SCIT-14(1)(1), MUMBAI V. BASF INDIA LIMITED, MUMBAI

ITA 6508/MUM/2024

AI Insights

The case involves appeals by the Revenue against the decisions of the learned CIT(A) allowing certain expenditures claimed by the assessee, BASF India Limited, under the heads 'Public Relation Expenses' and 'Product Registration'. The Revenue contended that these expenditures were not allowable as business expenses under the Income Tax Act, 1961. The Tribunal examined the precedents and the nature of the expenditures, noting that similar issues had been decided in favor of the assessee in earlier years. The Tribunal found that the expenditures were incurred for the purpose of business and thus allowable under section 37 of the Act. Additionally, the Tribunal noted that the services provided by BASF Asia Pacific Service Centre, Malaysia, did not fall under the category of technical or managerial services requiring TDS under section 195, and hence were not disallowable under section 40(a)(i).

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 33402 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: K
• Assessment Year: 2015-2016
• Other Referred Cases: HPCL Vs. Dy.CIT, ACIT, CIRCLE 1(1) Bilaspur Vs. Jindal Power Limited, NMDC Ltd. Vs. Joint Commissioner of Income Tax, Range- 16 Hyderabad, DCIT Vs. BASF Catalysts India P. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NEENA JEPH
• Assessee Lawyers: NIKHIL TIWARI
• Keywords: Set aside; Revenue expenditure; Transfer pricing; International transaction; Business expenditure; Depreciation; TDS; Double taxation relief; Permanent establishment
• Section: 143(3); 142(1); 143(2); 195; 250; 43; 13; 37; 37(1); 9(1); 9(1); 9(1); 20

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “K” BENCH, MUMBAI BEFORE SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 6507/MUM/2024 ITA No. 6508/MUM/2024 (Assessment Year : 2014–15) (Assessment Year : 2015–16) DCIT, 14(1)(1), Room No.432, 4th Floor, Aayakar Bhawan, M.K Road, Mumbai – 400020, Maharashtra ……………. Appellant v/s M/s. BASF India Limited, The Capital, A Wing, 1204 C, 12th Floor, Plot No. C 70, G Block, Bandra East, Mumbai – 400051 Maharashtra PAN: AAACB4599E ……………. Respondent CO No.24/MUM/2025 CO No.25/MUM/2025 (Arising out of ITA No.6507/MUM/2024) (Arising out of ITA No.6508/MUM/2024) (Assessment Year : 2014–15 ) (Assessment Year : 2015–16 ) M/s. BASF India Limited, The Capital, A Wing, 1204 C, 12th Floor, Plot No. C 70, G Block, Bandra East, Mumbai – 400051 Maharashtra PAN: AAACB4599E ……………. Cross Objector (Original Respondent) vs. DCIT, 14(1)(1), Room No.432, 4th Floor, Aayakar Bhawan, M.K Road, Mumbai – 400020, Maharashtra ……………. Respondent (Original Appellant) Assessee by : Shri Nikhil Tiwari Mr. Hemang Mehta Revenue by : Ms. Neena Jeph, CIT-DR Date of Hearing – 11/02/2025 Date of Order - /02/2025 2 ITA No.6507 & 6508/Mum/2024 & CO No.24 & 25/Mum/2025 (A.Y. 2014-15 & 2015-16) O R D E R PER BENCH 1. The present appeals by the Revenue and cross objections by the assessee have been filed against the separate impugned orders of even date 24/10/2024, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals)-55, Mumbai [“learned CIT(A)”], for the assessment years 2014-15 and 2015-16. 2. Since all the matters pertain to the same assessee and arise out of a similar factual matrix, therefore, as a matter of convenience these matters were heard together and are being decided by way of this consolidated order. With the consent of the parties, the Revenue’s appeal and assessee’s cross objection for the assessment year 2014-15 is considered as a lead case, and the decision rendered therein shall apply mutatis mutandis to the appeal and cross objection for the assessment year 2015-16. ITA No. 6507/Mum./2024 Revenue’s appeal- A.Y. 2014-15 3. In this appeal, the Revenue has raised the following grounds: – “1. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) appeal was right in allowing the expenses incurred under the head \"Public Relation Expenses\" without appreciating the fact that the said expenditure was not allowable as business expense with the meaning of section 37 of the Income-tax Act, 1961. 2. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) appeal was right in allowing the amount of Rs. 25,55,28,178/- paid to BASF Asia Pacific Service Centre, Malaysia from with no TDS has been deducted u/s 195 of the Act, ignoring the fact that the said expenditure is not allowable u/s 40(a)(i) of the Income-tax Act, 1961. 3. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) appeal was right in allowing the expenses incurred on \"Product Registration\", ignoring the fact that the said expenditure is capital in nature and not allowable as revenue expenditure.” 3 ITA No.6507 & 6508/Mum/2024 & CO No.24 & 25/Mum/2025 (A.Y. 2014-15 & 2015-16) 4. The issue arising in ground no.1, raised in Revenue’s appeal, pertains to the deletion of disallowance of expenditure incurred under the head “Public Relation Expenses”. 5. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is engaged in the business of manufacturing and marketing of expandable polystyrene, tanning agents, leather chemicals and auxiliaries. For the year under consideration, the assessee filed its return of income on 29/11/2014, declaring a total income of INR 198,89,19,750. The return filed by the assessee was selected for scrutiny, and statutory notices under section 143(2) and section 142(1) of the Act were issued and served on the assessee. During the assessment proceedings, from the details filed by the assessee, it was observed that the assessee in its profit and loss account has debited an expenditure of INR 31,24,445 under the head “Public Relation Expenses”. It was seen from the narration of the various expenses grouped under the heading “Public Relation Expenses” that some of the expenses could at best be qualified in the nature of fringe benefits while most of them will not qualify as allowable business expenditures at all as envisaged under section 37 of the Act. Accordingly, the assessee was asked to submit the detailed submission and was also asked to justify its claim as there was a similar disallowance in earlier years. In response, the assessee submitted that for the betterment of the life of the common man, the assessee has incurred expenses aptly described as “Public Relation Expenses” by way of, a) contributing funds for schools, temples, etc., for community developments; b) sponsoring cultural events. Accordingly, the assessee submitted that these expenses are incurred wholly and exposure leave for the purpose and benefit 4 ITA No.6507 & 6508/Mum/2024 & CO No.24 & 25/Mum/2025 (A.Y. 2014-15 & 2015-16) of the business and should be allowed as such under section 37(1) of the Act in computing the income. The assessee also submitted that similar expenditure was allowed by the Tribunal in its own case for the assessment years 2007-08 and 2008-09. 6. The Assessing Officer (“AO”) vide order dated 18/01/2018 passed under section 143(3) read with section 144C(3)(a) of the Act disagreed with the submissions of the assessee and held that the expenditure incurred by the assessee can at best be called charitable activities and the Act has provided for specific sections to claim such charitable expenditures and the same by no stretch of imagination will qualify as business expenditure under section 37 of the Act as laid out wholly and exclusively for the purpose of the business. The AO further held that the said expenditure may not have a direct benefit to the business though it will benefit the company indirectly in the form of a better public image of the company, motivation to the employees resulting in better productivity, increase in turnover. Thus, it was held that the assessee has failed to substantiate that the said expenditures are towards the business of the assessee. The AO also took into consideration the fact that similar additions were made in the earlier assessment years, i.e. assessment years 2007-08 to 2013-14, and the assessee has filed the appeals against the disallowance in all these years. Since in the assessment years 2008-09 and 2011-12, the learned CIT(A) and learned DRP, respectively, have allowed the expenditure incurred on advertisement and employee welfare, which was accepted by the Revenue, the AO allowed the expenditure incurred on advertisement sponsorship. However, the balance amount of INR 25,51,297 5 ITA No.6507 & 6508/Mum/2024 & CO No.24 & 25/Mum/2025 (A.Y. 2014-15 & 2015-16) incurred on “community development and other public expenses” by the assessee was disallowed under section 37 of the Act. 7. The learned CIT(A), vide impugned order, allowed the ground raised by the assessee on this issue, following the decision of the Tribunal in assessee’s own case for the assessment years 2007-08 and 2008-09, after noting that the issue arises out of similar facts which are recurring in nature. Being aggrieved, the Revenue is in appeal before us. 8. We have considered