: PROVIDED THAT IN THE CASE OF AN EXISTING BUSINESS, THE ADDITIONAL EMPLOYEE COST SHALL BE NIL, IF (A) THERE IS NO INCREASE IN THE NUMBER OF EMPLO YEES FROM THE TOTAL NUMBER OF EMPLOYEES EMPLOYED AS ON THE LA ST DAY OF THE PRECEDING YEAR; (B) EMOLUMENTS ARE PAID OTHERWISE THAN BY AN AC COUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT OR BY USE OF ELECTRONIC CLEARING SYSTEM THROUGH A BANK ACCOUNT: PROVIDED FURTHER THAT IN THE FIRST YEAR O F A NEW BUSINESS, EMOLUMENTS PAID OR PAYABLE TO EMPLOYEES EMPLOYED DURING THAT PREVIOUS YEAR SHALL BE DEEMED TO BE THE ADDITIONAL EMPLOYEE COST; (II) 'ADDITIONAL EMPLOYEE' MEANS AN EMPLOYEE WH O HAS BEEN EMPLOYED DURING THE PREVIOUS YEAR AND WHOSE EMPLOYMENT HAS THE EFFECT OF INCREASING THE TOTAL N UMBER OF EMPLOYEES EMPLOYED BY THE EMPLOYER AS ON THE LAST D AY OF THE PRECEDING YEAR, BUT DOES NOT INCLUDE, (A) AN EMPLOYEE WHOSE TOTAL EMOLUMENTS ARE MORE THAN TWENTY-FIVE THOUSAND RUPEES PER MONTH; OR (B) AN EMPLOYEE FOR WHOM THE ENTIRE CONTRIBUTIO N IS PAID BY THE GOVERNMENT UNDER THE EMPLOYEES' PENSION SCHE ME NOTIFIED IN ACCORDANCE WITH THE PROVISIONS OF THE E MPLOYEES' PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1 952 (19 OF 1952); OR ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 21 (C) AN EMPLOYEE EMPLOYED FOR A PERIOD OF LESS THAN TWO HUNDRED AND FORTY DAYS DURING THE PREVIOUS YEAR; OR (D) AN EMPLOYEE WHO DOES NOT PARTICIPATE IN THE RECOGNISED PROVIDENT FUND; (III) 'EMOLUMENTS' MEANS ANY SUM PAID OR PAYABLE TO AN EMPLOYEE IN LIEU OF HIS EMPLOYMENT BY WHATEVER NAME CALLED, BUT DOES NOT INCLUDE (A) ANY CONTRIBUTION PAID OR PAYABLE BY THE EMP LOYER TO ANY PENSION FUND OR PROVIDENT FUND OR ANY OTHER FUN D FOR THE BENEFIT OF THE EMPLOYEE UNDER ANY LAW FOR THE T IME BEING IN FORCE; AND (B) ANY LUMP-SUM PAYMENT PAID OR PAYABLE TO AN EMPLOYEE AT THE TIME OF TERMINATION OF HIS SERVICE OR SUPERANNUATION OR VOLUNTARY RETIREMENT, SUCH AS GRA TUITY, SEVERANCE PAY, LEAVE ENCASHMENT, VOLUNTARY RETRENCH MENT BENEFITS, COMMUTATION OF PENSION AND THE LIKE. (3) THE PROVISIONS OF THIS SECTION, AS TH EY STOOD IMMEDIATELY PRIOR TO THEIR AMENDMENT BY THE FINANCE ACT, 2016, SHALL APPLY TO AN ASSESSEE ELIGIBLE TO CLAIM ANY DEDUCTION FOR ANY ASSESSMENT YEAR COMMENCING ON OR BEFORE THE 1ST DAY OF APRIL, 2016.'. [(1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE, [ BEING AN INDIAN COMPANY,] INCLUDES ANY PROFITS AND GAINS DER IVED FROM THE MANUFACTURE OF GOODS IN A FACTORY, THERE S HALL, SUBJECT TO THE CONDITIONS SPECIFIED IN SUB-SECTION (2), BE ALLOWED A DEDUCTION OF AN AMOUNT EQUAL TO THIRTY PE R CENT. OF ADDITIONAL WAGES PAID TO THE NEW REGULAR WORKMEN EMPLOYED BY THE ASSESSEE IN SUCH FACTORY, IN THE PR EVIOUS YEAR, FOR THREE ASSESSMENT YEARS INCLUDING THE ASSE SSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH EMPLOYMENT IS PROVIDED.] ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 22 (2) NO DEDUCTION UNDER SUB-SECTION (1) SHALL BE ALL OWED [(A) IF THE FACTORY IS ACQUIRED BY THE ASSESSEE BY WAY OF TRANSFER FROM ANY OTHER PERSON OR AS A RESULT OF AN Y BUSINESS RE-ORGANISATION;] (B) UNLESS THE ASSESSEE FURNISHES ALONG WITH THE RE TURN OF INCOME THE REPORT OF THE ACCOUNTANT, AS DEFINED IN THE EXPLANATION BELOW SUB-SECTION (2) OF SECTION 288 GI VING SUCH PARTICULARS IN THE REPORT AS MAY BE PRESCRIBED . EXPLANATION.FOR THE PURPOSES OF THIS SECTION, THE EXPRESSIONS, (I) ADDITIONAL WAGES MEANS THE WAGES PAID TO THE NEW REGULAR WORKMEN IN EXCESS OF [ONE HUNDRED WORKMEN] EMPLOYED DURING THE PREVIOUS YEAR: PROVIDED THAT IN THE CASE OF AN EXISTING [FACTORY], THE ADDITIONAL WAGES SHALL BE NIL IF THE INCREASE IN TH E NUMBER OF REGULAR WORKMAN EMPLOYED DURING THE YEAR IS LESS THAN TEN PER CENT OF EXISTING NUMBER OF WORKMEN EMPLOYED IN SUCH FACTORY] AS ON THE LAST DAY OF THE PRECEDING Y EAR; (II) REGULAR WORKMAN, DOES NOT INCLUDE (A) A CASUAL WORKMAN; OR (B) A WORKMAN EMPLOYED THROUGH CONTRACT LABOUR; OR (C) ANY OTHER WORKMAN EMPLOYED FOR A PERIOD OF LESS THAN THREE HUNDRED DAYS DURING THE PREVIOUS YEAR; (III) WORKMAN SHALL HAVE THE MEANING ASSIGNED TO IT IN CLAUSE (S) OF SECTION (2) OF THE INDUSTRIAL DISPUTE S ACT, 1947 (14 OF 1947).] ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 23 (IV) 'FACTORY' SHALL HAVE THE SAME MEANING AS ASSIG NED TO IT IN CLAUSE (M) OF SECTION 2 OF THE FACTORIES ACT, 19 48 (63 OF 1948).]... 22. IN THE PRESENT CASE, THE AO HELD THAT SEC.80JJ AA WAS RESTRICTED TO ADDITIONAL WAGES PAID TO EMPLOYEES WHO HAVE WORKED FOR MORE THAN 300 DAYS DURING THE RELEVANT PERIOD IRRESPECTIVE OF WHE THER THEY WERE EMPLOYED ON A PERMANENT BASIS OR OTHERWISE. ACCORDINGLY, THE AO ASCERTAINED THE ADDITIONAL WAGES PAID TO THOSE WORKERS WHO HAD WORK ED FOR LESS THAN 300 DAYS OF RS.25,64,771/- AND 30% OF WHICH WORKED OUT TO RS.7,69,431/- WAS DISALLOWED BY THE AO. THE CLAIM OF THE ASSESSEE IS THIS THAT IF THE WORKER IS EMPLOYED ON PERMANENT BASIS THEN ONLY BECAUSE IN TH E PRESENT YEAR, WORKING DAYS ARE LESS THAN 300 DAYS BECAUSE HE WAS EMPLOYED AFTER 66 DAYS FROM THE START OF THE PREVIOUS YEAR THEN NO DEDUCTI ON WILL BE AVAILABLE UNDER THIS SECTION IN RESPECT OF SUCH WORKERS APPOINTED O R EMPLOYED AFTER THAT DATE AND THEREFORE, THIS APPROACH OF THE AO IS NOT CORRE CT. 23. IN OUR CONSIDERED OPINION, AS PER PROVISIONS O F SECTION 80JJAA AS REPRODUCED ABOVE, THE DEDUCTION IS ALLOWABLE FOR TH REE YEARS INCLUDING THE YEAR IN WHICH THE EMPLOYMENT IS PROVIDED. HENCE, I N EACH OF SUCH THREE YEARS IT HAS TO BE SEEN THAT THE WORKMEN WAS EMPLOY ED FOR AT LEAST 300 DAYS DURING THAT PREVIOUS YEAR AND THAT SUCH WORK MEN WA S NOT A CASUAL WORKMEN OR WORKMEN EMPLOYED THROUGH CONTRACT LABOUR . THEREFORE, IF SOME WORK MEN WERE EMPLOYED FOR A PERIOD LESS THAN 300 D AYS IN THE PREVIOUS YEAR THEN NO DEDUCTION IS ALLOWABLE IN RESPECT OF P AYMENT OF WAGE TO SUCH WORK MEN IN THE PRESENT YEAR EVEN IF SUCH WORK MEN WAS EMPLOYED IN THE ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 24 PRECEDING YEAR FOR MORE THAN 300 DAYS BUT IN THE PR ESENT YEAR, SUCH WORK MEN WAS NOT EMPLOYED FOR 300 DAYS OR MORE. IN THIS VIEW OF THE MATTER, WE FIND NO INFIRMITY IN THE ORDER OF THE LD.CIT(A) ON THIS ISSUE. 24. NOW WE EXAMINE THE APPLICABILITY OF THE JUDGME NT OF THE HONBLE APEX COURT CITED BY THE LD. AR OF THE ASSESSEE. IN OUR CONSIDERED OPINION, THE ISSUE IN DISPUTE IN THAT CASE WAS ENTIRELY DIFF ERENT AND THEREFORE, THIS JUDGMENT IS NOT APPLICABLE IN THE PRESENT CASE. 25. IN OUR CONSIDERED OPINION, THE BOARD CIRCULAR NO.772 ALSO DOES NOT RENDER ANY HELP TO THE ASSESSEE. HENCE, THIS GR OUND IS REJECTED. GROUND NO.9 IS AS UNDER; 9. THE LD. CIT(A) LTU ERRED IN REJECTING THE APP ELLANTS CLAIM FOR: GRANT OF DEDUCTION U/S 35(2AB) N EXPENDITURE INCU RRED ON SCIENTIFIC, RESEARCH WITH EFFECT FROM 01-04-2004 AS AGAINST DEDUCTION GRANTED ON EXPENDITURE INCURRED FROM 21-09-2004 (BE ING THE DATE OF ISSUE OF NOTIFICATION) NOTIFYING AUTOMOBILE COMPONENTS AS ELIGIBLE ARTICLE FOR DEDUCTION U/S 35(2AB); GRANTING THE DEDUCTION U/S 35(2AB) ON GROSS EXPEND ITURE. 26. THE LD. AR OF THE ASSESSEE PLACED RELIANCE ON THE TRIBUNAL ORDER RENDERED IN THE CASE OF DCIT(LTU) VS M/S MICROLAB L TD. AS REPORTED IN 39 ITR(T) 585. HE ALSO PLACED RELIANCE ON THE JUDGMEN T OF THE HONBLE GUJARAT ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 25 HIGH COURT RENDERED THE CASE OF CIT VS CLARIS LIFES CIENCES LIMITED.2008- TIOL-484-HC-AHM-IT. 27. THE LD. DR OF THE REVENUE SUPPORTED THE ORDER OF THE LD. CIT(A). 28. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY THE LD, CIT(A) AS PER PARA-16,1 6.1 & 16.1.1. OF HIS ORDER. THESE PARAS ARE REPRODUCED BELOW FOR THE SAK E OF READY REFERENCE; 16. GROUND 6 WHICH DEALS WITH DENIAL OF DEDUCTI ON CLAIMED U/S 35(2AB)READS AS UNDER; 6. THAT THE DCIT ERRED IN NOT GRANTING THE DEDUCTION U/S 35(2AB) ON THE GROSS EXPENDITURE INCURRED ON SCIENTIFIC RESEARCH . 