Joshi Technologies International Inc India Projects, Ahmedabad V. The DDIT, International Taxation-I, Ahmedabad

ITA 767/AHD/2014

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 6100 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: D
• Next Hearing Date: 17-10-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 13-03-2014
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: ASSESSEES CLAIM OF DEPRECIATION
• Keywords: Capital asset; Depreciation; Double taxation relief; Retrospective amendment; Non-deduction of tax; Revenue expenditure; TDS; Set aside
• Section: 15; 40(a)(ia); 195; 250; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I .T .A . N o . 7 6 7/ A h d /2 0 1 4 ( A s s e s s me nt Y ea r s : 2 0 09 -1 0) J os hi T e c h n ol og ie s I nt e r n a tio na l I n c. I nd ia P r o je c ts , B - 70 1- 7 02 , Sa n k a l p I c o n ic , O p p. V i kr a m N a g a r , I s c o n T e m pl e Cr o s s R o a d, S . G . H i gh wa y, A h m e d a b a d V s .The D e p ut y D i re c to r o f I nc o me Ta x ( In tl . T ax ) - I , Ah me da bad [P A N N o .AA A C J9 5 92 P] (Appellant) .. (Respondent) I .T .A . N o . 7 3 8/ A h d /2 0 1 4 ( A ss es s me n t Y e a r : 20 0 9 - 1 0) The D ep u t y D i r ec to r o f I n c o m e- ta x ( I n tl . Ta x ) - I, A h m e da ba d V s. Jo s h i T ec hn o l og ie s In t er na tio n a l I n c ., 70 1 , Pa r s hw an at h E sq uar e , Co r p or a te R oa d, P r a hl a d na ga r , Sat e l li te, A h m ed ab a d [ P A N N o. AA A C J 9 5 92 P ] (Appellant) .. (Respondent) I .T .A . N o . 7 6 6/ A h d /2 0 1 4 ( A ss es s me n t Y e a r : 20 1 0 - 1 1) J os h i T ec hn ol og ie s In t er na tio n a l I n c . I nd ia P r oj e c ts , B - 7 0 1- 7 02 , S a nk al p Ic on ic , O p p . V i kr a m Na ga r , I s c o n T e mp l e C r os s R o a d, S . G . H ig hw a y, A h m e da ba d V s. A s sis ta nt C o m mi s s i o ne r o f I n c o m e Ta x, C ir c l e ( I n tl . Ta x.- 1 ) , A h m e d a b ad [ P A N N o. A A AC J 9 5 92 P ] (Appellant) .. (Respondent) ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 2 - I .T .A . N o . 7 3 9/ A h d /2 0 1 4 ( A ss es s me n t Y e a r : 20 1 0 - 1 1) The D e p u t y D i re c to r o f I n co me - ta x ( In tl . Tax ) - I , A h me da ba d V s. J os hi T e c h n ol o g ie s I n t er na tio na l I n c. , 7 0 1, Pa r s hw an at h E s q u ar e , C o rp or a te R oa d, P ra hl a d na ga r , Sa te l lit e, A h m e d a b ad [ P A N N o. A A AC J 9 5 92 P ] (Appellant) .. (Respondent) I .T .A . N o . 2 4 2/ A h d /2 0 1 5 ( A ss es s me n t Y e a r : 20 1 1 - 1 2) J os hi T e c hn ol og ie s I nt er n a tio n a l I n c . I nd ia P r oj e c ts , B - 70 1 - 7 02 , Sa n k al p I c on ic , O p p . V i kr a m N a ga r , I s c o n T e m pl e C r os s R o a d, S . G . H ig h w a y, A h m e d a ba d Vs . A s s is ta n t C o mm i ss i on e r of I nc o m e Ta x, C ir cl e ( In tl . Ta x .- 1 ) , A h m e da ba d [ P A N N o. AA A C J 9 5 92 P ] (Appellant) .. (Respondent) I .T .A . N o . 1 4 6/ A h d /2 0 1 5 ( A ss es s me n t Y e a r : 20 1 1 - 1 2) Th e D e p ut y Co m m i ss i on er o f I n c o m e- ta x ( I n tl . T a x) - I , A h m e d a b ad Vs . J os hi T e c hn ol og ie s I nt er n a tio n a l I nc ., 70 1, Pa r s h w a n a t h E s q ua r e, C o r p o r a te R o a d , P r ahl a d n a ga r , Sa t el li te , A h me d a b ad [P A N N o.A A A C J 9 5 9 2 P] (Appellant) .. (Respondent) Appellant by : Shri Yogesh Shah, A.R. Respondent by: Shri Nitin Kulkarni, Sr. D.R. D at e of H ea r i ng 18.10.2023 D at e of P r o no u n ce me nt 27.10.2023 ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 3 - O R D E R PER BENCH: These cross appeals have been filed by the Assessee and the Revenue against the orders passed by the Ld. Dispute Resolution Panel, (in short “Ld. DRP”), Ahmedabad vide orders dated 26.12.2013 & 30.01.2014 passed for the Assessment Years 2009-10 to 2011-12. Since common facts and issues for consideration are involved for all the years under consideration, all the appeals are being heard and disposed of together. We shall first take up the Assessee’s appeal for A.Y. 2009-10 (ITA No. 767/Ahd/2014). 2. The Assessee has raised the following grounds of appeal:- “1 The order passed by the Deputy Director of Income Tax ("Assessing Officer") u/s 143(3), in pursuance of the order of Dispute Resolution Panel ("DRP") u/s 144C, is erroneous and requires to be modified. It is submitted that it be so held now. 2 The Assessing Officer has erred in law and facts in disallowing claim of deduction under section 42 of the Act of Rs.41,427,366/-. It is submitted that in the facts and circumstances of the case, the appellant is entitled to deduction under section 42 of the Act. It is submitted that it be so held now. 2.1 While disallowing appellant's claim for deduction under section 42, the Assessing Officer has erred, in considering an oil-well as 'Building' instead of 'Plant & Machinery' for the purpose of allowance of depreciation u/s. 32 of the Act. It be so held now. 2.2 While disallowing appellant's claim for deduction under section 42, the Assessing Officer has erred, in not granting depreciation at 60% together with additional depreciation on the plants used by the appellant in the field operations (including oil-well) as per Entry iii(8)(xii) of Appendix I to the Income Tax Rules, 1962. It is submitted that it be so held now. ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 4 - 3 The Assessing Officer has erred in holding that the appellant is not entitled to deduction u/s. 80IB(9) of the Act in respect of wells in Dholka oilfield. It be so held now. 4 The Assessing Officer has erred in not granting depreciation of Rs.8,06,481/- on amount paid for acquiring participating interest in Joint Venture (shown as goodwill in the books of account) which is business or commercial right of similar nature as envisaged u/s 32 of the Act. It is submitted that it be so held now. 5 The Assessing officer has erred in disallowing professional fees paid to Horizon Petroleum Consultants Inc. US of Rs.1,26,81,958/-under section 40(a)(i) for not deducting tax at source. 5.1 The Assessing officer erred in not appreciating that no technology is made available and hence the same is not covered within Article 12 of India- USA DTAA. It be so held now. 6 The Assessing officer has erred in disallowing reimbursement of expenses paid to Head office of Rs.1,44,67,504/- u/s 40(a)(i) on account of non- deduction of tax at source. 6.1 The Assessing officer has erred in not following the directions issued by DRP regarding taxability of the payment based on the Article of DTAA and has disallowed the same merely on the ground that self declaration cannot be accepted as proof of residence.” 3. Ground No.1 is general in nature and does not require any specific adjudication. Ground No.2:- Disallowance of claim under Section 42 of (Rs.4,14,27,366/-) 4. Before us, the Counsel for the assessee submitted that in this case, the Hon’ble Supreme Court dismissed the petition filed by the assessee and held that product sharing contracts entered into between assessee and Government of India did not include a clause pertaining to Section 42 of the Act and therefore, deduction under Section 42 could not be allowed to the ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 5 - assessee. Accordingly, based on the aforesaid decision of Hon’ble Supreme Court, the ITAT Ahmedabad in assessee’s own case for A.Ys. 2001-02, 2002-03, 2005-06, 2007-08 and 2008-09, dismissed this ground of the assessee. Accordingly, it was submitted that this ground needs to be decided against the assessee. 