Sundaram Fasteners Limited, CHENNAI V. DCIT, CHENNAI

ITA 813/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8201 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 08-09-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 01-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR MILIND MADHUKAR BHUSARI
• Keywords: Depreciation; Additional depreciation; Wholly owned subsidiary; Commercial expediency; Revenue expenditure
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , !' .$%$&, ( ') BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ./ ITA NO.813/MDS/2016 & +& / ASSESSMENT YEAR : 2011-12 M/S SUNDARAM FASTENERS LTD., 98-A, 7 TH FLOOR, DR. RADHAKRISHNAN SALAI, MYLAPORE, CHENNAI - 600 004. PAN : AAACS 8779 D V. THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 6(2), CHENNAI - 600 034. (-./ APPELLANT) (/0-./ RESPONDENT) -. 1 2 / APPELLANT BY : SHRI VIKRAM VIJAYARAGHAVAN, ADVOCA TE /0-. 1 2 / RESPONDENT BY : DR. MILIND MADHUKAR BHUSARI, CI T 3 1 4( / DATE OF HEARING : 08.09.2016 56+ 1 4( / DATE OF PRONOUNCEMENT : 28.10.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE ASSESSING OFFICER, CONSEQUENT TO THE DIRECTIONS OF DISPUTE RESOLUTION PANEL DATED 21.12.2015 AND PERTAINS TO A SSESSMENT YEAR 2011-12. 2 I.T.A. NO.813/MDS/16 2. THE FIRST GROUND OF APPEAL IS WITH REGARD TO ADJ USTMENT OF INTEREST FREE LOAN AND GUARANTEE COMMISSION. 3. SH. VIKRAM VIJAYARAGHAVAN, THE LD.COUNSEL FOR TH E ASSESSEE, SUBMITTED THAT THE ASSESSEE ADVANCED INTEREST FREE LOAN TO SUBSIDIARY COMPANY. ACCORDING TO THE LD. COUNSEL, THE LOAN WAS GIVEN TO WHOLLY OWNED SUBSIDIARY COMPANY OF THE ASS ESSEE SINCE THE SUBSIDIARY COMPANY WAS IN A VERY BAD FINANCIAL POSITION. THE SUBSIDIARY COMPANY ALSO SUFFERED LOSS. THEREFORE, ACCORDING TO THE LD. COUNSEL, IF THE INTEREST WAS CHARGED ON THE WHO LLY OWNED SUBSIDIARY COMPANY IN SUCH A SITUATION, ULTIMATELY IT HAS TO BE WRITTEN OFF SINCE THE ASSESSEE COULD NOT RECOVER TH E INTEREST FROM SUBSIDIARY COMPANY. REFERRING TO THE ORDER OF THIS TRIBUNAL FOR THE ASSESSMENT YEAR 2010-11 IN THE ASSESSEE'S OWN CASE, THE LD.COUNSEL SUBMITTED THAT ON IDENTICAL SITUATION, T HIS TRIBUNAL REMITTED BACK THE MATTER TO THE FILE OF THE ASSESSI NG OFFICER. THEREFORE, FOR THE YEAR UNDER CONSIDERATION ALSO, T HE ISSUE OF DISALLOWANCE OF INTEREST MAY BE REMITTED BACK TO TH E FILE OF THE ASSESSING OFFICER. 