16.1 A SCRUTINY OF THE FACTS REVEAL THAT THE APPEL LANT HAD CLAIMED DEDUCTION OF RS.6,39,54,500/-U/S 35(2AB ) WHICH REFERS TO EXPENDITURE INCURRED ON RESEARCH & DEVELOPMENT WHICH ACCORDING TO THE APPELLANT SHOULD BE ALLOWED WITH REFERENCE TO THE GROSS EXPENDITURE WITHOUT REDUCING RECEIPTS FROM THIS ACTIVITY. HOWE VER, IT WAS ASCERTAINED BY THE AO FROM A PERUSAL OF THE CERTIFICATE INFORM-3CL FROM THE DEPT. OF SCIENTIFIC & INDUSTRIAL RESEARCH (DSIR) THAT THE DEDUCTION TO BE CLAIMED BY THE APPELLANT WAS THE EXPENDITURE REDUCE D BY RELATED INCOME WHICH HAS BEEN APPROVED BY THE PRESCRIBED AUTHORITY. THE AO ACCORDINGLY, CONCLUDED THAT THE INCOME RECEIVED FROM R & D ACTIVITIES AS NOTHING BUT REIMBURSEMENT OF THE RELATED EXPENDITUR E AND THAT, THEREFORE, THE DEDUCTION WOULD HAVE TO BE ALLOWED ON THE NET EXPENDITURE CLAIMED BY THE ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 26 APPELLANT IN ITS R/I FOR AY: 2005-06 AND CERTIFIED BY THE PRESCRIBED AUTHORITY. HOWEVER, NO SEPARATE ADDITI ON WAS MADE BY THE AO AS THE APPELLANT ITSELF HAD CLAIMED THE NET AMOUNT AFTER REDUCING THE RECEIPTS FROM THE EXPENDITURE IN ITS STATEMENT OF COMPUTATION OF TOTAL INCOME FILED ALONG WITH ITS R/I FOR AY: 2005-06. 16.1.1. VIDE ITS WRITTEN SUBMISSIONS, THE APPELL ANT SMUTTED THAT NEITHER SEC.35(2AB) NOR FROM -3CL ENVISAGED REDUCTION FROM THE GROSS EXPENDITURE, RECEIPTS OF THE R&D CENTRE. CONSEQUENTLY, THE APPELLANT REITERATED THAT DSIR HAD INCORRECTLY REDU CED THE RECEIPTS OF THE R&D CENTRE FROM THE GROSS EXPENDITURE AND WRONGLY ADVISED H DIRECTOR GENERAL , EXEMPTIONS TO ALLOW WEIGHTED DEDUCTION U/S 35(2AB) ON THE NET EXPENDITURE. THE APPELLANT ALSO RAISED AN ADDITIONAL GROUND THAT THE AO OUGHT TO HAVE GRANTED DEDUCTION U/S 35(2AB) ON EXPENDITURE INCURRED ON SCIENTIFIC RESEARCH W.E.F.01-04-2004 AS AGAINST DEDUCTION GRANTED ON EXPENDITURE INCURRED FROM 21-0 9- 2004, BEING THE DATE OF ISSUE OF NOTIFICATION NOTIF YING AUTOMOBILE COMPONENTS AS ELIGIBLE ARTICLES FOR DEDUCTION U/S 35(2AB). ON A CAREFUL CONSIDERATION OF THE FACTUAL & LEGAL POSITION, I AM UNABLE TO ACCEPT THE APPELLANTS CONTENTIONS IN VIEW OF THE CERTIFICATE IN FORM-3CL FROM THE DEPT. OF SCIENTIFIC & INDUSTRIAL RESEARCH(DSIR) WHICH CATEGORICALLY STATES THAT THE DEDUCTION TO BE CLAIMED BY THE APPELLANT WAS THE EXPENDITURE REDUCED BY RELATED INCOME WHICH HAS BEE N APPROVED BY THE PRESCRIBED AUTHORITY. MOREOVER, I T IS QUITE APPARENT THAT THE NOTIFICATION NOTIFYING AUTOMOBILE COMPONENTS AS ARTICLES ELIGIBLE FOR DEDUCTION U/S 35(2AB) CAME INTO EFFECT ONLY FROM 21 - ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 27 09-2004. INCIDENTALLY, THE FACT THAT THE APPELLANT ITSELF HAD CLAIMED THE NET AMOUNT AFTER REDUCING THE RECEI PTS FROM THE EXPENDITURE IN ITS STATEMENT OF COMPUTATIO N OF TOTAL INCOME FILED ALONG WITH ITS R/I FOR AY: 25005 -06 IS IRREFUTABLE AND UNDENIABLE. GROUND 6, ACCORDINGLY FAILS. 29. WE ALSO CONSIDER IT NECESSARY TO REPRODUCE THE PROVISIONS OF SEC.35(2AB) OF THE IT ACT, 1961 AS UNDER; 35(2AB) ][(2AB)(1) WHERE A COMPANY ENGAGED IN THE BUSINESS OF BIO-TECHNOLOGY OR IN ANY BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING, NOT BEING AN AR TICLE OR THING SPECIFIED IN THE LIST OF THE ELEVENTH SCHEDUL E]] INCURS ANY EXPENDITURE ON SCIENTIFIC RESEARCH (NOT BEING EXPENDITURE IN THE NATURE OF COST OF ANY LAND OR BUILDING) ON IN-HOUSE RESEARCH AND DEVELOPMENT FACI LITY AS APPROVED BY THE PRESCRIBED AUTHORITY, THEN, THER E SHALL BE ALLOWED A DEDUCTION OF A SUM EQUAL TO 'ONE AND ONE-HALF TIMES' OF THE EXPENDITURE] SO INCURRED . ['PROVIDED THAT WHERE SUCH EXPENDITURE ON SCIENTIFI C RESEARCH (NOT BEING EXPENDITURE IN THE NATURE OF CO ST OF ANY LAND OR BUILDING) ON IN-HOUSE RESEARCH AND DEVELOPMENT FACILITY IS INCURRED IN A PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR BEGINNING ON OR AFT ER THE 1ST DAY OF APRIL, 2021, THE DEDUCTION UNDER THI S CLAUSE SHALL BE EQUAL TO THE EXPENDITURE SO INCURRE D.';] [EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, 'EXPENDITURE ON SCIENTIFIC RESEARCH', IN RELATION T O DRUGS AND PHARMACEUTICALS, SHALL INCLUDE EXPENDITURE ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 28 INCURRED ON CLINICAL DRUG TRIAL, OBTAINING APPROVAL FROM ANY REGULATORY AUTHORITY UNDER ANY CENTRAL, STATE O R PROVINCIAL ACT AND FILING AN APPLICATION FOR A PATE NT UNDER THE PATENTS ACT, 1970 (39 OF 1970).] 