5. It would be useful to reproduce the relevant extracts of the ITAT ruling in assessee’s own case for A.Y. 2007-08 and 2008-09 in ITA Nos. 3456/Ahd/2010 & 3195/Ahd/2011 for ready reference:- “5. The brief facts in relation to this ground of appeal are that during the year under consideration, the assessee claimed deduction u/s. 42 of the Act. In the draft assessment year, the Assessing Officer rejected the assessee’s claim for deduction u/s. 42 of the Act on the ground that as per the section 42 of the Act, only those deductions are allowable which are specifically provided in the agreement entered into between the assessee and the Central Government and in the agreement entered into by the assessee with the Government, no such provision has been made to allow any deduction falling within the domain of section 42 of the Act. 5.1 Before us, the counsel of for the assessee submitted that the Hon’ble Supreme Court dismissed the petition filed by the assessee and held that Product Sharing Contracts (PSCs) entered into between the assessee and the Government of India did not include a clause pertaining to section 42 and therefore deduction under this section could not be allowed to the assessee. Based on the aforesaid decision passed by Hon’ble Supreme Court, the ITAT dismissed the appeal filed by the assessee for assessment years 2005-06, assessment year 2001-02 and assessment year 2002-03. 5.2 Accordingly, the counsel for the assessee submitted that this ground of appeal may accordingly be decided against the assessee. 5.3 In the result, ground no. 2 of assessee’s appeal is dismissed.” ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 6 - 6. In light of the above observations made by ITAT in assessee’s own case for A.Y. 2007-08 and assessee’s submission on this issue, Ground No. 2 of the assessee’s appeal is dismissed. Ground Nos.2.1&2.2:- The Department erred in considering oil- well house as “building” instead of “Plant and Machinery” for the purpose of allowance and depreciation under Section 32 of the Act. 7. The brief facts in relation to this ground of appeal are that the Assessing Officer granted depreciation @ 10% by treating oil wells as “building” as per explanation to the definition of “building” in Appendix-1 of Income Tax Rules, which refers to “wells and tubewells”. On the other hand, the assessee’s contention is that “oil wells” are “Plant & Machinery” and are eligible for claiming depreciation @ 60%. Before us, the Counsel for the assessee submitted that this issue has been dealt with by the ITAT Ahmedabad in assessee’s own case for A.Ys. 2007-08 and 2008-09 and accordingly, reliance was placed by the Ld. Counsel for the assessee on the observations made by ITAT in assessee’s own case for A.Ys. 2007-08 and 2008-09. 8. It would be useful to reproduce the relevant extracts of the ITAT ruling in assessee’s own case for A.Y. 2007-08 and 2008-09 for ready reference:- “6. The brief facts in relation to this ground of appeal are that the assessee submitted before the Assessing Officer that in terms of entry III 8(xii) of Appendix 1, Depreciation table of Income Tax Rule 1962, oil wells are eligible for depreciation as plant and machinery @ 60%. However, the ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 7 - Assessing Officer granted depreciation on oil wells @ 10% by treating oil wells as building. The assessee filed appeal before DRP which held that the assessee is eligible for depreciation on oil wells @ 15%. The DRP further held that the Assessing Officer has rightly observed that to fall within the ambit of the said entry, the asset has to be used as plant and consequently it should be used for the purpose of “distribution”. 6.1 The assessee filed appeal before the DRP on this issue, which upheld the order of the Assessing Officer by placing reliance on the ITAT Ahmedabad decision in the Niko Resources Ltd. in ITA No. 661/Ahd/2005-06. The assessee is in appeal before us against the aforesaid addition confirmed by the DRP. 6.2 Before us, the counsel for the assessee submitted that DRP has erred in facts and in law in holding that to be eligible for claim for deduction the asset should be used for “distribution”, whereas the aforesaid entry in appendix-1 does not mandate any such requirement. Further, the counsel for the assessee submitted that relying on the decision of Gujarat High Court in the case of Niko Resources Ltd. in Tax Appeal No. 1193 of 2009 vide order dated 20-07-2016, the High Court held that minerals oil wells will form part of “plant and machinery” and not “building”. Accordingly, the ITAT Ahmedabad in assessee’s own case for assessment year 2005-06, assessment year 2001-02 and assessment year 2002-03 allowed depreciation at higher rate to the assessee. Further, the above order of ITAT has also been followed by ITAT in assessment year 2006-07 in assessee’s own case in ITA No. 2389/Ahd/2015 read with MA No. 149/Ahd/2021. The copies of the aforesaid orders have been placed before us for our perusal. 6.3 We observe that this issue has been decided in favour of the assessee for assessment year 2006-07 and the relevant extracts of the ITAT order are reproduced for reference: “5. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, the ITAT was pleased to allow the depreciation to the assessee after making reference to the order of the ITAT in ITA No.3988/And/2018 for the Assessment Hear 2005-06 vide order dated 31/12/2019 in the own case of the assessee. But due to the mistake, the ITAT has directed the AO to delete the addition made by him, though there was not any addition made by the AO during the assessment proceedings. Thus the question of deleting the addition made by the AO does not arise. Accordingly, we rectify the para 26.1 of the order of the ITAT as detailed under: ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 8 - Accordingly we direct the AO to allow depreciation at the rate of 60% on the oil well and oil field equipment as plant & machinery as provided Entry U(8)(xii) as Appendix I to the Income Tax Rules, 1962. 5.1 Hence, the ground raised in the MA filed by the assessee is allowed.” 6.4 It would also be useful to reproduce the relevant extracts of Ahmedabad ITAT order in assessee’s own case in ITA Nos. 3988/Ahd/2008, 904, 905/Ahd/2010 and 51/Ahd/2009 for assessment years 2001-12, 2002-03 and 2005-06, where the ITAT had allowed the assessee’s appeal. The relevant extracts of the ruling are reproduced for reference: “23. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset we find that the Hon'ble Gujarat High Court in case of Niko Resources Ltd. reported in 88 taxmann.com 691 has held that the oil wells are Plant & Machineries and not part of building. The relevant portion of the judgment is reproduced here under: “5. We have heard [earned Counsel appearing far the respective parties. In light of the decision of the Hon'ble Supreme Court in the cane of Scientific Engg. House (P.) Ltd. (supra), we are of the view that the reasoning which was adopted by the Tribunal holding that she well would not form a part of the plant and machinery for drilling of oil is not possible. In that view of the matter, the view taken by CIT (Appeals) is restored and the findings of the Tribunal are reversed. Hence, the issue raised in this Appeal is answered in favour of the assessee and against the Department. The Appeal stands disposed of accordingly. 23.1 As the facts in the case on hand and the facts of the case as discussed in the case of Niko Resources Ltd (supra) are identical, therefore, respectfully following the order of the jurisdictional High Court as discussed above, we hold that the oil well is part of the plant and machinery. Hence, the ground of appeal raised by the assessee is allowed.” 6.5 Accordingly, respectfully following the aforesaid decisions, we hold that the oil wells are eligible for depreciation as “plant and machinery”. 