4. ON THE CONTRARY, DR. MILIND MADHUKAR BHUSARI, TH E LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT INTERES T SHALL BE 3 I.T.A. NO.813/MDS/16 CHARGED ON THE AMOUNT ADVANCED BY THE ASSESSEE TO I TS SUBSIDIARY COMPANY IN UK. THEREFORE, THE ASSESSING OFFICER BY APPLYING LIBOR RATE OF INTEREST, MADE THE ADDITION. THE LD. D.R. FURTHER SUBMITTED THAT BY ADVANCING THE BORROWED FUNDS TO A NON-RESIDENT COMPANY WITHOUT CHARGING ANY INTEREST, THE ASSESSEE IS APPARENTLY SHIFTING THE TAXABLE INCOME TO A FOREIGN JURISDICTI ON. WHEN THE ASSESSEE CLAIMS THE INTEREST EXPENDITURE IN INDIA, WHILE COMPUTING THE TAXABLE INCOME, THE INCOME OF THE ASSESSEE IS R EDUCED TO THE EXTENT INTEREST PAID ON THE BORROWED LOAN WHICH WAS DIVERTED TO THE FOREIGN COMPANY. MERELY BECAUSE THE UK COMPANY WAS SAID TO BE 100% SUBSIDIARY COMPANY OF THE ASSESSEE THAT CANNOT BE A REASON TO REDUCE THE TAXABLE LIABILITY IN INDIA BY SHIFTIN G THE TAXABLE INCOME TO A FOREIGN JURISDICTION. SINCE THE ISSUE WAS REM ITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR THE ASSESSMENT YE AR 2010-11, THE LD. D.R. SUBMITTED THAT FOR THE YEAR UNDER CONSIDER ATION ALSO, THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE ASSE SSING OFFICER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. FOR THE ASSESSMENT YEAR 2010-11 ALSO, THE ASSESSEE-COMPANY ADVANCED INTEREST FREE LOAN TO ITS WHOLLY OWNED SUBSIDIARY C OMPANY AT UK. 4 I.T.A. NO.813/MDS/16 WHILE CONSIDERING THE ADDITION MADE BY THE ASSESSIN G OFFICER ON THE DIRECTION OF THE DRP, THIS TRIBUNAL FOUND THAT THE MATTER NEEDS TO BE RE-EXAMINED BY THE DRP AND VERIFY THE AVAILAB ILITY OF SURPLUS FUNDS WITH THE ASSESSEE FOR THE PURPOSE OF ADVANCIN G LOAN TO ASSOCIATE ENTERPRISE IN UK. SINCE FACTUAL SITUATIO N ARISES DURING THE YEAR UNDER CONSIDERATION IS SIMILAR AS THAT OF ASSE SSMENT YEAR 2010-11, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RECONSIDERED IN THE LIGHT OF OBSERVATIO N MADE BY THIS TRIBUNAL FOR ASSESSMENT YEAR 2010-11. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ISSUE O F DISALLOWANCE OF INTEREST ON THE BORROWED LOAN IS REMITTED BACK TO T HE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE- EXAMINE THE ISSUE AS OBSERVED BY THIS TRIBUNAL FOR ASSESSMENT Y EAR 2010-11 IN I.T.A. NO.688/MDS/2015 DATED 04.03.2016 AND THEREAF TER DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING A REASONAB LE OPPORTUNITY TO THE ASSESSEE. 6. THE NEXT GROUND OF APPEAL IS WITH REGARD TO GUAR ANTEE COMMISSION. 7. SH. VIKRAM VIJAYARAGHAVAN, THE LD.COUNSEL FOR TH E ASSESSEE, SUBMITTED THAT THIS ISSUE WAS ALSO COVERED BY THE D ECISION OF THIS 5 I.T.A. NO.813/MDS/16 TRIBUNAL IN REDINGTON (INDIA) LIMITED V. JCIT IN I. T.A. NO. 513/MDS/2014 DATED 07.07.2014. THE LD.COUNSEL FURT HER SUBMITTED THAT THE VERY SAME ISSUE WAS ALSO ADJUDICATED BY DE LHI BENCH OF THIS TRIBUNAL IN BHARTI AIRTEL LTD. V. ACIT (39 CCH 415). THEREFORE, THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. 8. ON THE CONTRARY, DR. MILIND MADHUKAR BHUSARI, TH E LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT FOR THE ASSESSMENT YEAR 2010-11, THE DRP BY FOLLOWING THE ORDER OF THI S TRIBUNAL IN REDINGTON (INDIA) LIMITED (SUPRA), ACCEPTED THE CLA IM OF THE ASSESSEE. DURING THE YEAR UNDER CONSIDERATION, THE DRP FOUND THAT THE FACTS ARE TOTALLY DIFFERENT. DURING THE YEAR U NDER CONSIDERATION, THE ASSESSEE EXTENDED CORPORATE GUARANTEE ON BEHALF OF AE CPFL AND THE ACTUAL AMOUNT OUTSTANDING AS ON 31.03.2011 WAS ` 61,86,647/- AS AGAINST THE BALANCE OF ` 58,55,773/- AS ON 01.04.2010. THE ASSESSEE HAS GIVEN FRESH BANK GUAR ANTEE OF ` 79,65,761/- IN JANUARY, 2011 AND THE ACTUAL AMOUNT OUTSTANDING AS ON 31.03.2011 WAS ` 82,63,097/-. THE ASSESSEE ACTUALLY PAID COMMISSION TO THE BANK FOR AVAILING THIS FACILITY. THEREFORE, IT IS NOT A CORPORATE GUARANTEE. THEREFORE, THE DRP DIRECTED THE TPO TO VERIFY THE ACTUAL COMMISSION PAID BY THE ASSESSEE W ORK OUT THE ARM'S LENGTH PRICE IN RESPECT OF THE BANK GUARANTEE . 6 I.T.A. NO.813/MDS/16 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE CLAIMS THAT THE ISSUE WAS COVERED IN ITS FAVOUR BY THE DECISION OF THIS TRIBUNAL IN REDINGTON (INDIA) LIMITED (SUPRA). HOWEVER, THE REVENUE CONTENDS THAT THE ISSUE WAS DISTINGUISHABLE AND THE ASSESSEE HAS ACTUALLY PAID COMMISSION TO BANK FOR A VAILING BANK GUARANTEE FROM THE BANK. IT IS NOT KNOWN FOR THE E ARLIER ASSESSMENT YEAR, NAMELY, ASSESSMENT YEAR 2010-11, IN THE CASE OF REDINGTON (INDIA) LTD., WHETHER THE ASSESSEE HAS PAID ACTUAL COMMISSION TO BANK OR NOT. IF THE ASSESSEE HAS PAID COMMISSION A CTUALLY TO THE BANK, THEN THE MATTER WOULD STAND DIFFERENTLY. THE REFORE, AS RIGHTLY OBSERVED BY THE DRP, THE MATTER NEEDS TO BE VERIFIE D WHETHER IN THE CASE OF REDINGTON (INDIA) LIMITED (SUPRA), THE ASSE SSEE HAS PAID THE COMMISSION ACTUALLY FOR AVAILING THE FACILITY F ROM THE BANK. SINCE THE EXACT FACTUAL SITUATION IS NOT AVAILABLE ON THE RECORD, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATT ER NEEDS TO BE RECONSIDERED BY THE ASSESSING OFFICER. ACCORDINGLY , THE ORDER OF THE LOWER AUTHORITY IS MODIFIED AND THE ASSESSING OFFIC ER IS DIRECTED TO REFER THE MATTER TO TPO ONCE AGAIN TO FIND OUT THE ACTUAL FACTS WITH REGARD TO PAYMENT OF COMMISSION TO BANK AND THEREAF TER DECIDE THE 7 I.T.A. NO.813/MDS/16 ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 10. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DIS ALLOWANCE UNDER SECTION 14A OF THE ACT. 11. SH. VIKRAM VIJAYARAGHAVAN, THE LD.COUNSEL FOR T HE ASSESSEE, SUBMITTED THAT THE DRP CONFIRMED THE DISALLOWANCE M ADE BY THE TPO IN RELATION TO THE INCOME WHICH DOES NOT FORM P ART OF THE TOTAL INCOME UNDER SECTION 14A OF THE ACT. IN FACT, THE ASSESSEE EARNED DIVIDEND INCOME OF ` 44,34,485/-. ACCORDING TO THE LD. COUNSEL, THE PAID UP CAPITAL AND RESERVES AND SURPLUS OF THE ASS ESSEE AS ON 31.03.2011 WAS ` 55,494.96 LAKHS, WHEREAS THE INVESTMENTS WAS ` 14,236.74 LAKHS. THEREFORE, THE ASSESSEE HAS MADE INVESTMENTS FROM ITS OWN FUNDS. MOREOVER, THE INVESTMENTS MADE WITH THE SUBSIDIARY COMPANY HAVE TO BE EXCLUDED. ON A QUERY FROM THE BENCH, HOW THE INVESTMENTS WERE SAID TO BE MADE IN SUBSIDIARY COMPANY AND WHAT IS THE SHAREHOLDING PATTERN? THE LD.COUNSEL SUBMITTED THAT FOR THE ASSESSMENT YEAR 2010-11, IN THE ASSESSEE'S OWN CASE IN I.T.A. NO.688/MDS/2015, THE MATTER WAS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER, THEREFORE, TH IS ISSUE ALSO MAY BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION. 8 I.T.A. NO.813/MDS/16 12. WE HAVE HEARD DR. MILIND MADHUKAR BHUSARI, THE LD. DEPARTMENTAL REPRESENTATIVE ALSO. THE ASSESSEE CLA IMS THAT THE PAID UP CAPITAL AND RESERVES AND SURPLUS WAS AVAILA BLE TO THE EXTENT OF ` 55,494.96 LAKHS AS ON 31.03.2011 AND THE INVESTMENT WAS ONLY TO THE EXTENT OF ` 14,236.74 LAKHS. THEREFORE, IT HAS TO BE PRESUMED THAT THE INVESTMENT WAS MADE FROM OWN CAPITAL. IT IS NOT KNOWN WHETHER THE PAID UP CAPITAL, RESERVES AND SURPLUS W ERE AVAILABLE WITH THE ASSESSEE IN LIQUID CASH. THE ASSESSEE HAS INVESTED IN PLANT AND MACHINERY, THEREFORE, THE LIQUID CASH MAY BE AVAILABLE WITH THE ASSESSEE. THEREFORE, THE ASSESSEE CANNOT CLAIM IN SUCH A SITUATION THAT THE INVESTMENT WAS MADE FROM THE AVA ILABLE FUNDS WITH THE ASSESSEE. THEREFORE, IT HAS TO BE ASCERTA INED WHETHER THE ASSESSEE HAS ANY LIQUID CASH ON HAND ON THE DATE OF INVESTMENT. MOREOVER, THE CAIM OF SUBSIDIARY COMPANY ALSO NEED S TO BE VERIFIED WITH REFERENCE TO SHAREHOLDING PATTERN OF SO-CALLED SUBSIDIARY COMPANY. SINCE THE SHAREHOLDING PATTER IS NOT ON R ECORD, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATT ER NEEDS TO BE RECONSIDERED. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ISSUE OF DISALLOWANCE UNDER SECTI ON 14A OF THE ACT IS REMITTED BACK TO THE FILE OF THE ASSESSING O FFICER. THE 9 I.T.A. NO.813/MDS/16 ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER IN TH E LIGHT OF THE MATERIAL THAT MAY BE FILED BY THE ASSESSEE AND THER EAFTER COMPUTE THE DISALLOWANCE STIPULATED UNDER RULE 8D(2) OF THE INCOME-TAX RULES, 1962. 13. THE NEXT ISSUE ARISES FOR CONSIDERATION IS INTE REST FREE LOANS GRANTED TO SUBSIDIARY COMPANIES. 14. SH. VIKRAM VIJAYARAGHAVAN, THE LD.COUNSEL FOR T HE ASSESSEE, SUBMITTED THAT THE ASSESSEE ADVANCED INTEREST FREE LOANS TO SISTER CONCENS / SUBSIDIARY COMPANIES. DURING THE ASSESSM ENT YEAR 2010-11, THE DRP ITSELF ALLOWED THE CLAIM OF THE AS SESSEE. NO DISALLOWANCE WAS MADE IN THE CASE OF LOANS ADVANCED TO SUBSIDIARY COMPANIES. ACCORDING TO THE LD. COUNSEL, THE ASSES SEE HAD SUFFICIENT SURPLUS FUNDS BY WAY OF RESERVES AND PAI D UP CAPITAL. THEREFORE, THERE CANNOT BE ANY DISALLOWANCE. THE L D.COUNSEL ALSO PLACED HIS RELIANCE IN THE JUDGMENT OF APEX COURT I N S.A. BUILDERS LTD. V. CIT (2007) 288 ITR 1. 15. ON THE CONTRARY, DR. MILIND MADHUKAR BHUSARI, T HE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE CAS E OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2011-12 IS TOTALLY DIFFERENT FROM 10 I.T.A. NO.813/MDS/16 THE ASSESSMENT YEAR 2010-11. THEREFORE, THE ORDER OF THE DRP CANNOT BE RELIED UPON DURING THE YEAR UNDER DEDUCTI ON. DURING THIS YEAR, THE ASSESSEE CLAIMS THAT CAPITAL AND RESERVES ARE AVAILABLE WITH THE ASSESSEE. HOWEVER, NO DETAILS WERE FILED BY THE ASSESSEE BEFORE THIS TRIBUNAL. IT IS NOT KNOWN WHETHER THE INVESTMENT WAS MADE ON THE COMMERCIAL EXPEDIENCY AS FOUND IN THE C ASE OF S.A. BUILDERS LTD. (SUPRA). THEREFORE, ACCORDING TO THE LD. D.R., THE MATTER NEEDS TO BE RECONSIDERED. 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THOUGH THE ASSESSEE CLAIMS THAT SUFFICIENT FUNDS BY WAY OF CAP ITAL AND RESERVES WERE AVAILABLE WITH THE ASSESSEE, NO MATERIAL IS FI LED BEFORE THIS TRIBUNAL TO SUBSTANTIATE THE AVAILABILITY OF LIQUID CASH ON THE DATE OF ADVANCE MADE TO THE SUBSIDIARY COMPANY. MOREOVER, THE SHAREHOLDING PATTERN OF THE SO-CALLED SUBSIDIARY CO MPANY IS ALSO NOT AVAILABLE ON RECORD. IN THOSE CIRCUMSTANCES, THIS T RIBUNAL CANNOT CONCLUDE THAT THE ADVANCE WAS MADE TO SUBSIDIARY CO MPANY. MOREOVER, THE COMMERCIAL EXPEDIENCY IN INVESTING T HE MONEY WAS NOT ESTABLISHED BY FILING NECESSARY MATERIAL BEFORE THIS TRIBUNAL. IN THOSE FACTUAL CIRCUMSTANCES, GIVING ONE MORE OPPORT UNITY TO THE 11 I.T.A. NO.813/MDS/16 ASSESSEE TO PRODUCE NECESSARY MATERIAL WOULD NOT PR EJUDICE THE INTEREST OF THE REVENUE. ACCORDINGLY, THE ORDERS O F THE LOWER AUTHORITIES ARE SET ASIDE AND THE ISSUE OF DISALLOW ANCE OF INTEREST ON THE FREE LOANS AND ADVANCES TO SUBSIDIARY COMPANY I S REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSIN G OFFICER SHALL RE- EXAMINE THE ISSUE IN THE LIGHT OF THE MATERIAL THAT MAY BE FILED BY THE ASSESSEE AND THEREAFTER DECIDE THE SAME IN ACCORDAN CE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESS EE. 17. THE NEXT ISSUE ARISES FOR CONSIDERATION IS DISA LLOWANCE OF CLAIM OF SOFTWARE EXPENSES. 18. SH. VIKRAM VIJAYARAGHAVAN, THE LD.COUNSEL FOR T HE ASSESSEE, SUBMITTED THAT THE DRP HAS DISALLOWED THE SOFTWARE EXPENSES. HOWEVER, THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE F OR ASSESSMENT YEAR 2010-11 IN I.T.A. NO.688/MDS/2015, REMANDED BA CK THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDER ATION. 19. WE HAVE HEARD DR. MILIND MADHUKAR BHUSARI, THE LD. DEPARTMENTAL REPRESENTATIVE ALSO. AS RIGHTLY SUBMI TTED BY THE LD.COUNSEL FOR THE ASSESSEE, THE TRIBUNAL REMITTED BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER BY DIRECTING T HE DRP TO VERIFY THE 12 I.T.A. NO.813/MDS/16 NATURE OF EXPENDITURE AND THEREAFTER DECIDE THE ISS UE. THIS TRIBUNAL FOUND THAT IF THE APPLICATION SOFTWARE IS ONLY FOR A SHORT PERIOD, THEN IT CAN BE TREATED AS REVENUE EXPENDITURE. HOWEVER, IF THE APPLICATION SOFTWARE IS FOR A LONGER PERIOD, THEN I T WILL HAVE ENDURING BENEFIT, THEREFORE, IT HAS TO BE CAPITALIZED. SINC E THE FACTS NEED TO BE VERIFIED. THIS TRIBUNAL IS OF THE CONSIDERED OPI NION THAT THE MATTER CAN BE VERIFIED BY THE ASSESSING OFFICER. ACCORDIN GLY, THE ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND THE ASSESSI NG OFFICER IS DIRECTED TO VERIFY THE NATURE OF EXPENDITURE AND TH EREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING A REASONA BLE OPPORTUNITY TO THE ASSESSEE. 20. THE NEXT ISSUE IS WITH REGARD TO DISALLOWANCE O F EXPORT COMMISSION. 21. SH. VIKRAM VIJAYARAGHAVAN, THE LD.COUNSEL FOR T HE ASSESSEE, SUBMITTED THAT IN THE ASSESSEE'S OWN CASE FOR ASSES SMENT YEAR 2010-11, THE DRP ALLOWED THE CLAIM OF THE ASSESSEE BY PLACING RELIANCE ON THE JUDGMENT OF MADRAS HIGH COURT IN CI T V. FAIZAN SHOES PVT. LTD. (367 ITR 155), THEREFORE, THERE IS NO REASON FOR DISALLOWING THE ISSUE DURING THE YEAR UNDER CONSIDE RATION. 13 I.T.A. NO.813/MDS/16 22. ON THE CONTRARY, DR. MILIND MADHUKAR BHUSARI, T HE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE DRP FOR THE ASSESSMENT YEAR 2010-11, HAS ALLOWED THE CLAIM OF T HE ASSESSEE BY PLACING RELIANCE ON THE CBDT CIRCULAR AND THE JU DGMENT OF MADRAS HIGH COURT. NOW THE CBDT WITHDREW ITS CIRCUL AR, THEREFORE, THE ORDER OF THE DRP FOR ASSESSMENT YEAR 2010-11 IN THE ASSESSEE'S OWN CASE MAY NOT BE APPLICABLE TO THE PR ESENT CASE. ACCORDING TO THE LD. COUNSEL, THE MATTER NEEDS TO B E RE-EXAMINED IN THE LIGHT OF MATERIAL ON THE CIRCULAR ISSUED BY THE CBDT. 23. BY WAY OF REJOINDER, SH. VIKRAM VIJAYARAGHAVAN, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT WITHDRA WAL OF CBDT CIRCULAR NEVER MAKES ANY IMPACT ON THE INTERPRETATI ON OF THE PROVISIONS OF LAW. IN FACT, THE MADRAS HIGH COURT INTERPRETED THE PROVISIONS OF INCOME-TAX ACT WITHOUT PLACING ANY RE LIANCE ON THE CBDT CIRCULAR, THEREFORE, THE LAW LAID DOWN BY THE MADRAS HIGH COURT IS SQUARELY APPLICABLE TO THE FACTS OF THE CA SE. 24. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE CIRCULAR ISSUED BY THE CBDT WAS WI THDRAWN AND THE ISSUE IN RESPECT OF COMMISSION PAID / PAYABLE TO TH E FOREIGN AGENCY. 14 I.T.A. NO.813/MDS/16 IN THE CASE BEFORE US, THE PROVISIONS OF INCOME-TAX ACT NEED TO BE EXAMINED IRRESPECTIVE OF THE FACT WHETHER THE CIRCU LAR OF THE CBDT IS WITHDRAWN OR NOT. THEREFORE, THIS TRIBUNAL IS OF T HE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RE-EXAMINED BY THE ASSESSING OFFICER. ACCORDINGLY, THE ORDERS OF BOTH THE AUTHO RITIES BELOW ARE SET ASIDE AND THE ISSUE OF DISALLOWANCE MADE BY THE ASS ESSING OFFICER UNDER SECTION 40(A)(IA) OF THE ACT IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE- EXAMINE THE ISSUE AFRESH IN THE LIGHT OF THE PROVISIONS OF INCO ME-TAX ACT AFTER CONSIDERING THE WITHDRAWAL OF CIRCULAR ISSUED BY CB DT AND THE JUDGMENT OF MADRAS HIGH COURT IN FAIZAN SHOES PVT. LTD. (SUPRA) AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 25. THE NEXT GROUND OF THE APPEAL IS ADDITIONAL DEP RECIATION UNDER SECTION 32(1)(IIA) OF THE ACT. 26. THE ISSUE OF ADDITIONAL DEPRECIATION WAS EXAMIN ED BY THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE. THIS TRIBUNAL FOUND THAT THE ASSESSEE IS ENTITLED TO ADDITIONAL DEPRECIATION IN THE SUBSEQUENT YEAR SINCE THE MACHINERY WAS PUT TO USE FOR 180 DAY S IN THE EARLIER ASSESSMENT YEAR. THE ORDER OF THIS TRIBUNAL IN THE ASSESSEE'S OWN 15 I.T.A. NO.813/MDS/16 CASE FOR ASSESSMENT YEAR 2010-11 WAS NOT BEFORE THE ASSESSING OFFICER. THEREFORE, THIS TRIBUNAL IS OF THE CONSID ERED OPINION THAT THE MATTER NEEDS TO BE RECONSIDERED IN THE LIGHT OF THE DECISION OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2010-11. ACCORDINGLY, THE ORDERS OF THE AUTHORITIES BELOW AR E SET ASIDE THE ISSUE OF ADDITIONAL DEPRECIATION IS REMITTED BACK T O THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE- EXAMINE THE MATTER AFRESH IN THE LIGHT OF THE DECISION OF THIS TRIBUNAL FOR ASSESSMENT YEAR 2010-11 AND THEREAFTER DECIDE THE I SSUE AFRESH IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPOR TUNITY TO THE ASSESSEE. 27. THE LAST GROUND OF APPEAL IS WITH REGARD TO CRE DIT FOR TDS. 28. WE HAVE HEARD SH. VIKRAM VIJAYARAGHAVAN, THE LD .COUNSEL FOR THE ASSESSEE AND DR. MILIND MADHUKAR BHUSARI, T HE LD. DEPARTMENTAL REPRESENTATIVE. THE ASSESSING OFFICER SHALL VERIFY THE TDS CERTIFICATES AND THEREAFTER GIVE CREDIT IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY TO THE AS SESSEE. 29. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. 16 I.T.A. NO.813/MDS/16 ORDER PRONOUNCED ON 28 TH OCTOBER, 2016 AT CHENNAI. SD/- SD/- ( !' .$%$& ) ( . . . ) (ABRAHAM P. GEORGE) (N.R.S. GANESAN) ( / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 8 /DATED, THE 28 TH OCTOBER, 2016. KRI. 1 /49: ;:+4 /COPY TO: 1. -. /APPELLANT 2. /0-. /RESPONDENT 3. SECRETARY, DRP-2, BANGALORE 4. PRINCIPAL CIT-6, CHENNAI 5. :< /4 /DR 6. & = /GF.