30. AS PER PROVISIONS OF SEC.35(2AB) OF THE ACT, A S REPRODUCED ABOVE, THE ASSESSEE IS ELIGIBLE FOR GETT ING DEDUCTION OF A SUM EQUAL TO ONE AND HALF TIMES OF EXPENDITURE INCURRED BEING ELIGIBLE EXPENDITURE. W E ALSO FIND THAT IT IS NOTED BY THE LD.CIT(A) IN PARA -16.1 OF HIS ORDER AS REPRODUCED ABOVE THAT IT WAS ASCERTAINED BY THE AO FROM THE PERUSAL OF THE CERTIFICATE IN FORM 3CL FROM THE DEPT. OF SCIENTIFI C & INDUSTRIAL RESEARCH (DSIR) THAT THE DEDUCTION TO BE CLAIMED BY THE APPELLANT WAS THE EXPENDITURE REDUCED BY THE RELATED INCOME WHICH HAS BEEN APPROVED BY THE PRESCRIBED AUTHORITY. ON THE BASIS OF IT, THE AO CAME TO THE CONCLUSION THAT INCOME RECEI VED FROM R&D ACTIVITIES WAS NOTHING BUT REIMBURSEMENT OF THE RELATED EXPENDITURE. THIS WAS ALSO QUOTED B Y THE LD. CIT(A) ON THE SAME PARA THAT THE AO HAS NOT MADE ANY SEPARATE ADDITION BECAUSE THE ASSESSEE HIMSELF HAD CLAIMED DEDUCTION U/S 35(2AB) OF THE AC T ON THE NET EXPENDITURE IN ITS STATEMENT OF COMPUTATION OF TOTAL INCOME FILED ALONG WITH THE RETURN OF INCOME FOR THE PRESENT YEAR. 31. UNLESS IT IS ESTABLISHED BY THE ASSESSEE THAT THE RECEIPTS SO REDUCED BY THE ASSESSEE FROM THE EXPENDITURE IS NOT IN THE NATURE OF REIMBURSEMENT OF EXPENDITURE INCURRED, IT HAS TO BE HELD THAT DEDUCTION IS TO ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 29 BE ALLOWED BY THE AO ON THE NET EXPENDITURE AFTER R EIMBURSEMENT AT PRESCRIBED PERCENTAGE OF SUCH NET EXPENDITURE BECAU SE, IF THERE IS ANY REIMBURSEMENT OF EXPENDITURE THEN THE AMOUNT OF EXP ENDITURE INCURRED BY ASSESSEE STANDS REDUCED. IN THIS VIEW OF THE MA TTER, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. 32. NOW, WE EXAMINE THE APPLICABILITY OF VARIOUS J UDGMENTS CITED BY THE LD. AR OF THE ASSESSEE. 33. THE FIRST JUDGMENT CITED BY HIM IS THE TRIBUNA L ORDER RENDERED IN THE CASE OF DCIT(LTU) VS M/S MICROLAB LTD (SUPRA). IN THAT CASE, IT WAS NOT A CASE THAT THE RECEIPT OF THE ASSESSEE WAS IN THE NATURE OF REIMBURSEMENT OF EXPENDITURE INCURRED AS IN THE PRESENT CASE AND THE REFORE, THIS TRIBUNAL ORDER IS NOT RENDERING ANY HELP TO THE ASSESSEE IN THE PRESENT CASE. 34. REGARDING SECOND JUDGMENT OF THE HONBLE GUJAR AT HIGH COURT RENDERED IN THE CASE OF CIT VS CLARIS LIFESCIENCES LTD., (SUPRA), WE FIND THAT IN THAT CASE, THE ASSESSEE SET UP IN-HOUSE R&D FACI LITY AND APPLIED FOR APPROVAL. AN APPROVAL CAME WITH A SPECIFIC DATE AND THE ASSESSEE CLAIMED DEDUCTION OF THE ENTIRE EXPENDITURE FOR SETTING UP THE FACILITY AND THE AO ALLOWED THE DEDUCTION BUT WITH A RIDER THAT THE EXP ENDITURE PRIOR TO THE DATE OF APPROVAL IS NOT ALLOWABLE. THE LD CIT(A) APPROVE D THE ASSESSMENT ORDER ON THIS ISSUE IN THAT CASE, BUT THE TRIBUNAL HELD IN F AVOUR OF THE ASSESSEE ON THIS BASIS THAT ONCE THE R&D FACILITY IS APPROVED THE EN TIRE EXPENDITURE IS TO BE ALLOWED. ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 30 35. BUT IN THE PRESENT CASE, THE FACTS ARE DIFFERE NT. IN THE PRESENT CASE, 21.09.2004 IS THE DATE OF ISSUING OF NOTIFICATION N OTIFYING THE AUTOMOBILE COMPONENTS AS ELIGIBLE ARTICLES FOR DEDUCTION U/S 3 5(2AB) OF THE ACT. IN A CASE, WHERE AN INDUSTRY IS IN THE LIST OF APPROVED INDUSTRY, BUT THE ASSESSEE APPLIES FOR APPROVAL OF ITS UNIT AFTER THE START OF THE PREVIOUS YEAR AND THE SAME IS APPROVED BY DSIR, THEN DEDUCTION CAN BE ALL OWED FROM APRIL EVEN IF THE APPROVAL IS GRANTED ON A LATER DATE IN THE SAME YEAR. BUT IN THE PRESENT CASE, TILL 20 TH SEPTEMBER, 2004, AUTOMOBILE COMPONENTS WAS NOT AN APPROVED ARTICLE FOR DEDUCTION U/S 35(2AB) AND THEREFORE, TH E APPROVAL GRANTED AFTER THIS DATE CANNOT RELATE BACK PRIOR TO THIS AND THER EFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). THIS GROUND OF AP PEAL OF THE ASSESSEE IS REJECTED, BECAUSE ON BOTH THESE ASPECTS OF THE MATT ER, THERE IS NO INFIRMITY IN THE ORDER OF THE LD. CIT(*A) I.E. REGARDING NETTING OF REIMBURSEMENT OF EXPENSES AND DATE OF NOTIFICATION. 36. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSE. 37. NOW WE TAKE UP THE APPEAL OF THE REVENUE FOR T HE AY : 2005-06 IN IT(TP)A NO.719(BANG)/2011. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER; 1. THE ORDER OF THE CIT(A) IN SO FAR AS IT IS PRE JUDICIAL TO THE REVENUE, IS OPPOSED TO LAW AND FACTS OF THE CAS E. ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 31 2. THE LD. CIT(A)LTU ERRED IN REJECTING TPOS COMP ARABLE COMPANIES SELECTED BY THE TPO IN ITS ORDER BY ADOPT ING THE BEST POSSIBLE SEARCH PROCESS. 3. THE LD. CIT(A) DID NOT MAKE ANY PROPER SEARCH F OR COMPARABLES AFTER REJECTING THE SEARCH PROCESS OF T HE TPO. 4. AFTER REJECTING THE COMPARABLES OF THE TPO, THE LD. CIT(A) PICKED UP HER OWN THREE COMPARABLE COMPANIES NAMELY , CHOKSI LABORATORIES LTD., RITES LTD., AND VIMTA LAB S LTD., MERELY BECAUSE THE SAME WERE CONSIDERED AS COMPARAB LES IN EARLIER YEARS AND IGNORED THE FACT THAT THESE CO MPANIES WERE FUNCTIONALLY DIFFERENT AS PER THE ANNUAL REPOR TS AND OTHER INFORMATION PERTAINING TO THE FY 2004-05. 5. THE LD. CIT(A) LTU ERRED IN SELECTING THE COMPAN Y NAMES QUINTEGRA SOLUTIONS LTD., WHICH DOES NOT QUAL IFY THE FILTERS OF FUNCTIONAL SIMILARITY AND DIFFERENT ACCOUNTING YEAR APPLIED BY THE TPO THROUGH NO ADVERSE FINDING HAS BEEN GIVEN IN RESPECT OF THE FILTERS. 6. THE LD. CT(A)LTU ERRED IN SELECTING THE COMPANY NAMES POWERSOFT GLOBAL SOLUTIONS LTD., WHICH FAILS THE TP OS FILTER OF DIFFERENT ACCOUNTING YEAR AND ALSO DOES NOT HAVE SEGMENTAL RESULTS IN RESPECT OF IT ENABLED SERVICE SEGMENT AND THE SOFTWARE DEVELOPMENT SERVICE SEGMENT. 7. THE LD.CIT(A) DID NOT GIVE ANY CLEAR FINDING IN RESPECT OF ALPHA GEO INDI LTD., AND WATER & POWER CONSULTANCY SERVICES LTD., AND HER DIRECTIONS FOR EXAMINING T HE FEASIBILITY OF THESE COMPANIES AS COMPARABLE WAS AK IN TO SETTING ASIDE THE MATTER IN CONTRAVENTION OF SEC.51 (1)(A). 8. THE LD. CIT(A) ERRED IN DIRECTING THE AO TO ALLO W DEPRECIATION ON INTANGIBLE ASSETS. ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 32 9. THE LD. CIT(A) ERRED IN MERELY FOLLOWING THE JUD GMENTS OF THE HONBLE TRIBUNAL FOR THE ASSESSMENT YEARS 2003- 04 AND 2004-05 WITHOUT EXAMINING THE FACTS O THE CASE WHICH WERE CLEARLY BROUGHT OUT IN THE ORDER. 10. THE LD. CIT(A) IS NOT JUSTIFIED IN ALLOWING THE ASSESSEES APPEAL IN VIEW OF THE FACT THAT THE ISSU E HAS NOT REACHED FINALITY AND THE DEPARTMENT IS BEFORE T HE HONBLE HIGH COURT ON THIS ISSUE. 11. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE UR GED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT TH E ORDER OF THE CIT(A) BE SET ASIDES AND THAT OF THE AO BE REST ORED. 12. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO AMEND OR TO DELETE ANY OF THE GROUNDS THAT MAY BE URGED A T THE TIME OF HEARING OF THE APPEAL 38. IT WAS SUBMITTED BY THE LD. DR OF THE REVENUE THAT GROUND NO1 TO 7 ARE REGARDING TP ISSUES AND SINCE IN THE APPEAL OF THE ASSESSEE, TP ISSUES ARE ALSO RAISED AND IT HAS BEEN ARGUED BY THE LD. AR OF THE ASSESSEE THAT THE MATTER REGARDING TP ISSUES SHOULD BE RESTORED BACK TO THE FILE OF THE LD. CIT(A), THE TP ISSUES RAISED BY THE REVENUE IN ITS APPEAL SHOULD ALSO BE RESTORED BACK TO THE FILE OF THE LD. CIT(A). 39. THE LD. AR OF THE ASSESSEE ALSO AGREED TO THIS PROPOSITION PUT FORTH BY THE LEARNED DR OF THE REVENUE. IN VIEW OF THE FA CTS NOTED ABOVE AS PER WHICH BOTH SIDES AGREED THAT THE TP ISSUES AS PER R EVENUES APPEAL SHOULD ALSO BE RESTORED BACK TO THE FILE OF THE LD. CIT(A) , WE SET ASIDE THE ORDER OF THE LD.CIT(A) ON TP ISSUES AND RESTORE BACK THE TP ISSU E TO THE FILE OF LD. IT(A) FOR A FRESH DECISION ALONG WITH THE DECISION IN RESPECT OF TP ISSUES RAISED BY THE ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 33 ASSESSEE IN ITS APPEAL AND RESTORED BACK TO US TO T HE FILE OF THE LD. CIT(A) FOR A FRESH DECISION. ACCORDINGLY, GROUND NO.1 TO 7 OF T HE REVENUE APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES. 40. REGARDING GROUND NO.8 TO 10 OF THE REVENUES A PPEAL, LD. DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS THE LD.AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT(A). HE ALSO SUBM ITTED THAT PARA-14.1.1 OF THE ORDER OF THE LD. CIT(A) IS RELEVANT FOR THIS IS SUE, AS PER WHICH LD. CIT(A) HAS SIMPLY FOLLOWED THE TRIBUNAL ORDER IN ASSESSEE S OWN CASE FOR EARLIER YEARS I.E. 2003-04 AND 2004-05. 41. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL WE REPRODUCE PARA-14.1.1 OF THE ORDER OF THE LD.CIT(A). 14.1.1 AT THE APPELLATE STAGE, THE APPELLANT DR EW ATTENTION TO THE DECISION OF THE HONBLE ITAT, BANGALORE BENCH IN TH E APPELLANTS OWN CASE FOR AY: 2004-05 (ITA NO.329(B)/2009 DATED 31-0-8-2009) SQUARELY ON THIS ISSUE WHICH WAS FOLLOWED SUBSEQUENTLY BY THE JURISDICTION AL ITAT FOR AY: 2003-04 (ITA NOS.706 & 707/B/2010 DT.22-10-2010) A PLAN R EADING OF THE ORDER DATED 31.08.2009 REVEALS THAT THE HONBLE ITAT CONC LUDED VIDE PARA-6.6 OF ITS ORDER THAT THE APPELLANT WAS ENTITLED TO CLAIM DEPR ECIATION ON BUSINESS INFORMATION AMOUNTING TO RS.1.38 CRORES UNDER THE CATEGORY OF OTHER IDENTIFIABLE INTANGI9BLES (GOODWILL) FOLLOWING THE PRINCIPLE LAID DOWN BY HE HONBLE ITAT MUMBAI BENCH SMC IN THE CASE OF SKYL INE CATERERS ()P)LTD., VS ITO (2008) 20 SOT 266(MUM.) THE RELEVANT EXTRACT OF WHICH IS REPRODUCED BELOW; ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 34 A PERUSAL OF THE PROVISIONS OF S.32(1)(II) SHOWS THAT THE LEGISLATURE HAS SPECIFIED CERTAIN INTANGIBLE ASSETS ON WHICH DEPRECIATION CAN BE CLAIMED, NAMELY. KNOW-HOW , PATENTS, COPYRIGHTS, TRADEMARKS, LICENSE, FRANCHISE S. THESE SPECIFIC INTANGIBLE ASSETS ARE FOLLOWED BY TH E EXPRESSION ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE. IN SUCH A SITUATION, THE RULE O F EJUSDEM GENERIS WOULD APPLY. THE SCOPE OF THE RULE IS THAT WORDS OF A GENERAL NATURE FOLLOWING SPECIFIC AND PARTICULAR WORDS SHOULD BE CONSTRUED AS LIMITED TO THINGS WHICH ARE OF THE SAME NATURE AS THOSE SPECIFIED. THE GENERAL WORDS T AKE THE COLOUR FROM THE SPECIFIC WORDS. THE SPECIFIC W ORDS IN THE ABOVE SECTION REVEAL THE SIMILARITY IN THE SENS E THAT ALL THE INTANGIBLE ASSETS SPECIFIED ARE TOOLS OF THE TR ADE, WHICH FACILITATE THE ASSESSEE CARRYING ON THE BUSINESS. T HEREFORE, THE EXPRESSION ANY OTHER BUSINESS OR COMMERCIAL R IGHTS OF SIMILAR NATURE WOULD INCLUDE SUCH RIGHTS WHICH CAN BE USED AS A TOOL TO CARRY ON THE BUSINESS. 42. SINCE THE LD. DR OF THE REVENUE COULD NOT POIN T OUT ANY DIFFERENCE IN FACTS IN THE PRESENT YEAR, WE FIND NO REASON TO TAKE A CONTRARY VIEW IN THE PRESENT YEAR AND THEREFORE, RESPECTFULLY FOLLOWING THE EARLIER TRIBUNAL ORDERS IN ASSESSEES OWN CASE, WE DECLINE TO INTERFERE WIT H THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. ACCORDINGLY, GROUND NO.8 TO 10 OF THE REVENUE ARE REJECTED. GROUND NO.11 & 12 OF THE REVENUES APPEAL ARE GENE RAL IN NATURE REQUIRES NO SPECIFIC ADJUDICATION 43. IN THE RESULT, THE APPEAL OF THE REVENUE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 35 44. NOW WE TAKE UP THE APPEAL OF THE ASSESSEE FOR AY: 2005-06 IN ITA NO.1211(B)/2015 IN THE COURSE OF PROCEEDINGS U/S 15 4 OF THE IT ACT, 1961. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER; 1. THAT THE LD.CIT(A), LTU OUGHT TO HAVE ALLOWED APPELLANTS CLAIM FOR WEIGHTED DEDUCTION U/S 35(2AB ) ON THE GROSS AMOUNT OF EXPENDITURE AND NOT ON THE NET AMOUNT OF EXPENDITURE, HAVING REGARD TO THE PROVISIONS OF SECTION 35(2AB). 2. THE APPELLANT CRAVES LEAVE TOAD, TO AMEND OR ALT ER ANY O THE GROUNDS HEREIN. 3. FOR SUCH AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE APPELLANT PRAYS FOR APPROPRIAT E RELIEF. 45. IT WAS SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT THIS ISSUE IS IDENTICAL TO GROUND NO.9 IN ASSESSEES APPEAL FOR A SSESSMENT YEAR 2005-06 AND THEREFORE, THE SAME CAN BE DECIDED ON SIMILAR L INE IN THE PRESENT CASE ALSO. 46. THE LD. DR OF THE REVENUE ALSO AGREED TO THIS P ROPOSITION PUT FORTH BY THE LD. AR. 47. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. 48. WE FIND THAT WHILE DECIDING IT(TP)A NO.719(B)/2 011 OF ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2005-06, WE HAVE DEC IDED THIS ISSUE AGAINST AS PER PARA-35. ACCORDINGLY, IN THE PRESENT APPEAL ALSO, THIS ISSUE IS DECIDED ON THE SAME LINE AND THESE GROUNDS OF THE ASSESSEE ARE REJECTED. ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 36 49. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. 50. NOW WE TAKE UP THE APPEAL OF THE REVENUE FOR TH E ASSESSMENT YEAR 2006-07 IN ITA NO.665(B)/2011. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER; 1.THE ORDER OF THE CIT(A) IN SO FAR AS IT IS PREJU DICIAL TO THE REVENUE, IS OPPOSED TO LAW AND FACTS OF THE CAS E. 2. THE LD. CIT(A) ERRED IN DIRECTING THE AO TO ALL OW AS DEPRECIATION ON INTANGIBLE ASSETS. 3. THE LD. CIT(A)SHOULD HAVE APPRECIATED THE FACT THAT IN THE DEPRECIATION SCHEDULE ATTACHED TO THE AUDIT REP ORT IN FORM-#CD, THE ASSESSEE HAD CLAIMED DEPRECIATION ON PAYMENT OF GOODWILL AND THIS AMOUNT WAS CAPITALIZ ED I THE BOOKS AS GOODWILL BY THE ASSESSEE COMPANY ITSEL F. THEREFORE, THE ASSESSEE COMPANY COULD NOT HAVE TAKE N A DIFFERENT STAND AT A LATER STAGE. 4. THE LD. CIT(A) ERRED IN MERELY FOLLOWING THE JUDGMENTS OF THE HONBLE TRIBUNAL FOR THE ASSESSMEN T YEARS 2003-04 & 2004-05 WITHOUT EXAMINING THE FACTS OF THE CASE WHICH WERE CLEARLY BROUGHT OUT IN THE ORD ER. 5. THE LD. CIT(A) IS NOT JUSTIFIED IN ALLOWING THE ASSESSEES APPEAL IN VIEW OF THE FACT THAT THE IS SUE HAS NOT REACHED FINALITY AND THE DEPARTMENT IS BEFORE T HE HONBLE HIGH COURT ON THIS ISSUE. 6. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE UR GED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT TH E ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE AO BE RESTO RED. ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 37 7. THE APPELLANT CRAVES LEAVE, TO ADD, TO ALTER, T O AMEND OR TO DELETE ANY OF THE GROUNDS THAT MAY BE URGED A T THE TIME OF HEARING OF THE APPEAL. 51. IT WAS SUBMITTED BY THE LD. DR OF THE REVENUE T HAT GROUND NO.1 IS GENERAL IN NATURE AND IT NEEDS NO SPECIFIC ADJUDICA TION. HE FURTHER SUBMITTED THAT ALTHOUGH, THE REVENUE HAS RAISED AS MANY AS SE VEN GROUNDS OF APPEAL BUT THE ONLY ISSUE INVOLVED IS REGARDING THE ACTION OF THE LD.CIT(A) TO ALLOW DEPRECIATION ON INTANGIBLE ASSETS I.E. GOODWILL. H E SUBMITTED THAT THE SAME ISSUE HAS BEEN RAISED BY THE REVENUE IN APPEAL FOR THE ASSESSMENT YEAR 2005-06 AS PER GROUND NO.8 TO 10 AND THEREFORE, IN THE PRESENT YEAR ALSO, THIS ISSUE MAY BE DECIDED ON SIMILAR LINES. 52. THE LD. AR OF THE ASSESSEE AGREED TO THIS PROP OSITION PUT FORTH BY THE LD. DR OF THE REVENUE. 53. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND W E FIND THAT IN ASSESSMENT YEAR 2005-06, WHILE DECIDING GROUNDS 8 T O 10 IN THE APPEAL OF THE REVENUE, THIS ISSUE HAS BEEN DECIDED BY US IN F AVOUR OF THE ASSESSEE AS PER PARA 42ABOVE AND HENCE IN THE PRESENT YEAR ALSO , THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND ACCORDINGLY, THESE GROUN DS OF THE REVENUE ARE REJECTED. 54. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. 55. NOW WE TAKE UP APPEAL BY THE ASSESSEE IN ITA N O.672(B)/2011 FOR THE ASSESSMENT YEAR 2006-07. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER; ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 38 1. THE LD. CIT(A),LTU ERRED IN UPHOLDING THE ACT ION OF THE AO IN NOT ALLOWING A DEDUCTION FOR THE PROVISIO N MADE TOWARDS INTEREST PAYABLE TO CENTRAL EXCISE AND CUST OMS DEPT. AMOUNTING TO RS.93,25,345/- ALTHOUGH THE APPE LLANT HAD FOLLOWED MERCANTILE SYSTEM OF ACCOUNTING. 2.1 THE LD. CIT(A) LTU ERRED IN UPHOLDING THE EXPENDITURE TOWARDS TRADEMARK AS CAPITAL EXPENDITU RE AND GRANTING DEPRECIATION AS AGAINST THE APPELLANT S CLAIM OF AMORTIZATION OVER 36 MONTHS GIVEN THE FACTS AND CIRCUMSTANCES IN THE APPELLANTS CASE. 2.2 THE LD. CIT(A) LTU ERRED IN UPHOLDING THE ACTI ON OF THE DCIT IN CHANGING THE CHARACTER OF THE EXPENDITU RE FROM REVENUE TO CAPITAL AFTER TWO YEAR OF ITS INCURRENCE . 3. THE LD. CIT(A)LTU ERRED IN UPHOLDING THE ACTION OF THE DCIT IN NOT GRANTING THE DEDUCTION U/S 80JJAA IN RE SPECT OF THE WORKMEN WHO WERE EMPLOYED BY THE APPELLANT DURING THE YEAR BUT WHOSE DURATION OF WORKING IN TH AT YEAR WAS LESS THAN 300 DAYS. 4. THE LD.CIT(A)LTU ERRED IN NOT DEALING WITH THE ADDITIONAL GROUND RAISED BY THE APPELLANT AGAINST D CITS ACTION OF NOT GRANTING THE DEDUCTION U/S 35(2AB) ON THE GROSS EXPENDITURE INCURRED ON SCIENTIFIC RESEARCH. 5. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR ALTER ANY OF THE GROUNDS HEREIN. 56. REGARDING GROUND NO.1, IT WAS SUBMITTED BY THE LD.AR OF THE ASSESSEE THAT THIS ISSUE IS IDENTICAL TO GROUND NO. 6 RAISED BY THE ASSESSEE IN ITS APPEAL FOR THE ASSESSMENT YEAR 2005-06. SIMILA RLY, FOR GROUND NO.2 IN THE PRESENT YEAR, IT WAS SUBMITTED BY THE LD.AR THAT TH IS ISSUE IS IDENTICAL TO ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 39 GROUND NO.7 RAISED BY THE ASSESSEE IN ITS APPEAL FO R THE ASSESSMENT YEAR: 2005-06. SIMILARLY, FOR GROUND NO.3 RAISED BY THE ASSESSEE, HE SUBMITTED THAT IT IS ALSO IDENTICAL TO GROUND NO.8 RAISED BY THE ASSESSEE IN ASSESSMENT YEAR 2005-06. FOR GROUND NO.4 IN THE PRESENT YEAR, HE SUBMITTED THAT THIS ISSUE IS IDENTICAL TO GROUND NO.9 RAISED BY THE ASS ESSEE IN APPEAL FOR THE ASSESSMENT YEAR 2005-06. HE FURTHER SUBMITTED THAT THESE FOUR GROUNDS RAISED IN THE PRESENT YEAR MAY BE DECIDED IN LINE W ITH THE TRIBUNALS DECISION IN ASSESSMENT YEAR 2005-06. 57. THE LD. DR OF THE REVENUE ALSO AGREED TO THIS PROPOSITION PUT FORTH BY THE LD.AR OF THE ASSESSEE. 58. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT GROUND NO.1 TO 4 IN THE PRESENT YEAR ARE IDENTICAL TO GROU ND NO.6 TO 9 RAISED BY THE ASSESSEE IN ITS APPEAL FOR THE ASSESSMENT YEAR 2005 -06 AND SINCE NO DIFFERENCE IN FACTS COULD BE POINTED OUT BY ANY SID E, WE FIND NO REASON TO TAKE A CONTRARY VIEW IN THE PRESENT YEAR. ACCORDINGLY, IN LINE WITH OUR DECISION IN ASSESSMENT YEAR 2005-06, WE DECIDE THESE FOUR GROUN DS IN THE PRESENT YEAR ON SIMILAR LINE. 59. IN ASSESSMENT YEAR 2005-06, GROUND NO.6 TO 9 O F THE ASSESSEE APPEAL WERE REJECTED AND THEREFORE, IN THE PRESENT YEAR ALSO, GROUND NO.1 TO 4 OF THE ASSESSEE ARE REJECTED. 62. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS D ISMISSED. ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 40 63. IN THE COMBINED RESULT, THE CROSS APPEALS OF T HE ASSESSEE AND REVENUE FOR ASSESSMENT YEAR 2005-06 ARE PARTLY ALLO WED. WHEREAS THE REMAINING APPEAL OF THE ASSESSEE FOR ASSESSMENT YEA R 2005-06 U/S154 IS DISMISSED AND THE CROSS APPEALS OF THE ASSESSEE AND REVENUE FOR ASSESSMENT YEAR 2006-07 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (ASHA VIJAYARAGHAVAN) (A.K. GA RODIA) JUDICAL MEMBER ACCOUNTANT MEMBER BANGALORE: D A T E D : 08.09.2016 AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER, AR, ITAT, BANGALORE ITA NOS.671,672,665 & 719((TP)A2011 & ITA NO.1211(B)/15 41 1. DATE OF DICTATION 2. , , DATE ON WHICH TYPED DRAFT IS PLACED BEFORE THE DICT ATING MEMBER .. 3. !' # . $ %# / $ %# # & DATE ON WHICH THE APPROVED DRAFT COMES TO THE PS/SR .PS. 4. ''() & * + DATE ON WHICH THE ORDER IS PLACED BEFORE THE DICTAT ING MEMBER FOR PRONOUNCEMENT 5. * . %# / # . . %# # + DATE ON WHICH THE ORDER COMES BACK TO THE PS/SR.PS .. 6 * !', + DATE OF UPLOADING THE ORDER ON WEBSITE .. 7. ! !', ' , - ) IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO . 8. .% / 0 + DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. * 1'2 / 34 & 5 + DATE ON WHICH ORDER GOES FOR XEROX &ENDORSEMENT 10. 0 6 / + DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 11. * 7 & 0 8 + THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 12. !) * 9() & 0 9() /#5 . + THE DATE ON WHICH THE FILE GOES TO DESPATCH SECTION FOR DESPATCH OF THE TRIBUNAL ORDER 13. * 9() + DATE OF DESPATCH OF ORDER .