6.6 Accordingly, the Assessing Officer is directed to re-compute the depreciation on “oil wells” on opening WDV. With respect to additions made ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 9 - during the year, the A.O. may call for necessary details from the assessee to ascertain the nature of additions made and allow depreciation as per the above directions. 7. In the result, ground no. 2.1 of the assessee’s appeal is allowed with the above directions to the Assessing Officer. Ground No. 2.2 (Oil field equipment are eligible for depreciation @ 60% being plant and machinery) 8. In ground no. 2.2, the assessee’s contention is that oil field equipment used for field operation should also be considered to be a part of oil well and depreciation should be allowed on oil field equipment @ 60% as is applicable to mineral oil concern as per Entry 8 of Appendix-I. 8.1 We observe that ITAT in assessee’s own case has allowed depreciation on oil field equipment in assessment year 2006-07 in ITA No. 2389/Ahd/2015 r.w. M.A. No. 149/Ahd/2021 8.2 Accordingly, respectfully following the decision in assessee’s own case for assessment year 2006-07, we hold that the assessee is eligible to claim depreciation on oil field equipment @ 60% (the relevant extracts of the aforesaid decision have been reproduced in the earlier part of the ruling while discussing the ground no. 2.1 of assessee’s appeal) 8.3 Accordingly, the Assessing Officer is directed to re-compute the depreciation on “oil field equipment” on opening WDV. With respect to additions made during the year, the A.O. may call for necessary details from the assessee to ascertain the nature of additions made and allow depreciation as per the above directions. 9. In the result, ground no. 2.2 of assessee’s appeal is allowed with the above directions to the Assessing Officer.” 9. Accordingly, in light of the aforesaid decision, we hold that the “oil wells” are eligible for depreciation as “Plant & Machinery” and the Assessing Officer is directed to re-compute the depreciation on “oil wells” on opening WDV. With respect to additions made during the year, the A.O. may call for necessary details from the assessee to ascertain the nature of additions made and allow depreciation as per the above directions. ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 10 - 10. In the result, Ground Nos. 2.1 & 2.2 of the assessee’s appeal are allowed with the above directions to the Assessing Officer. Ground No.3:- Disallowance of deduction under Section 80IB(9) for Dholka Oil field. 11. The issue for consideration in relation to this ground of appeal is whether each well operated by the assessee is a “separate undertaking” eligible for deduction under Section 80IB(9) of the Act. 12. Before us, the Counsel for the assessee submitted that the ITAT in assessee’s own case for A.Ys. 2007-08 and 2008-09 has restored the matter back to the file of the Assessing Officer to decide the issue in accordance with the direction of Hon’ble Supreme Court in CC No. 18380 of 2015. Accordingly, it was submitted before us that the matter may be restored to the file of Ld. Assessing Officer with similar directions as given by ITAT in assessee’s own case for A.Ys. 2007-08 and 2008-09. 13. It would be useful to reproduce the relevant extracts of the ITAT ruling in assessee’s own case for A.Ys. 2007-08 and 2008-08, with respect to this ground of appeal for ready reference:- “15. The issue for consideration in relation to this ground of appeal is whether each well operated by the assessee is a separate “undertaking” eligible for deduction u/s. 80IB(9) of the Act. Before us, the counsel for the assessee submitted that the ITAT in assessee’s own case for A.Y. 2005-06, A.Y. 2001-02 and A.Y. 2002-03 has decided this issue in favour of the assessee by relying on the Gujarat High Court decision in the case of Niko Resources supra. Further, the counsel for the assessee submitted that the above order has also been followed by the ITAT in assessee’s own case for A.Y. 2006-07. ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 11 - 15.1 We observe that the benefit of deduction u/s. 80IB(9) given to undertakings engaged in commercial production of natural gas was sought to be removed retrospectively by explanation 11 to the said provision. However, the retrospective insertion of explanation was held to be unconstitutional by the Gujarat High Court in the case of Niko Resources Ltd. vs. Union of India 274 ITR 369 since this affected the vested right of the assessee and therefore the Gujarat High Court struck down the aforesaid Explanation as being arbitrary and violative of Article 14 of the Constitution. However, the above findings made by the Gujarat High Court in the case of Niko Resources supra have been stayed by the Hon’ble Supreme Court while admitting the SLP in CC No. 18370 of 2015. In the aforesaid order, the Supreme Court held as below:- “as we are entertaining the matter, the High Courts where the appeals are pending shall not finalize the same till the matter is dealt with by this Court.” 15.2 Therefore, the present matter whether each well would constitute a separate undertaking is pending adjudication before the Supreme Court. Further, the Supreme Court in the case of similar provision u/s. 35D in the case of Pransati Medical Services and Resources Foundation vs. Union of India 416 ITR 485 (SC) refused to read-down the amendment in such a manner. In the aforesaid case, the Hon’ble Supreme Court held that constitutional validity of any provision and specially taxing provision cannot be struck down on a plea based on equity or/and hardship in a taxing statute and same is not legally sustainable. 15.3 Accordingly, the matter has been stayed by the Hon’ble Supreme Court and the ITAT in assessee’s own case for assessment year 2001-02, 2002-03 and 2005-06 has refrained from adjudicating on the issue whether or not the Explanation inserted by way of amendment u/s. 80IB(9) of the Act is retrospectively applicable. The ITAT in assessee’s own case set aside the issue to the file of the Assessing Officer for fresh adjudication in accordance with the judgment of the Hon’ble Supreme Court which is pending adjudication. In the aforesaid decision, the ITAT directed the Assessing Officer to wait for the verdict of the Hon’ble Supreme Court and thereafter decide the issue accordingly in the light of the judgment of the Hon’ble Supreme Court. Therefore, since the issue whether each “well” would constitute a separate undertaking and hence eligible for deduction u/s. 80IB(9) is dependent on whether the Explanation inserted to section 80IB(9) would operate from retrospective effect or not. 15.4 Accordingly, since the issue whether the Explanation to section 80IB(9) would operate retrospectively or not is pending adjudication before ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 12 - the Hon’ble Supreme Court, following the decision of the assessee’s own case for assessment year 2001-02, 2002-3 and 2005-06 at this juncture, we are refraining from adjudicating ground nos. 3 & 4 and restore the matter back to the file of Assessing Officer to decide the issue in accordance with the directions of the Hon’ble Supreme Court decision in CC N0.18370 of 2015 as referred to above. 16. In the result, issues raised vide ground nos. 4 & 5 of assessee’s appeal are set aside to the file of Assessing Officer for fresh adjudication in the light of order of Hon’ble Supreme Court of India. ” 14. Accordingly, in light of the above observation made by ITAT in assessee’s own case for A.Ys. 2007-08 and 2008-09, Ground No. 3 of the assessee’s appeal is set-aside to the file of Assessing Officer for fresh adjudication in light of order of Hon’ble Supreme Court of India. Ground No.4:- Depreciation on goodwill (Rs. 8,06,481/-) 15. Before us, at the outset, Ld. Counsel for the assessee submitted that on identical set of facts, ITAT Ahmedabad in assessee’s own case has set- aside the issue to the Assessing Officer for carrying out necessary verification in their order for A.Y. 2007-08. Accordingly, it was submitted that in light of the observations made by the ITAT for A.Y. 2007-08 the matter may be restored to the file of Assessing Officer for carrying out necessary verification. 