the submissions of both sides and perused the material available on record. During the year under consideration, the assessee incurred the following expenditure under the head “Public Relation Expenses”, which was claimed as business expenditure under section 37 of the Act: – Sr. No. Broad classification Amount (Rs.) 1. Advertisements in souvenirs, magazines etc 5,73, 148- 2. Sponsoring events for promoting Corporate image of the company 11,46,983/- 3. Community development 12,43,8441- 4. Other public relation expenses 1,60,470/- Total 31,24,445/- 9. As is evident from the record that the AO allowed the expenditure towards advertisement sponsorship following the orders passed by the learned CIT(A) for the assessment year 2008-09 and the learned DRP for the assessment year 2009-10. However, the balance amount of INR 25,51,297 spent on “community development and other public expenses” was disallowed and added back to the total income of the assessee. During the hearing, the learned Authorised Representative (“learned AR”), reiterating the submissions made before the lower authorities submitted that this issue is recurring in 6 ITA No.6507 & 6508/Mum/2024 & CO No.24 & 25/Mum/2025 (A.Y. 2014-15 & 2015-16) nature and similar expenses were allowed in the assessee’s own case by the coordinate bench of the Tribunal in the assessment years 2007-08 and 2008- 09. We find that while deciding the assessee’s appeal in BASF India Ltd v/s ADIT, in ITA No. 3547 and 5069/Mum./2013, for the assessment years 2007- 08 and 2008-09, the coordinate bench of the Tribunal vide order dated 18/09/2017 allowed expenditure incurred under the head “Public Relation Expenses”, by observing as follows:- “6. Under this issue the assessee has challenged the disallowance of Public Relation Expenses to the tune of Rs.29,72,425/-. The assessee incurred the expenses in the nature of sponsorship of the professional bodies like CI1, IGCC etc., which were related to corporate relations with these institutions. The assessee officer was of the view that the same was not incurred for the business purpose therefore, the disallowed the same. CIT(A) confirmed the finding of the Assessing Officer on this issue. The Ld. representative of the assessee has argued that the expenses were incurred for the sponsorship of the events and miscellaneous charitable activities and contributing to the educational exhibition which are not liable to be disallowed in view of law settled in HPCL Vs. Dy.CIT 2005 96 ITD 186 Mumbai& ACIT, CIRCLE 1(1) Bilaspur Vs. Jindal Power Limited, ITAT 99/BLPR/2012 dated 23 June, 2016 Raipur Bench and NMDC Ltd. Vs. Joint Commissioner of Income Tax, Range- 16 Hyderabad (ITAT2015 56 taxmann.com 396 (Hyderabad) Tribunal. On the other hand, the Ld. representative of the department has placed reliance upon the order passed by the CIT(A) in question. With due to regard of the contention raised by the Ld. representative of the parties and perusing the record, we find that the assessee was contributing fees to the education institution and for sponsorship of events and charitable activities. The companies are not confined strictly to the business purpose but are expending for this sponsorship events and for the charitable activities and also contributing in education institution. In the case of Hindustan Petroleum (supra) the Hon'ble ITAT Mumbai Bench has allowed expenses on the fact that the promotion of 20 points program is in the interest of the state and if a company is expending in this regard then the expenses are not liable to be disallowed in the interest of justice. In the other cases such as NMDC Ltd. Vs. Jindal Power (supra) such type of expenses has been allowed. In view of the said law, we are of the view that the CIT(A) has wrongly decided this issue by disallowing the expenses to the tune of Rs.29,72,425/-. Therefore, the finding of the CIT(A) is not liable to be sustainable in the eyes of law hence, we set aside the finding of the CIT(A) on this issue and allowed the claim of the assessee. Accordingly, this issue is decided in favour of the assessee against the revenue.” 7 ITA No.6507 & 6508/Mum/2024 & CO No.24 & 25/Mum/2025 (A.Y. 2014-15 & 2015-16) 10. It is evident from the record that in its submission during the assessment proceedings, the assessee specifically referred to the aforesaid decision of the coordinate bench of the Tribunal rendered in its own case for the earlier years on a similar issue. However, the AO, in complete disregard to the decision of the higher judicial forum, proceeded to decide the issue following its approach adopted in earlier years, without pointing out any change in fact or law. We find a similar disregard to the decision of the Tribunal by the AO in respect of other disallowances, which have been dealt with in the subsequent paragraphs of this order. In the present case, it is not even the plea of the AO that because the order passed by the Tribunal is under challenge before the Higher Courts, therefore till there is finality on the issue, the approach adopted by it in earlier years was followed. Thus, we, at the outset, deprecate such an act of the AO, who is not only a tax administrator but is also discharging the quasi-judicial functions under the Act while completing the assessment of the assessee, and therefore, is required to follow the principles of precedence and not simply follow the earlier years’ approach which has already been overruled by a higher judicial forum. 11. During the hearing, the learned Departmental Representative (“learned DR”) could not show any reason to deviate from the aforesaid order and no change in facts and law was alleged in the relevant assessment year. The issue arising in the present appeal is recurring in nature and has been decided in favour of the assessee by the decision of the coordinate bench of the Tribunal for the preceding assessment years. Since the learned CIT(A) has followed the decision of the coordinate bench of the Tribunal cited supra, we do not find any infirmity in the findings of the learned CIT(A) on this issue. 8 ITA No.6507 & 6508/Mum/2024 & CO No.24 & 25/Mum/2025 (A.Y. 2014-15 & 2015-16) Accordingly, the same are upheld and ground no.1 raised in Revenue’s appeal is dismissed. 12. The issue arising in ground no.2, raised in Revenue’s appeal, pertains to the deletion of disallowance made under section 40(a)(i) of the Act. 13. The brief facts of the case pertaining to this issue, as emanating from the record, are: During the assessment proceedings, from the perusal of the details filed by the assessee, it was observed that the assessee has paid a sum of INR 25,55,28,178 to BASF Asia Pacific Service Centre, Malaysia (“BASC”) from which no tax was deducted under section 195 of the Act. Accordingly, during the assessment proceedings, the assessee was asked to submit a detailed submission on this issue as there were similar disallowances on this issue under section 40(a)(i) of the Act in the earlier years (viz. from the assessment years 2008-09 to 2013-14). In response, the assessee submitted that the assessee has entered into an agreement dated 01/10/2006 with BASC, which is situated in Malaysia, under which BASC provides to the assessee the services in relation to Finance and Accounting, Accounts Payable, Accounts Receivable, General Accounting, Treasury and Financial Reporting, and for Human Resource, Payroll Processing, Salary Payments and General Ledger Posting, Employed at Administration and Processing, Training Administration, Compensation and Performance Management Administration. The assessee submitted that the facts in this assessment year regarding share services expenses are similar to the facts in the assessment year 2008-09 to the assessment year 2013-14. It was further submitted that from these payments tax is not liable to be deducted under section 195 of the Act and 9 ITA No.6507 & 6508/Mum/2024 & CO No.24 & 25/Mum/2025 (A.Y. 2014-15 & 2015-16) therefore the impugned amount is not disallowable under section 40(a)(i) of the Act. The assessee also placed reliance upon the decision of the Tribunal in its own case for assessment year 2008-09, wherein similar disallowance made under section 40(a)(i) of the Act was deleted. 14. The AO, vide assessment order, disagreed with the submissions of the assessee and following the approach adopted in the assessment year 2008- 09 to the assessment year 2013-14, disallowed the expenditure amounting to INR 25,55,28,178 under section 40(a)(i) of the Act and added the same to the total income of the assessee 15. The learned CIT(A), vide impugned order, allowed the ground raised by the assessee on this issue, following the decision of the Tribunal in assessee’s own case for the assessment year 2008-09, after noting that the issue arises out of similar facts which are recurring in nature. Being aggrieved, the Revenue is in appeal before us. 16. We have considered the submissions of both sides and perused the material available on record. In the present case, under the Master Service Agreement dated 01/10/2006 entered into between the assessee and BASC, which forms part of the paper book from pages 219-262, BASC agreed to provide Finance and Accounting and Human Resources services to the assessee. From the perusal of the agreement, we find that both parties agreed that this agreement shall be valid from 01/01/2007 and shall remain valid until further changes are made to service items, service level or other relevant areas. In the present case, there is no dispute regarding the fact that under this agreement only the aforesaid services were provided to the assessee 10 ITA No.6507 & 6508/Mum/2024 & CO No.24 & 25/Mum/2025 (A.Y. 2014-15 & 2015-16) during the year under consideration and in respect of same the assessee made the payment to BASC. As per the Revenue, since the assessee did not deduct the TDS under section 195 of the Act at the time of making the payment to BASC, these payments are disallowable under section 40(a)(i) of the Act. 17. We find that while considering a similar issue in assessee’s own case for the assessment year 2008-09, the coordinate bench of the Tribunal vide order dated 18/09/2017 (cited supra), following the decision of the coordinate bench of the Tribunal in the case of the assessee’s sister concern in DCIT v/s BASF Catalyst India Private Limited, in ITA No. 650 and 651/Mds/2016, held that the provisions of section 40(a)(i) of the Act are not applicable to the payment made to BASC for rendering Finance and Accounting and Human Resource services. The relevant findings of the coordinate bench, in the aforesaid decision, are reproduced as follows: - “21. Under this issue the assessee has challenged the disallowance of shared service deposit paid to Malaysia u/s 40(ia) of Rs.4,77,53,296/-. The appellant has paid an amount of Rs.4,77,53,296/- in respect of shared service to its sister concern(foreign)BASF Asia pacific service centre sdn bhd Malaysia. Since tax was not deducted at source therefore the same was disallowed. There is a master service agreement for finance and accounting and human resources between BASF Asia Pacific Service Centre Sdn Bhd, and BASF India Lid. dated 01 October, 2006. The said agreement lies at Page No. 43 in the paper book and accordingly the amount was paid to the Malaysia company. This issue has already been decided in favour of the assessee in the assessee's own case title as DCIT Vs. BASF Catalysts India P. Ltd., (ITAT Chennai Bench). The relevant finding of the Tribunal is hereby mentioned below..- \"We heard the rival submissions perused the material on record and judicial decisions, the Ld. AR submitted that assessee company has entered into agreement with BASF-Asia Pacific Service Centre (BASC), Malaysia for providing the services of Financial and Accounting, Human Resource and such other services from time to time. The financial services include accounts payable and accounts receivable and other Financial Reports and where as Human Resources (HR) includes payroli processing, salary payments and general ledger posting, employee data administration and processing, training. administration and others. The assessee company has made payment to the Malaysia company for services rendered in the financial year as per the agreement these payments are not covered as technical services or managerial services to be taxable for deduction of TDS withholding of tax and applicability of provision of 40(a)(i) of the Act.\" 11 ITA No.6507 & 6508/Mum/2024 & CO No.24 & 25/Mum/2025 (A.Y. 2014-15 & 2015-16) \"10. Whereas, the Ld. DR submitted that these services require expertise and high degree of skills on financial accounting management and fall within the provisions of section 9(1) (vii) of the Act and liable for TDS. The Ld. AR further explained that the assessee has entered into the service agreement with Malaysia Company rendering accounting services the information/Data is sent by Indian Company to Malaysia and they enter the data information to the assessee company. The Ld. AR demonstrated with copy of vouchers filed in the paper book at page 36 and invoice copies of service at page 40 to substantiate that the services are in the nature of data entry operations and there is no expertise is necessary for making such transactions. We also perused the provisions of section 9(1)(vii) of the Act where the fees for technical services have been considered and the services being international transaction the DTAA agreement between India and Malaysia shall come into effect. In Article 13 of DTAA fees for technical services being rendering of any managerial, technical or consultancy services and includes the provision of services for technical or other which does not include payment for services mentioned in Artic le 15, 16 of the agreement.\" \"11. The Malaysia Company (BASC) provides services under Article 13 r.w.s. Article 5 and Article 7 of DTAA. The article 5 deal with permanent establishment defined as the fixed place of business through which the business of enterprise is wholly or partly carried on. The facts are not disputed by the Revenue that there is no PE of the Malaysia Company in India and the services are rendered outside the country. Whereas, the Article 7 deals with the profits of establishment taxable through PE of foreign Company having operations. Considering the apparent facts, provisions of law. DTAA and undisputed facts that there is no PE in India and the services are nature of data operating entry of Accounts and Human Resources service duly supported with evidence of samples invoices and journal voucher produced, we found that the services of BASC Malaysia does not fall in the category u/s. 9(1)(vii) of the Act and provisions of section 40 (a)(i) are not applicable, we found Ld. CIT(A) has dealt on this disputed issue exhaustively in his order visa vis explanations of the assessee and passed reasoned order in treating the services as not in the nature of technical services and provision of section 40(a)(i) of the Act are not applicable and we uphold the same and dismiss the revenue appeal.\" 22. On appraisal of the above mentioned finding, we are of the view that the facts and circumstances of the present case are quite similar to the above mentioned case which has been decided by the ITAT Chennai Bench in favour of assessee. Therefore by honoring the order of the ITAT Chennai Bench in ITA. No. 650 & 651/Mds/2016 in the case of DCIT Vs. BAS Catalysts India P. Ltd., we allowed the claim of the assessee. Accordingly, the finding of the CIT(A) is hereby ordered to be set aside and the claim of the assessee is hereby allowed.” 18. During the hearing, the learned DR could not show any reason to deviate from the aforesaid order and no change in facts and law was alleged in the relevant assessment year. The issue arising in the present appeal is recurring in nature and has been decided in favour of the assessee by the decision of the coordinate bench of the Tribunal for the preceding assessment year. Since 12 ITA No.6507 & 6508/Mum/2024 & CO No.24 & 25/Mum/2025 (A.Y. 2014-15 & 2015-16) the learned CIT(A) has followed the decision of the coordinate bench of the Tribunal cited supra, we do not find any infirmity in the findings of the learned CIT(A) on this issue. Accordingly, the same are upheld and ground no.2 raised in Revenue’s appeal is dismissed. 19. The issue arising in ground no.3, raised in Revenue’s appeal, pertains to deletion of disallowance of expenditure incurred on “Product Registration”. 20. The brief facts of the case pertaining to this issue, as emanating from the record, are: During the assessment proceedings, upon perusal of the profit and loss account, it was noticed that the assessee has debited a sum of INR 5,55,30,348 on account of product development expenses. Accordingly, the assessee was asked to submit the detailed submission and was also asked to justify its claim as there was a similar disallowance in earlier assessment years, viz assessment years 2008-09 to 2013-14. In response, the assessee submitted that in the assessment year 2008-09, the product registration expenditure was disallowed for the first time by the AO by holding the same to be capital in nature representing intangible rights on which depreciation at 25% was allowable and as such depreciation was allowed. It was further submitted that similar expenditure has also been disallowed in the subsequent assessment years, i.e. assessment years 2009-10 to 2013-14. The assessee submitted that it has incurred product development and registration expenditure of INR 5,55,30,348, which includes testing charges, travelling expenses of the staff of the assessee incurred in connection with the registration of products, gathering data, etc. The assessee submitted that the facts, in the year under consideration, regarding project registration 13 ITA No.6507 & 6508/Mum/2024 & CO No.24 & 25/Mum/2025 (A.Y. 2014-15 & 2015-16) expenditure are similar to the facts for the earlier years, i.e. assessment years 2008-09 to 2013-14. Accordingly, placing reliance upon the submissions made in the earlier years, the assessee submitted that such expenditure is not capital in nature and no disallowance is warranted. The assessee further submitted that in the assessment year 2008-09, the learned CIT(A) deleted similar disallowance and the Revenue’s appeal against the same was dismissed by the Tribunal. 21. The AO, vide assessment order, disagreed with the submissions of the assessee and held that similar disallowance was made in the assessments for assessment year 2008-09 onwards. The AO further noted that for the assessment year 2008-09, although the learned CIT(A) deleted this addition, the Department is in appeal before the Tribunal. Further, for the assessment years 2009-10 to 2012-13, the Hon’ble DRP has confirmed a similar addition with a direction to allow depreciation at 25% on the above expenditure. Accordingly, the AO following the approach adopted in preceding years disallowed the product registration expenditure after granting depreciation at the rate of 25%. 22. The learned CIT(A), vide impugned order, allowed the ground raised by the assessee on this issue, following the decision of the Tribunal in assessee’s own case for the assessment year 2008-09, after noting that the issue arises out of similar facts which are recurring in nature. Being aggrieved, the Revenue is in appeal before us. 14 ITA No.6507 & 6508/Mum/2024 & CO No.24 & 25/Mum/2025 (A.Y. 2014-15 & 2015-16) 23. We have considered the submissions of both sides and perused the material available on record. We find that the coordinate bench of the Tribunal while considering a similar issue in the assessee’s own case for the assessment year 2008-09 cited supra, vide order dated 18/09/2017, dismissed the Revenue’s appeal and held that the product registration expenditure though is a one-time expenditure in relation to a new product, however, cannot be categorised to be capital in nature. The relevant findings of the coordinate bench, in the aforesaid decision, are reproduced as follows:– “29. On appraisal of the above mentioned finding, we noticed that the appellant is in the business of manufacture and sale of pesticides, herbicides etc, called 'Agro Chemical Products'. In carrying on this ongoing business, whenever a new pesticide or herbicide ete is to be imported, manufactured and sold in India, it needs to be registered with \"Central Insecticides Board and Registration Committee\" Board, which operates under the Ministry of Agriculture of the Central Government. This is the regulatory requirement under the Insecticide Act 1968. Thus, although the registration expense incurred is a one-time expenditure in relation to a new product: being incurred is a one-time expenditure in relation cannot be categorized to be capital in nature. We also found that the matter of controversy has already been adjudicated in favour of the assessee in the case of title as ACIT Vs. Sanofi Synthelabo (India) Ltd. ITA No. 6720, 6755 & 7592/Mum/2011, Mumbai Bench decided on 20.11.2016. Since, this issue is squarely covered by this order therefore, we are of the view that the CIT(A) has passed the order judiciously and correctly which is not required to be interfere with at this appellate stage. No distinguishable material has been produced before us. Accordingly, this issue is decided in favour of the assessee.” 24. During the hearing, the learned DR could not show any reason to deviate from the aforesaid order and no change in facts and law was alleged in the relevant assessment year. The issue arising in the present appeal is recurring in nature and has been decided in favour of the assessee by the decision of the coordinate bench of the Tribunal for the preceding assessment year. Since the learned CIT(A) has followed the decision of the coordinate bench of the Tribunal cited supra, we do not find any infirmity in the findings of the learned 15 ITA No.6507 & 6508/Mum/2024 & CO No.24 & 25/Mum/2025 (A.Y. 2014-15 & 2015-16) CIT(A) on this issue. Accordingly, the same are upheld and ground no.3 raised in Revenue’s appeal is dismissed. 25. In the result, the appeal by the Revenue is dismissed. CO No. 24/Mum./2025 Assessee’s Cross objection- A.Y. 2014-15 26. In its cross objection, the assessee has raised the following grounds: – “On the facts and in circumstances of the case and in law, given that Dividend Distribution Tax ('DDT) represents tax on dividend income, BIL should be granted the benefit of Article 10 of the India-Swiss Double Taxation Avoidance Agreement and India-Germany Double Taxation Avoidance Agreement. Accordingly, DDT on the dividend declared and paid by BIL to BASF Schweiz AG, Switzerland, BASF Societas Europaea, Germany and BAS Construction Solutions GmbH, Germany being tax on dividend income should be liable at the rate prescribed in the respective India-Swiss Double Taxation Avoidance Agreement and India-Germany Double Taxation Avoidance Agreement. Consequently, excess dividend distribution tax paid by BIL should be refunded.” 27. During the hearing, the learned Representative appearing for the parties fairly agreed that the issue arising in the assessee’s cross objection is covered in favour of the Revenue by the decision of the Special Bench of the Tribunal in DCIT v/s Total Oil India Private Ltd, reported in [2023] 149 taxmann.com 332 (Mumbai - Trib.) (SB). Accordingly, respectfully following the aforesaid decision of the Special Bench of the Tribunal, the ground raised in the cross objection is dismissed. 28. In the result, the cross objection by the assessee is dismissed. ITA No. 6508/Mum./2024 Revenue’s appeal- A.Y. 2015-16 29. In this appeal, the Revenue has raised the following grounds: – 16 ITA No.6507 & 6508/Mum/2024 & CO No.24 & 25/Mum/2025 (A.Y. 2014-15 & 2015-16) “1. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) appeal was right in allowing the expenses incurred under the head \"Public Relation Expenses\" without appreciating the fact that the said expenditure was not allowable as business expense with the meaning of section 37 of the Income-tax Act, 1961. 2. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) appeal was right in allowing the amount of Rs. 21, 19,86,613/- paid to BASF Asia Pacific Service Centre, Malaysia from with no TDS has been deducted u/s 195 of the Act, ignoring the fact that the said expenditure is not allowable u/s 40(a)(i) of the Income-tax Act, 1961. 3. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) appeal was right in allowing the expenses incurred on \"Product Registration\", ignoring the fact that the said expenditure is capital in nature and not allowable as revenue expenditure.” 30. Since similar issues have been decided in Revenue’s appeal for the assessment year 2014-15, our findings/conclusions as rendered therein shall apply mutatis mutandis to the present appeal. Accordingly, the impugned order passed by the learned CIT(A) on the issues raised before us is upheld and the grounds raised by the Revenue are dismissed. 31. In the result, the appeal by the Revenue is dismissed. CO No. 25/Mum./2025 Assessee’s Cross objection- A.Y. 2015-16 32. In its cross objection, the assessee has raised the following grounds: – “On the facts and in circumstances of the case and in law, given that Dividend Distribution Tax ('DDT') represents tax on dividend income, BIL should be granted the benefit of Article 10 of the India-Swiss Double Taxation Avoidance Agreement and India-Germany Double Taxation Avoidance Agreement. Accordingly, DDT on the dividend declared and paid by BIL to BASF Schweiz AG, Switzerland, BASF Societas Europaea, Germany and BAS Construction Solutions GmbH, Germany being tax on dividend income should be liable at the rate prescribed in the respective India-Swiss Double Taxation Avoidance Agreement and India-Germany Double Taxation Avoidance Agreement. Consequently, excess dividend distribution tax paid by BIL should be refunded.” 33. During the hearing, the learned Representative appearing for the parties fairly agreed that the issue arising in the assessee’s cross objection is covered 17 ITA No.6507 & 6508/Mum/2024 & CO No.24 & 25/Mum/2025 (A.Y. 2014-15 & 2015-16) in favour of the Revenue by the decision of the Special Bench of the Tribunal in Total Oil India Private Ltd. (supra). Accordingly, respectfully following the aforesaid decision of the Special Bench of the Tribunal, the ground raised in the cross objection is dismissed. 34. In the result, the cross objection by the assessee is dismissed. 35. To sum up, the appeals by the Revenue and cross objections by the assessee are dismissed. Order pronounced in the open Court on 20/02/2025 Sd/- GIRISH AGRAWAL ACCOUNTANT MEMBER Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 20/02/2025 Prabhat Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order Assistant Registrar ITAT, Mumbai "