16. It would be useful to reproduce the relevant extract from the ITAT order for ready reference:- “37. The brief facts in relation to this ground of appeal are that the assessee company in its return of income has claimed an amount of Rs. 14,33,745/- as depreciation on goodwill. During the course of assessment, the assessee vide letter dated 18-12-2019 submitted that the amount shown under the head “goodwill” is the amount paid by the company in respect of ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 13 - value of assets acquired by it along with interest in joint venture from L & T. However, the Assessing Officer disallowed the claim of the assessee by placing reliance on the Bombay High Court decision in the case of CIT vs. Techno Shares and Stock Ltd. in ITA No. 971 of 2006 dated 11-09-2009 in which the Bombay High Court held that u/s. 32(1)(ii) of the Act depreciation is not allowed on all capital assets but is allowable on capital assets which fall in any one of the categories enumerated in the section. Accordingly, the Assessing Officer by relying on the aforesaid decision held that depreciation of goodwill is not admissible to the assessee as goodwill does not fall in any categories of intangible assets as prescribed in section 32(1)(ii) of the Act. 37.1 Before the DRP, the assessee submitted that firstly the facts of assessee’s case and the facts of the case of CIT vs. Techno Shares supra are distinguishable. Further, the assessee submitted that since no payment was made during the year and there was no addition to the block of intangible asset during the year, the block which was decided in 2003-04 cannot be changed in the subsequent assessment year. However, the DRP rejected the assessee’s claim on the ground that firstly that the amount on which depreciation of Rs. 14,33,744/- has been claimed by the assessee was paid for acquiring the participating interest in the joint venture from L & T and the said amount was shown by the assessee itself as “goodwill” in its books of account. Accordingly, the claim of the assessee that this amount does not represent goodwill cannot be accepted. Secondly, even if the claim of the assessee is accepted that the aforesaid payment was made for acquiring participating interest in the joint venture, and is not in the nature of goodwill, even then, rights acquired by the assessee do not fall in any of the categories of “intangible assets” as prescribed by section 32(1)(ii) of the Act and hence depreciation is not admissible. Thirdly, the DRP held that the contention of the assessee that since the block of assets was decided in assessment year 2003-04, the same cannot be changed in the subsequent year is not acceptable. The DRP held that if an error has been committed in the earlier assessment year, it would not prevent the Income Tax Authorities from taking the correct legal view in the subsequent year. Accordingly, the DRP upheld that disallowance of depreciation of Rs. 14,33,744/- on the said amount. 37.2 Before us, the contention of the counsel for the assessee was two fold. Firstly, that DRP had disallowed the claim of depreciation by placing reliance in the case of Techno Shares and Stocks case passed by the Bombay High Court, however, the aforesaid decision has been reversed and decided in favour of the assessee by the Hon’ble Supreme Court in the case of Techno Shares and Stocks Ltd. vs. CIT 193 taxman 248. Accordingly, since the aforesaid case has since been decided by the Supreme Court in favour of the assessee and since the issue was decided by the DRP against the assessee on the basis of aforesaid case, which has since been reversed by the Supreme ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 14 - Court, the depreciation should be allowed to the assessee. The second contention raised by the counsel for the assessee is that since depreciation on the aforesaid asset has already been allowed to the assessee in the earlier years and the aforesaid asset was forming part of block of assets on which the depreciation has been allowed for various years, then, in view of various judicial precedents on the subject which have held that once depreciation has been allowed to the assessee on an asset forming part of block of asset, then, even if such asset has not been put to use in the subsequent years, the assessee would still be eligible to claim depreciation on such block of assets. Therefore, depreciation cannot be disturbed in the impugned assessment, since depreciation has been allowed on the “block of assets”, of which this asset has been a part of, for past many years. In response, ld. Departmental Representative placed reliance on the observations made by the DRP in its order. 38. We have heard the rival contention and perused the material on record. We are however, unable to agree with the contentions put forward by the ld. counsel for the assessee. Firstly, the we are of the considered view that simply because the depreciation has been allowed to the assessee on a block of assets of which this particular asset is a part thereof, would not suo moto entitle the assessee to claim depreciation, even if, it is late, found that the assessee’s claim for depreciation is per-se incorrect. While we agree with the contention that if the assessee is correct in claiming depreciation on an asset forming part of block of asset in a particular year, then, depreciation would still be allowable even if the aforesaid block of assets could not be put to use in the subsequent assessment years owing lull in the business of the assessee or for any other reason whatsoever. However, the above principle would not apply if the depreciation which was allowed to the assessee is per-se incorrect. For instance, if, an asset eligible for depreciation @ 15% has been formed part of the block assets eligible for deprecation @ 60% and the depreciation was allowed to the assessee on such block of assets “including the assets” which is eligible for deprecation @ 15%, for the reason that the Assessing Officer failed to examine the claim of depreciation during the course of assessment, then in such a case, in our considered view such incorrect claim can be re-examined by the Department in the subsequent years. In such circumstances, the assessee does not get a vested right to a higher claim of depreciation simply on the ground that an asset has been placed in another block of assets on which depreciation has been inadvertently allowed to the assessee in the earlier assessment years. Therefore, the above contention of the assessee cannot be accepted that simply because the assessee has been allowed depreciation on a block of assets, albeit incorrectly, this would give a vested right to the assessee to claim depreciation on such asset which has been mistakenly/inadvertently granted by the Department in the earlier years. Secondly, we are also not in ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 15 - agreement with the argument for the assessee that the claim of depreciation can be examined by the Department only in the first year when the asset was acquired and the Department is precluded from examining claim of depreciation in the subsequent assessment years. In our considered view, if the Department omitted to examine the claim of the assessee in earlier assessment years or if Department is of the view that such claim of depreciation has been incorrectly allowed to the assessee in the previous assessment years, then, nothing precludes the Department from examining the claim of the assessee simply on the reasoning that the claim of depreciation can be examined only in the year when the asset was first acquired by the assessee. The third contention of the counsel for the assessee was that since the decision of Techno Shares and Stocks supra (on which reliance was placed by DRP) has since been reversed by the Supreme Court in favour of the assessee, then the claim of depreciation may accordingly be allowed in favour of the assessee. However, we observe that the decision of DRP was not based exclusively on the decision of Techno Shares and Stocks supra alone which was on the issue whether right of membership conferred upon a member of BSE was a business or commercial right and hence eligible for depreciation u/s. 32(1)(ii) of the Act. The DRP has dealt with several aspects while disallowing the assessee’s claim of depreciation and the decision of DRP is not based on the case of Techno Shares and Stocks alone. We further observe that while the assessee in the return of income has claimed that the depreciation is allowable on such asset as “goodwill”, however, during the course of proceedings before the Department, the assessee submitted that the aforesaid amount paid towards excess of consideration paid for assets and liabilities as goodwill, essentially represents amounts paid for acquiring the right of L & T under the PSC signed with Government of India, and, therefore, strictly speaking, aforesaid amount does not qualify as goodwill since the contract is fully governed by the product sharing contract and as per the terms of PSC, entire sale is to be made to IOC and therefore there is no question of acquisition of any “goodwill”. Further, the assessee submitted that even though the amount paid for acquiring the participating interest is debited as “goodwill”, it is a settled law that nomenclature in books would not determine the nature of asset. Therefore, the amount paid to L & T towards purchasing or acquiring statutory right which entitles the company to carry out its business activity, falls within the purview of “intangible assets” and is eligible for depreciation u/s. 32 of the Act. Therefore, as per the above submissions of the assessee, while assessee has debited the aforesaid asset as “goodwill” in its books of accounts, however, during the course of proceedings before the Department, the assessee itself submitted that the nomenclature in the books of accounts is not representative of the true character of asset and the assessee is eligible for claiming depreciation on the aforesaid asset as “intangible assets” u/s. 32 of the Act. However, we observe that the eligibility of assessee’s claim of depreciation has not been ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 16 - examined in detail by the Assessing Officer during the course of assessment proceedings, i.e. whether the assessee is eligible to claim depreciation as “goodwill” as per assessee’s books as “intangible assets” u/s 32 of the Act, as per assessee’s submissions before the Department. Accordingly, in the interest of justice, this issue is being restored to the file of Assessing Officer to examine firstly, whether or not depreciation is allowable on the aforesaid asset and under which category the assessee is claiming depreciation on the same i.e. as depreciation on goodwill or as depreciation of “any other commercial right” or “intangible asset” u/s. 32 of the Act. Secondly, the Assessing Officer may also examine that the necessary supporting documents in justification for assessee’s claim of depreciation. Accordingly, this issue is aside to the file of ld. Assessing Officer with the aforesaid directions. 39. In the result, ground no. 13 & 13.1 of assessee’s appeal are allowed for statistical purposes.” 17. Accordingly, in light of the directions given by the ITAT Ahmedabad for assessee’s own case for A.Y. 2007-08, the matter is being restored to the file of Assessing Officer for carrying out necessary verification to examine firstly, whether or not depreciation is allowable on the aforesaid asset and under which categorically the assessee is claiming depreciation on the same i.e. as depreciation on goodwill or as depreciation on “any other commercial right” or “intangible assets” under Section 32 of the Act and secondly, the Assessing Officer is also directed to examine the necessary supporting documents in justification for assessee’s claim of depreciation. Accordingly, this issue is set-aside to the file of Ld. AO, with the aforesaid direction. 18. In the result, Ground No. 4 of the assessee’s appeal is allowed for statistical purposes. ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 17 - Ground Nos.5 & 5.1:- Disallowance under Section 40(a)(ia) of the Act on professional fees paid to Horizon Petroleum Consultants Inc. USA. 19. Before us, the Counsel for the assessee submitted that assessee has deducted and paid tax at source in A.Y. 2010-11 on the aforesaid fee and the said expenditure has been allowed to the assessee in A.Y. 2010-11. Accordingly, this ground has become infructuous and the assessee shall not be pressing for the same. 20. In the light of assessee’s submission, Ground Nos. 5 & 5.1 of the assessee’s appeal are dismissed as not pressed. Ground Nos. 6 & 6.1:- Disallowance on reimbursement of expenses paid to Head Office of Rs. 1,44,67,504/- under Section 40(a)(ia) of the Act on account of non-deduction of tax at source. 21. The brief facts in relation to this ground of appeal are that the assessee made payment of Rs. 1,44,67,504/- as reimbursement of expenses to Head Office towards geological mapping and production engineering paid by Head Office to third party individual consultants on behalf of the assessee. The DRP directed the AO to examine whether payment was made to individuals or corporate and directed that if the payment was made to individuals then Article related to “independent personal services” would be attracted and the DRP directed the AO to examine whether any tax was payable in India as per the said Article. However, the AO did not examine this specific direction given by the DRP and asked the assessee to furnish ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 18 - the “tax residency certificate” of the above mentioned consultants. The assessee was however, only able to produce self-declaration of those individuals as proof of residency. However, the AO did not accept the self- declaration furnished by those individuals as proof of tax residency and accordingly held that the provisions of the India-USA Tax Treaty cannot be applied in the present case. Accordingly, the Assessing Officer disallowed the aforesaid payments under Section 40(a)(ia) of the Act for non-deduction of tax at source under Section 195 of the Act. 22. We observe that in the aforesaid case, the AO do not comply with the direction given by DRP and has not examined whether Article 12 of the Tax Treaty or Article 15 relating to “independent personal services” would be attracted in the instant set of facts. Further, we observe that even the assessee apart from furnishing self-declaration filed by the individual consultants to whom the payments were disbursed by the JTI Head Office on behalf of the assessee, did not furnish any conclusive evidence to show that the individual consultants were “tax residents” of USA. 23. Accordingly, looking into the above facts, in the interest of justice the matter being restored to the file of the Assessing Officer to examine whether the correct Article to be applied in the instant facts should be Article 12 relating to “fee for technical services / fee for included services” or Article 15 relating to “independent personal services” of the DTAA between India and USA. Further, we are also of the considered view that merely filing of self-declaration by the individual consultants is not adequate proof of residency and accordingly, the assessee is directed to file necessary supporting documents to prove the tax residency of the individual ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 19 - residency of the individual consultants to whom the payments were made by JIT Head Office on behalf of the assessee. 24. In the result, Ground No.6 and 6.1 of the assessee’s appeal are restored to the file of the AO with the aforesaid directions. 25. In the result, Ground Nos. 6 & 6.1 of the assessee’s appeal are allowed for statistical purposes. Ground No.7:- Revenue ought to have allowed depreciation on opening WDV of expenditure held to be of capital nature in the assessment proceedings for A.Y. 2007-08 26. The brief facts of the case are that during the course of hearing before ITAT pertaining to A.Y. 2007-08 the ITAT held that out of revenue expenditure of Rs. 18,36,641/- claim by the assessee towards renovation expenses, a sum of Rs. 11,50,733/- is of capital nature and cannot be allowed as revenue expenditure in the hands of the assessee. Accordingly, a direction was given by ITAT to allow depreciation on this expenditure which was held to be capital in nature. While passing the order, ITAT in assessee’s own case for A.Y. 2007-08 made the following observations:- “26. Before us, the counsel for the assessee submitted that during the impugned assessment year, the assessee incurred certain expenditure relating to office renovation expenses like dismantling wells, sand filling, excavation, cementing, plastering etc. and on purchase of furniture and fixture. The assessee submitted that these office renovation expenses are on leased premises and hence are allowable as revenue expenditure. Further, the assessee submitted that looking into the nature of expenses, these are small structural changes which have been made by the assessee and cannot be construed as creation of a capital asset since no new asset has come into existence with enduring benefit. ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 20 - 27. We observe that on perusal of break-up of the expenses a sum of Rs. 5,68,990/- was paid to one Mr. Jitendra S. Bhimani on account of office renovation expenses towards dismantling old wells excavation, sand filling, brick work for partition etc. In our view, the aforesaid expenditure qualifies as revenue expenditure and hence may be allowed as revenue expenditure. Further, the assessee has incurred a sum of Rs. 1,16,918/- towards other sundry expenses, may also be allowed as revenue expenditure since no capital asset of enduring nature was brought into existence by way of aforesaid expenditure and hence the same may be allowed to the assessee as revenue expenditure. However, expenses towards purchase of furniture and fixture Rs. 2,09,679/-, and another payment to Dishnet Wireless Ltd. for purchase of asset Rs. 8,55,500/- and payment of Rs. 85,554/- towards purchase of furniture and fixture for new office have been incurred for purchase of furniture and fixture and other capital assets and hence are in the nature of capital expenses. Accordingly, the same cannot, in our view, be allowed as revenue expenditure in the hands of the assessee. However, the Assessing Officer is directed to allow depreciation on such fixed asset in accordance with law after carrying out the necessary verification. 28. In the result, ground no. 9 of assessee’s appeal is dismissed and ground no. 9.1 of assessee’s appeal is allowed for statistical purposes. ” 27. Before us, the Counsel for the assessee submitted that in respect of disallowance sustained in A.Y. 2007-08 by ITAT and depreciation granted in consequence thereof, depreciation on closing WDV of A.Y. 2008-09 should be allowed in A.Y. 2009-10. 28. We are in agreement with the Ld. Counsel for the assessee that the depreciation may be allowed to the expenditure which has been held to be capital expenditure as per directions given by the ITAT in assessee’s own case for A.Y. 2007-08. Accordingly, the Assessing Officer is directed to grant depreciation to the assessee on expenditure held to be capital in nature, in accordance with law. 29. In the result, Ground No. 7 of the assessee’s appeal is allowed. ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 21 - 30. Other grounds of appeal raised by the assessee are general in nature and do not require any specific adjudication. Now we shall take up the Department’s appeal for A.Y. 2009-10 (ITA No. 738/Ahd/2014) Ground No.1:- DRP erred in directing the Assessing Officer that if the Hon’ble High Court allow the writ petition, the Assessing Officer should allow the assessee to submit Form 10CCB and allow the claim under Section 80IB(9) of the Act. 31. We observe that while adjudicating on Ground No. 3 of assessee’s appeal, for A.Y. 2009-10 with respect to deduction under Section 80IB(9) of the Act the matter was restored to the file of Assessing Officer to allow the assessee’s claim of deduction under Section 80IB(9) of the Act in line with the directions given by Hon’ble Supreme Court, with whom the present issue is pending. 32. Accordingly, in light of observations made in assessee’s appeal in Ground No. 3 for A.Y. 2009-10, the matter is being restored to the file of the Assessing Officer to grant relief to the assessee, in accordance with law. Ground No.2:- DRP erred in deleting addition of preliminary drilling expenses (Rs. 19,30,216/-) 33. Before us, at the outset, the Counsel for the assessee submitted that the ITAT in assessee’s own case for A.Ys. 2007-08 and 2008-09 has ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 22 - allowed the appeal of the assessee on this issue. Accordingly, this issue needs to be decided in favour of the assessee. 34. It would be useful to reproduce the relevant extracts of the ITAT in assessee’s own case for A.Y. 2007-08 for ready reference:- “21. The brief facts in relation to this ground of appeal are that the Assessing Officer disallowed a sum of Rs. 12,14,580/- debited to the profit and loss account on account of preliminary drilling expenses by treating the same as capital expenditure. In appeal, the DRP upheld the order of Assessing Officer by observing that the preliminary drilling expense have been incurred by the assessee on account of fees, studies and other consultancy charges with regard to creation of new assets and therefore the aforesaid expenditure is capital in nature. 22. Before us, the counsel for the assessee submitted that the aforesaid expenditure has been incurred on revenue account to analyse the feasibility of drilling of production wells. The expenses include consultancy charges, food and lodging relating to consultancy and drilling expenses. The counsel for the assessee submitted that these expenses have been incurred as revenue expenditure as part of assessee’s business operation and no new asset has come into existence which could give enduring benefit. The counsel for the assessee submitted that these expenses are normal day to day expenses with respect to nature of industry. The counsel for the assessee placed reliance on several judicial precedents in support of its contention. In response, the ld. Departmental Representative placed reliance on the observations made in the DRP order. 22.1 We observe that in the case of DCIT vs. Gujarat Narmada Valley Fertilizer 57 taxman.com 250 (Gujarat), the Gujarat High Court held that where the new project did not materialize, the expenses incurred towards such project was revenue expenditure. Accordingly, looking into the nature of expenses incurred by the assessee coupled with the fact that the Department has not brought anything on record to show that any capital asset of enduring nature was brought into existence, the claim of the assessee on expenses incurred on preliminary drilling expenditure is hereby allowed. 23. In the result, ground no. 7 of the assessee’s appeal is allowed. ” ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 23 - 35. In light of the observations made by ITAT in assessee’s own case for A.Y. 2007-08 where this issue has been adjudicated in favour of the assessee, Ground No. 2 of the Department’s appeal is dismissed. Ground No.3:- DRP erred in allowing the claim of assessee in respect of disallowance of subscription charges of Rs. 5,04,591/- on the ground that no technical services has been made available. 36. The brief facts in relation to this ground of appeal are that during the year under consideration, the assessee made payment of Rs. 5,04,591/- for subscribing to pool of data which is available to the public at large and accordingly, the assessee was of the view that the payment do not qualify as fee for technical services. The Assessing Officer was of the view that the aforesaid payment was made by the assessee for getting access to a data base which is not publicly available. Accordingly, the Assessing Officer was of the view that TDS was required to be deducted on the aforesaid payments and accordingly, the Assessing Officer disallowed the aforesaid payments under Section 40(a)(ia) of the Act. 37. In appeal, the DRP held that subscription to a data base is not technical service made available as per DTAA and accordingly, directed the Assessing Officer to delete the disallowance. 38. Department is in appeal before us against the aforesaid relief granted by DRP. Before us, the Ld. DRP placed reliance on the observation made by the AO in the draft assessment order. In response, the Ld. Counsel for the assessee placed reliance on the observation made by the DRP and ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 24 - argued that DRP after considering the facts of the instant case has correctly observed that subscription to data base is not payment for technical services as per the DTAA. 39. We have heard the rival contentions and perused the material on record. We observe that the ITAT in various cases have held that payments towards subscription fees for access to specified online data base could not be considered as “fees for technical services”, support may be drawn from the following judicial precedents which have upheld the above proposition of law:- (i) Elsevier Information Systems GmbH (2019) 106 taxmann.com 401 (ii) TIS Two Administration (Singapore) Pte. Ltd. (2010) 40 SOT 16 (iii) CIT vs. De Beers India Minerals P. Ltd. 346 ITR 467 (Kar) (iv) Adani Port Infrastructure Pvt. Ltd. ITA No. 1405/Ahd/2009 (v) BA Research India Pvt. Ltd. ITA No. 3106/Ahd/2011 (vi) Guy Carpenter & Co. Ltd. 20 taxmann.com 807 (vii) Sheraton International Inc. 178 taxman 84 (viii) Relx Inc. 149 taxmann.com 78 (Delhi Tribunal). 40. Accordingly, in light of the facts relating to this ground of appeal and judicial precedents on the subject, we are of the considered view that the DRP has not erred in holding that the aforesaid payments towards subscription charges do not qualify as fee for technical services. 41. In the result, Ground No. 3 of the Department’s appeal is dismissed. ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 25 - Ground No.4:- DRP erred in allowing the claim of the assessee in respect of disallowance of training expenses of Rs. 4,49,147/- without discussing the merit of the case. 42. The brief facts in relation to this ground of appeal are that during the course of assessment, the Assessing Officer observed that assessee had made payment of Rs. 4,49,147/- to the head office for arrangement of training for the employees of project office. The assessee claimed that this payment includes reimbursement towards travelling expenses, but no bifurcation of the same was provided by the assessee to the AO. Accordingly, the AO held that since the payment is for providing training to employees of project office, the same qualifies as “fee for technical services” on which TDS was required to be deducted by the assessee. Accordingly, the AO disallowed a sum of Rs. 4,49,147/- under Section 40(a)(ia) of the Act. In appeal, DRP allowed the appeal of the assessee by holding that training and travelling etc. would not qualify as “technical services” in terms of the Act or the DTAA. 43. On going through the facts of the instant case, on a preliminary perusal of the expenses (training expenses), the same prima facie seem to qualify as payment for “technical services”. Further, we observe that the DRP, while allowing the appeal of the assessee has not given in specific finding on merits as to why payment for providing training services do not qualify as “fee for technical services” under the Act read with the Treaty. Accordingly, in the interest of justice, the matter is being restored to the file of AO to give detailed findings as to the nature of expenses and the assessee is also directed to file necessary details and also provide break-up as ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 26 - payment in support of its contention that the aforesaid payment do not qualify as fee for technical services under the Income Tax Act read with the DTAA. 44. In the result, Ground No. 4 of the Department’s appeal is allowed for statistical purposes. Now we shall take up the assessee’s appeal in ITA No. 766/Ahd/2014 for A.Y. 2010-11 Ground No.1:- Not allowing depreciation on opening WDV of amount of claim made under Section 42 45. In light of our observation with respect to Ground No. 2.2 of assessee’s appeal for A.Y. 2009-10 Ground No. 1 of the assessee’s appeal is allowed for A.Y. 2010-11. Ground No.2:- Disallowance of deduction under Section 80IB(9) of the Act 46. In light of our observation with respect to Ground No. 3 of assessee’s appeal for A.Y. 2009-10 Ground No. 2 of the assessee’s appeal is restored to the file of Ld. AO with similar directions as for A.Y. 2009-10. Ground No.3:- Disallowance of depreciation of Rs. 6,04,861/- on intangible asset ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 27 - 47. In light of our observation with respect to Ground No. 4 of assessee’s appeal for A.Y. 2009-10, Ground No. 3 of the assessee’s appeal is restored to the file of the Ld. AO with similar directions as for A.Y. 2009-10. Ground No.4:- DRP erred in not allowing reimbursement of expenses paid to Head Office under Section 40(a)(ia) of the Act of Rs 1,87,825/-. 48. The brief facts in relation to this ground of appeal are that the assessee has taken services of “Interactive Interpretation and Training Inc. USA” in relation to data evaluation of NELP VIII and Seismic 2D data interpretation. The aforesaid cost was incurred in relation to the India Project Office of the assessee company and accordingly, the same was reimbursed by the assessee to its Head Office. The issue for consideration before us is whether in the aforesaid facts, the reimbursement in respect of aforesaid services qualify as “fee for technical services” under Article 12 of the India-USA Treaty. 49. Before us, the Counsel for the assessee submitted that the aforesaid payment is for availing data evaluation services and there is no development or transfer of technical plan / design as alleged by the AO. Further, interactive Inc. does not have a PE or fixed place of business income and therefore, the business provides are not taxable in India as per Article 7 of the India-USA Tax Treaty. 50. The assessee has placed reliance on several judicial precedents in support of the contention that the aforesaid services do not qualify as “fee ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 28 - for technical services / fee for included services” under the India-USA Treaty. It was submitted before us that the DRP has not given any direction in respect of disallowance of expenses incurred for data evaluation. The assessee also submitted that rectification application dated 21.01.2005 filed before DRP is still pending for disposal. 51. In light of the above facts, in the interest of justice, the DRP is directed to give a finding as to whether the aforesaid services qualify as “fee for technical services” under the Income Tax Act read with India-USA Tax Treaty, since from perusal of the contents of the order passed by DRP, no specific findings has been given by DRP on this issue. Accordingly, the matter is being restored to the file of DRP with the aforesaid directions. 52. In the result, Ground No. 4 of the assessee’s appeal is allowed for statistical purposes. Ground No.5:- Disallowance of claim of depreciation and additional depreciation on certain assets at 60% being Plant & Machinery 53. In light of our observation with respect to Ground No. 2.2 of assessee’s appeal for A.Y. 2009-10 Ground No. 5 of the assessee’s appeal is allowed for A.Y. 2010-11 for statistical purposes. Ground No.6:- Not allowed depreciation on expenditure capitalized in AY 2007-08 assessment. ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 29 - 54. In light of our observation with respect to Ground No. 7 of assessee’s appeal for A.Y. 2009-10 Ground No. 6 of the assessee’s appeal is allowed for A.Y. 2010-11. 55. Ground No. 7 of the assessee’s appeal is general in nature hence does not require any specific adjudication. Now we shall come to Department’s appeal for A.Y. 2010-11(ITA No. 739/Ahd/2014) Ground No.1:- Erred in law and facts in directing AO that if the Hon’ble High Court allows writ petition, AO should allow assessee to submit Form 10CCB and allow the claim u/s 80IB(9) of the Act. 56. We observe that while adjudicating on Ground No. 3 of assessee’s appeal, for A.Y. 2009-10 with respect to deduction under Section 80IB(9) of the Act the matter was restored to the file of Assessing Officer to allow the assessee’s claim of deduction under Section 80IB(9) of the Act in line with the directions given by Hon’ble Supreme Court, with whom the present issue is pending. 57. Accordingly, in light of observations made in assessee’s appeal in Ground No. 3 for A.Y. 2009-10, the matter is being restored to the file of the Assessing Officer to grant relief to the assessee, in accordance with law. ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 30 - Ground No.2:- Erred in law and on facts in allowing claim of assessee in respect of disallowance of subscription charges of Rs. 7,71,554/- 58. In light of our observation with respect to Ground No. 3 of Department’s appeal for A.Y. 2009-10 Ground No. 2 of the Department’s appeal is allowed for A.Y. 2010-11. Ground No.3:- DRP erred in allowing claim of the assessee in respect of audit expenses of Rs. 8,66,796/- and stating that no technical services made available with discussing the merit of the case. 59. The brief facts in relation to this ground of appeal are that the assessee’s Head Office had taken services of RPS of USA in relation to Dholka Oil Fields Reserve Audit the issue for consideration before us that whether the payment towards such audit fees qualifies as “fee for technical services” under the Act read with the Treaty. Before us, the Department placed reliance on the observation made by the AO in the draft assessment order, whereas the Counsel for the assessee submitted that DRP has correctly held that payment for Reserve Audit of Dholka Unit is not taxable in India since as per DTAA, no technology is “made available” to the assessee. 60. We observe that in the instant facts, payment was made by the assessee carrying out of reserve audit of Dholka Unit. Looking into the facts of the instant case, we are of the considered view that in the instant ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 31 - case, no technology has been “made available” to the assessee during the course of providing of aforesaid “audit services”, which is a mandate of Article 12 of the India-USA DTAA for any services to qualify as “fee for technical services / fee for included services” under the India-USA Tax Treaty. In our considered view, DRP has correctly observed that looking into the instant facts and nature of services for which payment was made by the assessee viz. audit services, there can be no inference that any technology was “made available” to the assessee, looking into the nature of services availed by the assessee. Further, it is also not the allegation of the Department that RPS, USA has a permanent establishment or fixed placed of business in India so that the income erred by RPS USA should be taxable under Article 7 of the India-USA Tax Treaty as business profits in India. Further, in the case of ACIT vs. BSR and Company 70 taxmann.com 69 (Mumbai Tribunal), the ITAT held that different types of professional services rendered to an Indian company by overseas companies outside India in relation to audit, taxation, transfer-pricing, information technology, background checks, etc would be independent personal services; since these overseas companies had no fixed base or PE in India, payment made to them would not be chargeable to tax in India. 61. Accordingly, in light of the facts of the instant case, we find no infirmity in the order of DRP so as to call for any interference. 62. In the result, Ground No. 3 of the Department’s appeal is dismissed. ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 32 - Now we shall take up the assessee’s appeal in ITA No. 242/Ahd/2014 for A.Y. 2011-12 63. Ground No. 1 is general in nature and does not require any specific adjudication. Ground No.2:- Disallowance of deduction under Section 80IB(9) of the Act. 64. In light of our observation with respect to Ground No. 3 of assessee’s appeal for A.Y. 2009-10, Ground No. 2 of the assessee’s appeal is restored to the file of Ld. AO with similar directions as for A.Y. 2009-10. Ground No.3:- Disallowance of claim of depreciation and additional depreciation on certain assets at 60% being Plant & Machinery 65. In light of our observation with respect to Ground No. 2.2 of assessee’s appeal for A.Y. 2009-10 Ground No. 3 of the assessee’s appeal is allowed for A.Y. 2011-12. Now we shall take up the Department’s appeal in ITA No. 146/Ahd/2015 for A.Y. 2011-12 Ground No.1:- Erred in law and facts in directing AO that if the Hon’ble High Court allows writ petition, AO should allow assessee to allow the claim under Section under Section 80IB(9) of the Act. ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 33 - 66. In light of our observation with respect to Ground No. 1 of Department’s appeal for A.Y. 2009-10 Ground No. 1 of the Department’s appeal is allowed for statistical purposes for A.Y. 2011-12. Ground No.2:- DRP erred in law and on facts in allowing claim of assessee in respect of disallowance of depreciation on goodwill of Rs. 4,53,646/- 67. In light of our observation with respect to Ground No. 4 of assessee’s appeal for A.Y. 2009-10 Ground No. 2 of the Department’s appeal is restored to the file of Ld. AO with similar directions as for A.Y. 2009-10. Ground No.3:- DRP erred in law and on facts in allowing claim of assessee in respect of disallowance of subscription charges of Rs.7,48,597/- 68. In light of our observation with respect to Ground No. 3 of Department’s appeal for A.Y. 2009-10 Ground No. 3 of the Department’s appeal is dismissed for A.Y. 2011-12. 69. In the combined result, appeals filed by the Assessee are partly allowed for statistical purposes and appeals filed by the Department are also partly allowed for statistical purposes. This Order pronounced in Open Court on 27/10/2023 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 27/10/2023 TANMAY, Sr. PS TRUE COPY ITA Nos. 767/Ahd/2014 & 05 others Joshi Technologies International Inc. India Projects vs. DDIT Asst. Years –2009-10 to 2011-12 - 34 - आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad