AI Insights
The case involves SRF Limited appealing against the order of the Assessing Officer/National e-Assessment Centre, which made significant transfer pricing adjustments and disallowances related to international and specified domestic transactions for the Assessment Year 2016-17. The main issues revolved around the adjustments made by the Transfer Pricing Officer (TPO) concerning the allocation of software expenses, reimbursement of expenses, and corporate guarantee fees, among others. The Tribunal examined the legal and factual basis of these adjustments, considering precedents and the OECD guidelines on transfer pricing.
Appeal Details
Counselvise Citation
[2025] 140 COUNSELVISE.COM (IT) 31009 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
CRN Number
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
19-03-2025
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
H
Assessment Year
2016-2017
Judgement Text
"IN THE INCOME TAX AFPELLATE TRIBUNAL DELHI BENCH “H”, NEW DELHI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No.792/DEL/2021 (Assessment Year : 2016-17) SRF Limited, vs. NeAC, New Delhi The Galleria, DLF Mayur Vihar, Unit No. 236, 237, Second Floor, Mayur Place, Noida Link Road, Mayur Vihar, Phase-I, Extension, Delhi – 110 091 (PAN: AAACS0206P) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Pradeep Dinodia, CA Shri Ravi Kumar, CA Shri Harish Dhamija, CA REVENUE BY : Shri S.K. Jhadav, CIT DR DATE OF HEARING : 16.01.2025 DATE OF ORDER : 19.03.2025 O R D E R PER S. RIFAUR RAHMAN, AM : 1. This appeal is filed by the assessee against the order of the Assessing Officer/National e-Assessment Centre, Delhi dated 30.04.2021passed u/s. 143(3) r.w.s. 144C(13) read with section 144B of the Income-tax Act, 1961 (for short ‘the Act’)subsequent to the directions of the Ld. Dispute 2 ITA No.792/DEL/2021 Resolution Panel (DRP)/TPO pertaining to Assessment Year 2016-17 on the following grounds:- 1.0 General Grounds : That the Learned Assessing Officer (‘Ld. AO’) has grossly erred in law and on the facts & circumstances of the assessee’s case by passing the final assessment order u/s 143(3) r.w.s. 144C(13) / 92CA(3) of the Act dated 30th April, 2021 pursuant to the directions of the Learned Dispute Resolution Panel (‘Ld. DRP’) dated 26th March, 2021 after making transfer pricing adjustments / additions of Rs.18,19,19,254/- in relation to International Transactions & Specified Domestic Transactions arising out of the order of the Ld. Transfer Pricing Officer (‘TPO’) u/s 92CA(3) of the Act and additions / disallowances of Rs.1,00,30,23,411/- on account of various non- transfer pricing issues. 2.0 That the Ld. DRP and consequently the Ld. AO have grossly erred in law and on the facts & circumstances of the assessee’s case in not entertaining or granting the additional claims / allowances total amounting to Rs.17,36,90,694/- made by the assessee during the course of assessment proceedings and again before the Ld. DRP, on account remaining additional depreciation, which was inadvertently left to be claimed by the assessee while filing / revising its return of income. 3.0 That the Ld. DRP and consequently the Ld. AO have grossly erred in law and on the facts & circumstances of the assessee’s case in not allowing the deduction of Education Cess (@ 3%) amounting to Rs.2,15,79,405/- u/s 37 of the Act paid or payable under normal provision of the Act. 4.0 That the final assessment order passed u/s 143(3) r.w.s. 144C(13) / 92CA(3) of the Act dated 30th April, 2021 is bad in law. Grounds of Appeal in respect of incorrect computation of total income and consequently the incorrect demand of tax and interest payable thereon [Mistake apparent from records] 5.0 Without prejudice to the grounds challenging the adjustments / additions / disallowances made by the Ld. TPO / Ld. AO as upheld by the Ld. DRP, the Ld. AO has grossly erred in law and on the facts & circumstances of the assessee’s case in computing the incorrect assessed total income and again in wrongly computing the demand of Rs. 22,66,25,370/- u/s 156 of the Act which is laced with the following gross mistakes apparent from records and which are on wholly unjust, illegal, erroneous and untenable grounds; - 3 ITA No.792/DEL/2021 i. that the Ld. AO has grossly erred in law and on the facts & circumstances of the assessee’s case in imputing an imaginary figure of Rs. 3,54,68,95,770/- as total income in the computation sheet forming an integral part of the final assessment order while computing the net amount payable by the assessee, while even as per the final assessment order, the total income as assessed (though also incorrect) is only Rs. 3,32,57,56,655/-; ii. that the Ld. DRP and consequently the Ld. AO have grossly erred in law and on the facts & circumstances of the assessee’s case in enhancing the amount of variation proposed in the draft assessment order by Rs. 70,94,60,024/- being the amount of deduction u/s 35(2AB) of the Act pertaining to four R&D facilities of the assessee which were not even under dispute in the draft assessment which is contrary to the provisions of law; iii. without prejudice, the Ld. DRP and consequently the Ld. AO have grossly erred in law and on the facts & circumstances of the appellant’s case in making the disallowance of the entire claim of weighted deduction u/s 35(2AB) of the Act amounting to Rs. 82,61,65,610/- pertaining to all five R&D facilities of the assessee, instead of disallowing the portion of such claim amounting to Rs. 10,23,47,931/- pertaining to ‘Gurgaon R&D Research Facility’ as directed by the Ld. DRP vide para no. 18.6 & 18.7 at page no. 80 of its directions dated 26thMarch, 2021. The Ld. AO erred in not giving effect to the directions of Ld. DRP in correct manner and making disallowance of entire deduction pertaining to all five R&D facilities despite the specific directions of Ld. DRP to disallow deduction pertaining to ‘Gurgaon R&D Research Facility’ only and thus acted without application of mind & beyond his authority as mandated under law; iv. without prejudice, the Ld. AO has grossly erred in inadvertently disallowing the entire amount of deduction amounting to Rs. 9,63,12,743/- claimed by the assessee u/s 80-IA of the Act in respect of WPP unit ignoring that an amount of Rs. 6,53,67,880/- has already been added through transfer pricing adjustment in accordance with the directions of the Ld. DRP in respect of same unit [contested by assessee vide ground no. 40.0 to 43.0] and thus inadvertently making excess disallowance to the extent of Rs. 9,63,12,743/-; v. without prejudice, the Ld. AO has grossly erred in law and on facts and circumstances of the case in not grating the claim of 4 ITA No.792/DEL/2021 remaining deduction u/s 80-IC of the Act amounting to Rs. 2,82,36,993/-[Rs. 2,82,41,479/- (original amount of deduction) minus 30% of Rs. 14,952/- (being amount of adjustment upheld by the Ld. DRP)] in respect to the Technical Textiles Business at Kashipur; vi. without prejudice, the Ld. AO has grossly erred in law and on facts and circumstances of the case in not grating the claim of remaining deduction u/s 80-IC of the Act amounting to Rs. 2,38,81,562/-[Rs. 2,56,22,162/- (original amount of deduction) minus 30% of Rs. 58,02,000/- (being amount of adjustment upheld by the Ld. DRP)] in respect to the Engineering Plastic Business at Pantnagar; vii. that the Ld. AO has grossly erred in law and on the facts & circumstances of the assessee’s case in not granting or allowing the benefit of the MAT Credit amounting to Rs. 1,56,30,02,091/- (as per return of income) available to the assessee u/s 115AA of the Act and thus raising a demand of Rs. 22,66,25,370/-inspite of having MAT credit of Rs. 1,56,30,02,091/-; viii. that the Ld. AO has grossly erred in law and on the facts & circumstances of the assessee’s case in levying the alleged interest u/s 234A of the Act amounting to Rs. 27,77,582/- without appreciating that the original income tax return for the assessment year under consideration was duly filed on or before the due date viz. 30thNovember, 2016, thus warranting no levying of interest u/s 234A. 6.0 It is prayed before the Hon’ble Tribunal to direct the Ld. AO to compute the correct total income after rectifying the aforesaid mistakes apparent from records and consequently to delete the demand inadvertently raised u/s 156 of the Act amounting to Rs. 22,66,25,370/- Grounds of Appeal - Transfer pricing adjustments in respect of international transactions - Adjustment of Rs. 2,79,20,808/- I. Allocation of Software Expenses to AE’s – Adjustment of Rs. 16,68,574/- 7.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have grossly erred in law and on the facts & circumstances of the appellant’s case in making an adjustment of Rs. 16,68,574/- in respect of international transaction of allocation of software cost only amounting to Rs. 1,26,59,893/- to AE’s by imputing a mark-up of @ 13.18% over and above the cost allocations. 5 ITA No.792/DEL/2021 8.0 Without prejudice, the Ld. DRP and consequently Ld. TPO / Ld. AO have grossly erred in taking the search process / comparables and their PLI’s solely based on directions given by the Ld. DRP in the assessee’s case for the A.Y. 2014-15, completely ignoring that such comparables are manufacturing companies and applying their margins for benchmarking the cost allocation transaction is highly unjustified. 9.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have grossly erred in law and on the facts & circumstances of the assessee’s case in not appreciating and completely ignoring that assessee has recovered the software allocation cost along with finance charges @ 8.99% which should have been accepted at ALP mark-up having regard to the nature of transaction. 10.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have grossly erred in holding that not charging of mark-up is not reflective of arm’s length behavior of the transaction and thus failing to appreciate that the assessee while performing its role of a parent company of the group incurs various costs for and behalf of its group entities/AE’s at group HO level (which are charged to group entities without any mark-up), as incurring such cost (such as software implementation, license etc.) at individual entity level may not be commercially and economically feasible. 11.0 The Hon’ble ITAT may be pleased to direct the Ld. TPO / Ld. AO to delete aforesaid adjustment of Rs. 16,68,574/- in respect of allocation of software cost only to AE’s. II. Reimbursement / recovery of expenses from AE’s - Adjustment of Rs. 22,20,109/- 12.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have grossly erred in law and on the facts & circumstances of the appellant’s case in making an adjustment of Rs. 22,20,109/- in respect of international transaction of reimbursement / recovery of expenses from its AE (on cost-to-cost basis) amounting to Rs. 1,68,44,535/- by erroneously imputing a mark-up of @ 13.18% over and above said cost. 13.0 Without prejudice, the Ld. DRP and consequently Ld. TPO / Ld. AO have grossly erred in taking the search process / comparables and their PLI’s solely based on directions given by the Ld. DRP in the assessee’s case for the A.Y. 2014-15, completely ignoring that such comparables are manufacturing companies and applying their margins for benchmarking the cost reimbursement transaction is highly unjustified. 14.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have grossly erred in holding that not charging of mark-up is not reflective of arm’s length behavior of the transaction and thus failing to appreciate that 6 ITA No.792/DEL/2021 during the course of normal business, both assessee and AEs incurs certain expenses which under reciprocal arrangement are reimbursed to each other on cost-to-cost basis. 15.0 The Hon’ble ITAT may be pleased to direct the Ld. TPO / Ld. AO to delete the above adjustment of Rs. 22,20,109/- in respect of international transaction of reimbursement received from AE’s. III. Corporate Guarantee Fee from AE’s - Adjustment of Rs. 2,40,32,125/- 16.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have grossly erred in law and on the facts & circumstances of the appellant’s case in making an upward adjustment of Rs. 2,40,32,125/- by imputing the arm’s length corporate guarantee fee rate @ 0.50% instead of @ 0.25% charged by appellant from its AEs [wholly owned subsidiaries] based on the specific quotation obtained from HDFC Bank, which constituted the valid comparable data in appellant's specific case under the ‘Other Method’. 17.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have exceeded their jurisdiction in proposing a transfer pricing adjustment for the extension of corporate guarantees which do not involve incurring any cost and therefore are out of the ambit of international transactions u/s 92B of the Act and therefore not subject to assessment under Chapter- X. 18.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have grossly erred in law and on the facts & circumstances of the appellant’s case in not considering that the AE’s have furnished back to back counter guarantees of equal amounts on similar terms to the appellant, therefore appellant is completely indemnified against any risk of default on the part of its AE’s. 19.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have grossly erred in law and on the facts & circumstances of the appellant’s case in not appreciating the fact that corporate guarantee has been extended by the appellant, being the parent company on behalf of its wholly owned subsidiary, as a matter of business prudence and to protect its own commercial interest. The appellant does not incur any cost by extending such corporate guarantee to its AEs nor assumes any risk as entire capital / assets of its AEs are held directly or indirectly by the appellant. Further, the Ld. DRP / Ld. TPO / Ld. AO have not followed the established judicial precedents rendered on the issue including the Hon’ble ITAT’s orders in assessee’s own case for A.Y. 2010-11 and A.Y. 2012-13. 20.0 The Hon’ble ITAT may be pleased to hold that: - 7 ITA No.792/DEL/2021 i. the act of giving corporate guarantee by the appellant on behalf of the AE’s is not an international transaction and, therefore, not amenable to any adjustment under Chapter X of the Act; ii. no adjustment is required as AE has provided back-to-back counter guarantees of equal amounts on similar terms and hence no adjustment / addition is required; iii. no adjustment is required as @ 0.25% charged by the appellant as corporate guarantee fee from its AE’s [wholly owned subsidiaries] is at arm’s length and thus upward adjustment of Rs. 2,40,32,125/- be directed to be deleted; iv. the corporate guarantee fee has been benchmarked by the appellant using ‘other method’ as most appropriate method based on specific quotation obtained from HDFC Bank is at arm’s length; v. no adjustment is required as corporate guarantee fee @ 0.25% charged by the appellant has also been accepted at arm’s length by Hon’ble ITAT in assessee’s own case for A.Y. 2010-11 and A.Y. 2012-13. Grounds of Appeal - Transfer pricing adjustment in respect of specified domestic transactions - Adjustment of Rs. 34,70,72,550/- IV. Inter-unit Transfer - Technical Textile Business, Kashipur (TTBK) Division – Adjustment of Rs. 14,952/- 21.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have grossly erred in law and on the facts & circumstances of the appellant’s case in making transfer pricing adjustment of Rs. 14,952/- in respect of inter- unit transactions amounting to Rs. 3,91,401/- pertaining to ‘Technical Textile Business’ (TTB) Segment of the assessee. 22.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have grossly erred in law and on facts and circumstances of the case, in rejecting, without any cogent reason, the assessee’s most appropriate method being ‘CUP Method’ and ‘Other Method’ both of which are direct price based methods and instead applying the ‘Internal TNMM’ in arbitrary manner. 23.0 Without prejudice, the methodology adopted by the Ld. TPO and upheld by the Ld. DRP is plagued with the gross mistakes, inconsistency and assumptions on account of following; - i. the segmental margin of TTB segment computed by ld. TPO @ 6.28% is incorrect as the segmental margin from the segmental results of assessee is @ 12.14%; 8 ITA No.792/DEL/2021 ii. even following Ld. TPO’s approach the assessee’s eligible unit’s margin @ 10.10% is lower than the relevant segmental margin @ 12.14% and hence no adjustment is warranted in any case. 24.0 The Hon’ble ITAT may be pleased to direct the Ld. TPO / Ld. AO to delete such adjustment of Rs. 14,952/- in respect of inter-unit transactions pertaining to TTB Segment. V. Inter-unit Transfer – Chemical and Polymer Business – Adjustment of Rs. 58,02,000/- 25.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have grossly erred in law and on the facts & circumstances of the appellant’s case in making transfer pricing adjustment of Rs. 58,02,000/- in respect of inter-unit transactions amounting to Rs. 6,39,36,389/- pertaining to Engineering and Plastic Business unit (EPB), Pantnagar forming part of ‘Chemical and Polymer Business’ (CPB) segment of the assessee. 26.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have grossly erred in law and on facts and circumstances of the case, in rejecting, without any cogent reason, the assessee’s most appropriate method being ‘CUP Method’ and ‘Other Method’ both of which are direct price based methods and instead applying the ‘TNMM’ in arbitrary manner, not providing FAR analysis and search process to the assessee and resultantly taking the companies which are product wise and functionally incomparable to the assessee’s EPB unit. 27.0 Without prejudice, the Ld. DRP and consequently Ld. TPO / Ld. AO have grossly erred in computing the adjustment twice, Rs. 40.23 Lakhs on cost side and Rs. 17.82 Lakhs on revenue side thus incorrectly applying the TNMM. 28.0 Without prejudice, the methodology adopted by the Ld. TPO and upheld by the Ld. DRP is plagued with the gross mistakes, inconsistency and assumptions on account of following; - i. the segmental margin of TTB segment computed by ld. TPO @ (-) 1.37% is incorrect as the segmental margin of CPB from the segmental results of assessee is @ 33.34%; ii. even following Ld. TPO’s approach the assessee’s eligible unit’s margin @ 16.32% is lower than the relevant segmental margin @ 33.34% and hence no adjustment is warranted in any case. 29.0 The Hon’ble ITAT may be pleased to direct the Ld. TPO / Ld. AO to delete such adjustment of Rs. 58,02,000/- in respect of inter-unit transactions pertaining to CPB Segment. 9 ITA No.792/DEL/2021 VI. Transfer of Electricity by Captive Power Plant unit at Bhiwadi, Rajasthan – Adjustment Rs. 18,72,72,104/- 30.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have grossly erred in law and on facts of the case by proposing transfer pricing adjustment of Rs. 18,72,72,104/- in respect of transaction of transfer of electricity by the assessee’s captive power plant unit at Bhiwadi to chemical unit on wholly erroneous, illegal and arbitrary grounds. 31.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have grossly erred in law and on the facts of the case by rejecting the assessee’s methodology using transactional net margin method (TNMM) without any cogent reason and on completely erroneous grounds. 32.0 That the Ld. TPO has grossly erred in law and on the facts of the case by rejecting the assessee’s alternative methodology of benchmarking of transfer of electricity @ Rs. 8.65 per unit based on the state electricity board-JVVNL purchase price rates and instead taking the average rates of various Discoms @ Rs. 3.786 per unit obtained u/s 133(6) of the Act which is not a valid comparable and also not available in public domain. 33.0 That the Ld. TPO has erred in law and in facts and circumstances of the case in rejecting the assessee’s reliable internal CUP data in form of actual transactions of purchase of electricity and taking the average tariff rates obtained u/s 133(6) of the Act without appreciating that such tariff rates are general in nature and various other charges viz. fixed charges, electricity duty, cesses etc. have not been factored in while benchmarking the transactions. 34.0 The Hon’ble ITAT may be pleased to direct the Ld. TPO / Ld. AO to delete the above transfer pricing adjustment of Rs. 18,72,72,104/- in respect of transaction of transfer of electricity by captive power plant at Bhiwadi. VII. Purchase of Electricity from its AE’s Vavyu Renewable Energy (Tapti) Private Limited (VRETPL) – Adjustment of Rs. 8,86,15,614/- 35.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have grossly erred in law and on the facts & circumstances of the appellant’s case in making transfer pricing adjustment of Rs. 8,86,15,614/- in respect of specified domestic transaction as referred in section 92BA(i) in the nature of purchase of electricity from its associate VRETPL@ Rs. 5.68 per unit on wholly unjust, illegal, erroneous, superficial, frivolous, arbitrary and untenable grounds and is prayed to be deleted before your honour. 10 ITA No.792/DEL/2021 36.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have grossly erred in law and on the facts & circumstances of the appellant’s case in rejecting the assessee’s reliable internal CUP data in form of actual transactions of purchase of electricity and instead taking the general tariff rates obtained by the Ld. TPO u/s 133(6) of the Act from the Tamil Nadu State Electricity Corporation (TNERC) @ Rs. 2.95 per unit while benchmarking the transaction of purchase of electricity from associate by the assessee. 37.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have grossly erred in law and on the facts & circumstances of the appellant’s case in making the above adjustment in respect of transaction of purchase of electricity from associate covered in section 40A(2)(b) not appreciating that transfer pricing regulations are not applicable on such transactions after omission of clause (i) from section 92BA of the Act vide Finance Act, 2017. 38.0 Without prejudice, that the Ld. DRP and consequently Ld. TPO / Ld. AO have grossly erred in law and on the facts & circumstances of the appellant’s case in taking the tariff rates obtained from TNERC without appreciating that such tariff rates may only be basic rates and various other charges viz. fixed charges, electricity duty, cesses etc. have not been factored in while considering such rate for benchmarking purposes. 39.0 The Hon’ble ITAT may be pleased to direct the Ld. TPO / Ld. AO to delete such adjustment of Rs. 8,86,15,614/- in respect of specified domestic transaction of purchase of electricity from VRETPL. VIII. Sale of Electricity by Wind Power Mill (WPP) unit at Tamil Nadu – Adjustment of Rs. 6,53,67,880/- 40.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have grossly erred in law and on the facts & circumstances of the appellant’s case in making the transfer pricing adjustment of Rs. 6,53,67,880/- in respect of specified domestic transaction of transfer or sale of electricity @ 6.35 per unit by the assessee’s WPP unit at Tamil Nadu on wholly unjust, illegal, erroneous, superficial, frivolous, arbitrary and untenable grounds and is prayed to be deleted before your honour. 41.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have grossly erred in law and on the facts & circumstances of the appellant’s case in rejecting the assessee’s reliable internal CUP data in form of actual transactions of purchase of electricity and instead taking the general tariff rates @ 2.95 per unit obtained by ld. TPO u/s 133(6) of the Act from TNERC while benchmarking the transaction of sale of electricity by WPP unit of the assessee. 11 ITA No.792/DEL/2021 42.0 Without prejudice, that the Ld. DRP and consequently Ld. TPO / Ld. AO have grossly erred in law and on the facts & circumstances of the appellant’s case in taking the tariff rates obtained from TNERC without appreciating that such tariff rates may only be basic rates and various other charges viz. fixed charges, electricity duty, cesses etc. have not been factored in while considering such rate for benchmarking purposes. 43.0 The Hon’ble ITAT may be pleased to direct the Ld. TPO / Ld. AO to delete such adjustment of Rs. 6,35,67,880/- in respect of specified domestic transaction of sale of electricity by WPP unit of the assessee. Grounds of Appeal – Corporate Tax Issues – Additions / Disallowances of Rs.1,05,51,38,904/- IX. Disallowance of deduction u/s 32AC of the Act amounting to Rs. 5,63,55,983/- 44.0 That the Ld. DRP and consequently the Ld. AO have grossly erred in law and on the facts & circumstances of the assessee’s case in disallowing the deduction u/s 32AC of the Act to the extent of Rs. 5,63,55,983/-. 45.0 That the Ld. DRP / Ld. AO has grossly erred in law and on the facts & circumstances of the assessee’s case in disallowing the deduction u/s 32AC of the Act to the extent of Rs. 5,63,55,983/- on the following grounds:- i. by treating the difference between the claim of assessee i.e. Rs. 53,59,40,165/- and amount shown in the tax audit report at Rs. 47,95,84,182/- as inadmissible deduction completely ignoring the various supporting documents including Chartered Accountant’s specific certificate certifying the amount of deduction allowable u/s 32AC of the Act; ii. by erroneously stating that the assessee has failed to furnish any bills / vouchers etc. in order to verify the date of acquisition of assets: iii. by alleging that the assessee has failed to satisfy the claim in spite of several opportunities; iv. by not appreciating that the assessee has discharged its onus of substantiating its claim with documentary evidences. 46.0 That the Ld. DRP and consequently the Ld. AO have grossly erred in law and on the facts & circumstances of the assessee’s case in allegedly stating that the assessee had not submitted the evidences regarding the actual dates of acquisition and its reconciliation with the fixed assets schedule despite of the fact that the assessee had duly furnished the 12 ITA No.792/DEL/2021 details of invoice wise additions made to eligible plant & machinery amounting to Rs. 357.29 Crores during the course of assessment proceedings and further during the proceedings before Ld. DRP. 47.0 It is prayed before the Hon’ble Tribunal to direct the ld. AO to delete the aforesaid disallowance of Rs. 5,63,55,983/- made in respect of deduction u/s 32AC of the Act. X. Disallowance u/s 14A of the Act amounting to Rs. 15,32,818/- 48.0 That the Ld. DRP and consequently the Ld. AO have grossly erred in law and on the facts & circumstances of the assessee’s case by enhancing the disallowance u/s 14A of the Act read with rule 8D(2)(ii), to the amount of Rs. 15,32,818/- relying on the Ld. DRP’s own directions in case of assessee for A.Y. 2012-13 and A.Y. 2013-14, which is wholly untenable in law and based on conjectures and surmises. 49.0 That the Ld. DRP and consequently the Ld. AO have while enhancing the disallowance u/s 14A of the Act, grossly erred in holding that the entire amount of finance cost of Rs. 93.53 Crores is in-directly attributable for earning a dividend income of Rs. 18,21,155/-, disregarding the fact that the finance costs (including interest expenses) were directly relatable to specific purpose borrowings used for the assessee’s business & not for the purpose of making investments such that clause (ii) of rule 8D(2) of the Rules is not attracted. 50.0 That the Ld. DRP and consequently the Ld. AO have grossly erred in law and on the facts & circumstances of the appellant’s case in enhancing the above disallowance by failing to appreciate that assessee had made investment out of its own reserves and surplus funds as the amount of average investments related to tax free income is only Rs.8.47 Crores and the total amount of reserves & surplus as on 31.03.2016 is Rs. 2,631.85 Crores which is 310.72 times of the value of average tax free investments, thus warranting no disallowance u/s 14A of the Act r.w.r. 8D(2)(ii). 51.0 Without prejudice to the above grounds, the Ld. DRP and consequently the Ld. AO have grossly erred in law and on the facts & circumstances of the assessee’s case in making the disallowance u/s 14A to the tune of Rs. 15,32,818/- without appreciating the fact that the assessee has already made a disallowance of Rs. 4,26,590/- u/s 14A r.w.r. 8D(2)(iii) and thus resulting in a total disallowance of more than the amount of exempt income viz. Rs. 18,21,155/- received by the assessee during the year under consideration. 13 ITA No.792/DEL/2021 52.0 That the Ld. DRP has erred in upholding the enhanced disallowance u/s 14A solely relying on its own direction in assessee’s own case A.Y. 2012-13 and A.Y. 2013-14, however, it completely ignoring its own directions in assessee’s case for A.Y. 2014-15 wherein it deleted the identical enhanced disallowance. 53.0 That the Ld. DRP and consequently the Ld. AO have grossly erred in law and on the facts & circumstances of the appellant’s case in failing to appreciate that the similar issue has been decided in the favour of the assessee in the assessee’s own case in different year before the various appellate forums viz. Ld. CIT(A) in the A.Y. 2015-16, and Hon’ble Delhi ITAT in the A.Y. 2012-13, A.Y. 2010-11, A.Y. 2008-09 & A.Y. 2006-07. 54.0 It is humbly prayed before the Hon’ble ITAT that enhancement of disallowance of Rs. 15,32,818/- u/s 14A of the Act r.w.r. 8D(2)(ii) of the Rules made by the Ld. AO and upheld by the Ld. DRP may be directed to be deleted. XI. Disallowance of Weighted Deduction u/s 35(2AB) of the Act amounting to Rs. 82,61,65,610/- in respect of In-House Research and Development Units 55.0 That the Ld. DRP and consequently the Ld. AO have grossly erred in law and on the facts & circumstances of the appellant’s case by disallowing the entire claim of weighted deduction u/s 35(2AB) of the Act in respect of in-house research facilities total amounting to Rs. 82,61,65,610/-. Apparent Mistake 56.0 That the Ld. DRP and consequently the Ld. AO have grossly erred in law and on the facts & circumstances of the assessee’s case in enhancing the amount of variation proposed in the draft assessment order by Rs. 70,94,60,024/- being the amount of deduction u/s 35(2AB) of the Act pertaining to four R&D facilities of the assessee which were not even under dispute in the draft assessment which is contrary to the provisions of law. 57.0 Without prejudice, the Ld. DRP and consequently the Ld. AO have grossly erred in law and on the facts & circumstances of the appellant’s case in making the disallowance of the entire claim of weighted deduction u/s 35(2AB) of the Act amounting to Rs. 82,61,65,610/- pertaining to all five R&D facilities of the assessee, instead of disallowing the portion of such claim amounting to Rs. 10,23,47,931/- pertaining to ‘Gurgaon R&D Research Facility’ as directed by the Ld. DRP vide para no. 18.6 & 18.7 at page no. 80 of its directions dated 26thMarch, 2021. The Ld. AO erred in not giving effect 14 ITA No.792/DEL/2021 to the directions of Ld. DRP in correct manner and making disallowance of entire deduction pertaining to all five R&D facilities despite the specific directions of Ld. DRP to disallow deduction pertaining to ‘Gurgaon R&D Research Facility’ only and thus acted without application of mind & beyond his authority as mandated under law. Grounds on Merits 58.0 That the Ld. DRP has grossly erred in law and on the facts & circumstances of the appellant’s case by disallowing the claim of weighted deduction u/s 35(2AB) of the Act in respect of ‘Gurgaon R&D Research Facility’ by allegedly stating that the such ‘Gurgaon R&D Research Facility’ was not an approved facility by the DSIR for the relevant year under consideration and accordingly concluding that the assessee is not eligible for weighted deduction for amount spent on such ‘Gurgaon R&D Research Facility’. 59.0 That the Ld. DRP has grossly erred in law and on the facts & circumstances of the appellant’s case in incorrectly stating that ‘Gurgaon R&D Research Facility’ is approved by DSIR from 01.04.2016 ignoring that such facility has been duly recognised by the DSIR we.f. 31stJuly, 2015 vide letter dated 11th September, 2015 already placed on records. 60.0 That the Ld. DRP and consequently the Ld. AO have grossly erred in law in making the aforesaid disallowance by ignoring that assessee has duly complied with all applicable provisions of section 35(2AB) r.w.r. 6(7A) as attributable to the assessee i.e. recognition / renewal of all R&D units from DSIR, filing of Form No. 3CK before DSIR [along with all necessary details], obtaining the reports from Statutory auditors in Form No. 3CLA and getting the same uploaded on IT Portal, Audits of accounts of R&D units, and further getting the Form No. 3CL from the DSIR filed with IT authorities. 61.0 The Hon’ble ITAT may be pleased to grant the weighted deduction u/s 35(2AB) of the Act for Rs. 82,61,65,610/-. XII. Disallowance of Deduction u/s 80-IA of the Act amounting to Rs. 9,63,12,743/- in respect of Wind Power Plant (WPP) unit. 62.0 That the Ld. AO has grossly erred in inadvertently disallowing the entire amount of deduction amounting to Rs. 9,63,12,743/- claimed by the assessee u/s 80-IA of the Act in respect of WPP unit ignoring that an amount of Rs. 6,35,67,880/- has already been added through transfer pricing adjustment in accordance with the directions of the Ld. DRP in respect of same unit [contested by assessee vide ground no. 40.0 to 43.0 15 ITA No.792/DEL/2021 above] and thus inadvertently making excess disallowance to the extent of Rs. 9,63,12,743/-. 63.0 The Hon’ble ITAT may be pleased to direct the Ld. AO / Ld. TPO to delete the aforesaid disallowance of Rs. 9,63,12,743/- inadvertently made by the Ld. AO. XIII. Non-granting of claim of deduction of Rs. 5,21,15,493/- u/s 80-IC of the Act 64.0 Without prejudice, the Ld. AO has grossly erred in law and on facts and circumstances of the case in not following the binding directions of the Ld. DRP by not granting the following claims of remaining deduction u/s 80-IC of the Act in respect of Technical Textiles Business at Kashipur and Engineering Plastic Business at Pantnagar;- i. a deduction of Rs. 2,82,36,993/- [Rs. 2,82,41,479/- (original amount of deduction) minus 30% of Rs. 14,952/- (being amount of adjustment upheld by the Ld. DRP)] in respect of its Technical Textile Business at Kashipur as directed by the Ld. DRP; ii. a deduction of Rs. 2,38,81,562/- [Rs. 2,56,22,162/- (original amount of deduction) minus 30% of Rs. 58,02,000/- (being amount of adjustment upheld by the Ld. DRP)] in respect of its Engineering and Plastic Business at Pantnagar as directed by the Ld. DRP. 65.0 The Hon’ble ITAT may be pleased to direct the Ld. TPO / Ld. AO to grant the deduction u/s 80-IC of the Act amounting to Rs. 5,21,15,493/- XIV. Disallowance of Depreciation of Goodwill amounting to Rs. 14,36,387/- 66.0 That the Ld. DRP and consequently the Ld. AO have grossly erred in law and on the facts & circumstances of the assessee’s case in making the disallowance of depreciation of Rs. 14,36,387/- on goodwill arising on acquisition of three business units from SRF Polymers. 67.0 That the Ld. DRP and consequently the Ld. AO have grossly erred in law and on the facts & circumstances of the assessee’s case in making the disallowance of depreciation of Rs. 14,36,387/- on goodwill: - i. by taking a view that the amount of goodwill as arise on acquisition of three businesses is a balancing figure and not the goodwill which the assessee paid in excess of its valuation; ii. by drawing an incorrect interpretation after perusal of agreement for transfer of business dated 01.01.2009 that in the given schedule of assets & liabilities, goodwill is not mentioned 16 ITA No.792/DEL/2021 implying thereby that there was neither any valuation of goodwill nor there was any sale of goodwill; iii. by treating the same merely as book entry in the books of accounts of the assessee. 68.0 That the Ld. DRP has grossly erred in law and on the facts & circumstances of the assessee’s case in confirming the above disallowance of depreciation of Rs. 14,36,387/- on goodwill by following its own directions in the assessee’s own case for the A.Y. 2014-15. 69.0 That the Ld. DRP and consequently the Ld. AO have grossly erred in law and on the facts & circumstances of the assessee’s case in failing to appreciate that the identical issue has been decided in the favour of the assessee by the Hon’ble Delhi ITAT in the A.Y. 2012-13 in the assessee’s own case. 70.0 The Hon’ble ITAT may be pleased to grant the allowance of depreciation on Goodwill of Rs. 14,36,387/-. XV. Disallowance on account of inventories written off amounting to Rs. 2,04,00,000/- 71.0 That the Ld. DRP and consequently the Ld. AO have grossly erred in law and on the facts & circumstances of the assessee’s case by disallowing a deduction of Rs. 2,04,00,000/- in respect of inventories written off by the assessee. 72.0 That the Ld. DRP and consequently the Ld. AO have grossly erred in law and on the facts & circumstances of the assessee’s case by allegedly stating that apart from some general sample sanction notes provided by the assessee, no such supporting materials have been submitted. 73.0 It is prayed before the Hon’ble Tribunal to delete the aforesaid disallowance of Rs. 2,04,00,000/- made in respect of inventories written off. XVI. Disallowance on account of software expenses amounting to Rs. 8,19,870/- 74.0 That the Ld. AO has grossly erred in law and on the facts & circumstances of the appellant’s case by making the disallowance of Rs. 8,19,870/- by treating the software expense in nature of annual maintenance and annual recurring subscription fee amounting to Rs. 10,93,160/- as capital expenditure which is bad in law. 75.0 That the Ld. AO has grossly erred by failing to give the effect of the directions of the Ld. DRP vide para no. 23.2 at page no. 83 of its 17 ITA No.792/DEL/2021 directions dated 26thMarch, 2021 that if the expenses are in the nature of annual maintenance & annual recurring subscription fee, the same shall be allowed as revenue expenditure. 76.0 The Hon’ble ITAT may be pleased to direct the Ld. AO to delete the above disallowance of Rs. 8,19,870/-. XVII. Other Corporate Tax Issue - Other claims made during the course of assessment proceedings and before the Ld. DRP– Rs. 17,36,90,694/- 77.0 That the Ld. DRP and consequently the Ld. AO have grossly erred in law and on the facts & circumstances of the assessee’s case in not entertaining the claim made by the assessee during the course of assessment and then again before the ld. DRP pertaining to remaining additional depreciation @ 10% u/s 32(1)(iia) amounting to Rs. 17,36,90,694/- which was inadvertently left to be claimed while filing / revising the return of income. 78.0 That on the facts & circumstances of the assessee’s case, the Ld. DRP and consequently the Ld. AO have grossly erred in law in not entertaining and adjudicating the above ground by relying the judgment of Hon’ble Supreme Court in the case of Goetze (India) Ltd. vs CIT [284 ITR 323] and without prejudice, the claim is being made before the Hon’ble ITAT as an adjudicating authority following precedent in NTPC Ltd. [229 ITR 383 (1998)]. XVIII. Other Corporate Tax Issue - Other claim made during the proceedings before the Ld. DRP – Rs. 2,15,79,405/- 79.0 That the Ld. DRP and consequently the Ld. AO have grossly erred in law and on the facts & circumstances of the assessee’s case in not allowing the deduction of Education Cess amounting to Rs. 2,15,79,405/- u/s 37 of the Act paid or payable under normal provision of the Act. 80.0 That the Ld. DRP and consequently the Ld. AO have grossly erred in law and on the facts & circumstances of the assessee’s case in not allowing the deduction of education cess based on the judgments of the Hon’ble Rajasthan High Court (Jaipur Bench) in the case of Chambal Fertilizers & Chemicals Ltd. vs. CIT being Appeal No. 52/2018 decided on 31st July, 2018 and the Hon’ble Bombay High Court (Goa Bench) in the case of Sesa Goa Limited vs. JCIT in Tax Appeal No. 17/2013 vide its judgment dated 28th February, 2020. 81.0 The Hon’ble ITAT may be pleased to grant the claim of deduction of education cess amounting to Rs. 2,15,79,405/- u/s 37 of the Act paid / payable by the assessee under normal provision of the Act. 18 ITA No.792/DEL/2021 XIX. Other Grounds of Appeal 82.0 That the Ld. AO has grossly erred in law and on the facts & circumstances of the appellant’s case in initiated the penalty proceedings u/s 271(1)(c) of the Act for furnishing of inaccurate particulars of income since there was no concealment of income nor submission of inaccurate particulars of income, nor any default according to law by the assessee. 83.0 That the Ld. AO has grossly erred in law and on the facts & circumstances of the appellant’s case in charging alleged interest under section 234A and 234B of the Act on wholly unjust, illegal, erroneous and untenable grounds and is prayed not to be upheld and deleted before your honour. 84.0 That the assessee craves leave to amend, alter, change vary or substitute any of the aforesaid grounds of appeal or add & raise an additional ground of appeal if it becomes necessary to do so in the interest of justice. 85.0 That each ground of appeal is independent of and without prejudice to the other grounds of appeals raised herein.” 2. The Ground Nos. 1 to 6 are general in nature, hence, not adjudicated and dismissed as such. 3. Apropos grounds no.7 to 11 relating to adjustment of Rs.16,68,574/- u/s 92CA(3) of the Act on account of allocation of software cost received from its Associated Enterprises are concerned, ld. Counsel for the assessee submitted that this issue is fully covered by the order of the Hon'ble Jurisdictional ITAT in the assessee's own case for A.Y. 2014-15, wherein the coordinate Bench upheld that the reimbursement received at cost does not require any mark-up. It was further submitted that the Transactions entered into with the AEs are purely reimbursement received of software allocations on cost to cost basis from the AEs. Hence, no mark-up is 19 ITA No.792/DEL/2021 chargeable on the cost of reimbursement received from AEs. It was the further contention that not considering the fact that the assessee is a holding company of the group and incurs cost, which is recovered from the AEs and also, not appreciating that the assessee has recovered the software allocation costs along with finance charges @ 8.99%. Further, it was submitted that the mark up of 13.18% which has been worked out through a search process, wherein selected companies are into the manufacturing of textiles, yarn etc. This average margin is applied on reimbursement transactions, which is grossly erroneous. Further the assessee has entered into various business transactions with its AEs in the nature of export of goods, import of goods, corporate guarantee fee, interest on loan, management support services etc. the volume of which is around Rs. 33.59 Crores. It was also submitted that the assessee has also entered into the ancillary transactions in the nature of software cost allocations received from AEs for Rs.1.27 Crores, which is nominal and normal considering the volume of business transactions entered into with the AEs. It was also submitted that the assessee also relied on OECD guidelines in this regard which advocates that no mark-up is chargeable on reimbursements. It was further submitted that the Hon’ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. vs. CIT [TS-106-SC-2021] had also upheld the reference to OECD 20 ITA No.792/DEL/2021 guidelines being persuasive in nature. The Ld. AR also submitted that various judicial precedents on the same issue have upheld the cost to cost nature of reimbursement as ALP. In view of above, he requested to direct the TPO to delete such adjustment in respect of reimbursement received. 4. Ld. DR of the Revenue relied upon the orders of the authorities below, but she did not controvert the contention of the ld. AR for the assessee that the issue is covered in favour of the assessee by the decision of the Tribunal in assessee’s own case in the assessment year 2014-15 and neither produced any contrary decision. 5. Considered the rival submissions and material placed on record. We find considerable cogency in the contention of the Ld. AR that the instant issue is fully covered by the order of the Coordinate Bench of the Tribunal in assessee's own case for A.Y. 2014-15, wherein the coordinate Bench upheld that the reimbursement received at cost does not require any mark-up. The relevant findings of the coordinate bench are reproduced below: “23. Ground No.12 to 15 are with respect to adjustment on account of reimbursement received by the assessee from its AEs amounting to Rs.45,39,571/-. 24. TPO on perusing the TP documentation noticed that assessee had incurred certain expenses which were in the nature of travelling lodging and boarding charges, courier etc. Assessee was asked to show-cause as to why reimbursement of the expenses not be treated as expenses and why a markup should be charged to which assessee inter 21 ITA No.792/DEL/2021 alia submitted that the reimbursement should not be treated as intra group services as these were third party costs which were reimbursed by AEs on a cost to cost basis. The submission of the assessee was not found acceptable to TPO. TPO noted that assessee had incurred expenses and also employed manpower, assets and had rendered travel related services to its AEs. He was of the view that had these resources been utilized by the assessee for its own business activities, the assessee would have benefitted and by utilizing those resources for benefit of its AEs, the assessee is losing out on benefits. He therefore held that assessee should have earned a markup on such expenses. The TPO thereafter by considering the comparables, as listed at Page 40 & 41 of his order, proposed an adjustment of Rs.58,13,774/-. 25. Aggrieved by the proposed adjustment, assessee carried the matter before the DRP. DRP upheld the action of adjustment proposed by the TPO but however directed to compute the adjustment by taking the nine comparables as listed on Page 11 of its directions. Consequent to the direction of DRP, AO made final upward adjustment of Rs.45,39,571/-. Aggrieved by the order of AO, assessee is now before us. 26. Before us, Learned AR reiterated the submissions made before the lower authorities and further submitted that on identical facts, no adjustment on account of reimbursement of expenses was made in earlier years. He further submitted that transactions entered into with the AEs are of the pure reimbursement received from the AEs which are in the nature of expenses incurred for travelling, lodging, boarding, courier etc. of employees of the AEs which are charged on cost to cost basis. It was further submitted that similar reimbursement are made by the assessee to its AEs also at cost to cost basis. It was further submitted that assessee had entered various business transactions with its AEs which are in the nature of export of goods, import of goods, corporate guarantee fee, interest on loan, management support services etc. the volume of which is Rs.126.93 crore as against which the nature of reimbursement received and paid from and to the AEs are Rs.3.86 crore which is normal considering the volume of business transactions entered into with the AEs. He further submitted that no adjustment is required when it is reimbursement of expenses. He further submitted that transactions were undertaken 22 ITA No.792/DEL/2021 from commercial expediency point of view and were not intended for the exploitation of return. He thereafter submitted that Co-ordinate Bench of Tribunal in the case of Vedanta Ltd. vs. ACIT in ITA No.12/Del/2010 order dated 21.09.2020 for A.Y. 2014-15 has held that no mark up was warranted on the reimbursement of primary third party expenses for which no value addition was done by the assessee and which are subsequently reimbursed by the AEs on cost to cost basis. He pointed to the relevant findings of the Tribunal order placed at Page 236 of the paper book. He therefore submitted no addition is called for. 27. Learned DR on the other hand pointed to the observations made by DRP. She also placed reliance on the decision rendered by Hon’ble Delhi High Court in case of CIT vs. Cushman And Wakefield (India) Pvt. Ltd. reported in 367 ITR 730 and decision rendered by Hon’ble Delhi High Court in the case of Centrica India Offshore Pvt. Ltd. (WP-6807 of 2012 order dated 25.04.2014). 28. Learned AR in the rejoinder submitted that the expenses were in the nature of reimbursement and there is no whisper in the order of TPO of the assessee having rendered any services and that assessee collects the expenses incurred on behalf of AEs from the AEs and passes it on to the third parties. He further submitted that it is not an international transactions as per Clause 92D(1) of the Act. 29. We have heard the rival submissions and perused the materials on record. The issue in the present ground is with 21 respect to the adjustment made on account of reimbursement of cost. Before us, it is an assessee’s submissions that the expenses which were reimbursement of all expenditure which were inter alia incurred by the assessee on behalf of the AEs and the same have been reimbursed to the third parties and for which no value addition has been done by the assessee. It is further assessee’s submissions that the reimbursement are on cost to cost basis and transactions were undertaken for commercial expediency and not intended with the expectation of return. The aforesaid contentions of the AR have not found to be false. We find that the Co-ordinate Bench of Tribunal in the case of Vedanta Ltd. (supra) has held that no mark up is warranted on pass through costs which are inter alia incurred by the assessee and are 23 ITA No.792/DEL/2021 reimbursement of primary third party expenses initially incurred by the assessee for which no value addition is done by the assessee and which are subsequently reimbursed by the AEs on cost to cost basis. Before us no material has been placed by Revenue to demonstrate that value addition has been done by the assessee and is not in the nature of reimbursement of primary third party expenses which were initially incurred by the assessee. Considering the totality of the aforesaid facts and relying on the aforesaid decisions rendered by the Co-ordinate Bench in the case of Vedanta Ltd. (supra), we are of the view that no addition is called for in the present case. Thus the grounds of assessee is allowed.” 6. Respectfully following the above decisions and further it is noted that Hon’ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. vs. CIT (supra) had also upheld the reference to OECD guidelines being persuasive in nature. In view of the aforesaid discussions and respectfully the aforesaid precedents, we deem it fit and proper to direct the AO/TPO to delete adjustments of Rs.16,68,574/- in respect of reimbursement received. Accordingly, Ground Nos.7 to 11 are allowed. 7. Apropos grounds no. 12 to 15 relating to adjustment of Rs.22,20,109/- u/s. 92CA(3) of the Act on account of allocation of reimbursement received from its Associated Enterprises are concerned, ld. Counsel for the assessee submitted that this issue is fully covered by the order of the ITAT in the assessee's own case for A.Y. 2014-15, wherein the coordinate bench upheld that the reimbursement received at cost does not require any mark-up. Reimbursement received from AEs in the nature of expenses incurred for 24 ITA No.792/DEL/2021 traveling, lodging, boarding, courier etc. of employees of AEs which are charged on cost-to-cost basis. Similarly, the reimbursement expenditure paid by the assessee to its AE is also on a cost basis only. Further, it was submitted that the mark up of 13.18% which has been worked out through a search process, wherein selected companies are into the manufacturing of textiles, yarn etc. This average margin is applied on reimbursement transactions, which is grossly erroneous. Further the assessee has entered into various business transactions with its AEs in the nature of export of goods, import of goods, corporate guarantee fee, interest on loan, management support services etc. the volume of which is around Rs.33.17 crores. It was also submitted that the assessee has also entered into the ancillary transactions in the nature of reimbursement received and paid from/to AEs for Rs.1.68crores, which is nominal and normal considering the volume of business transactions entered into with the AEs. It was also submitted that the assessee also relies on OECD guidelines in this regard which advocate that no mark-up is chargeable in reimbursements. It was further submitted that Hon’ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. vs. CIT (supra) had also upheld the reference to OECD guidelines being persuasive in nature. The Ld. AR also submitted that various judicial precedents on the issue have upheld the cost 25 ITA No.792/DEL/2021 to cost nature of reimbursement as ALP. In view of above, he requested to direct the TPO to delete such adjustment of Rs.22,20,109/- in respect of reimbursement received. 8. Ld. DR of the Revenue relied upon the orders of the authorities below, but she did not controvert the contention of the ld. AR for the assessee that the issue is covered in favour of the assessee by the decision of the Tribunal in assessee’s own case in the assessment year 2014-15 and neither produced any contrary decision. 9. Considered the rival submissions and material placed on record. We find considerable cogency in the contention of the Ld. AR that the instant issue is fully covered by the order of the Coordinate Bench of the Tribunal in assessee's own case for A.Y. 2014-15, wherein the coordinate Bench upheld that the reimbursement received at cost does not require any mark-up. It is noted that in this case the assessee relied on OECD guidelines which support that no mark-up is chargeable in reimbursements. The coordinate bench has already considered the similar issue and reproduced the same by us in the para no.5 above. In view of the aforesaid discussions and respectfully following the aforesaid precedents, we deem it fit and proper to direct the TPO to delete such adjustment of Rs.22,20,109/- in respect of reimbursement received. Accordingly, Grounds No. 12 to 15 are allowed. 26 ITA No.792/DEL/2021 10. Apropos grounds no.16 to 20 relating to adjustment of Rs.2,40,32,125/- u/s. 92CA(3) of the Act on account of Corporate Guarantee Fee from AE are concerned, ld. Counsel for the assessee submitted that ITAT has reversed the order of the DRP for the AY 2014-15 and AY 2012-13 and also AY 2010- 11 in assessee’s own case. He further submitted that this issue is fully covered by the order of the coordinate Bench of ITAT in the assessee's own case for A.Y. 2014-15, wherein ITAT upheld that the corporate guaranteed rate @ 0.25%. It was further submitted that not considering the fact that the AEs have furnished a counter guarantee to the assessee, therefore, assessee is completely indemnified against any risk of default on the part of the AEs. It was further concluded that corporate guarantees does not involve any cost and therefore are out of the ambit of international transactions u/s. 92B of the Act thus not subject to assessment under Chapter-X. It was further submitted that TPO/DRP has rejected the valid comparable data obtained by the assessee in the form of quotation received from HDFC bank without assigning any cogent reason for such action. In view of the above, he requested that no adjustment is required as @0.25% charged by the assessee as corporate guarantee fee from its AE’s is at arms’ length and thus upward adjustment of Rs.2,40,32,125/- be directed to be deleted. 11. Ld. DR of the Revenue relied upon the orders of the authorities below, but 27 ITA No.792/DEL/2021 she did not controvert the contention of the ld. AR for the assessee that the issue is covered in favour of the assessee by the decision of the Tribunal in assessee’s own case in the assessment year 2014-15 and neither produced any contrary decision. 12. Considered the rival submissions and material placed on record. We find considerable cogency in the contention of the Ld. AR that the instant issue is fully covered by the order of the Coordinate Bench of the Tribunal in assessee's own case for A.Y. 2014-15, wherein the coordinate Bench upheld the corporate guaranteed rate @0.25%. It is also noted that ITAT has reversed the order of the DRP for the AY 2014-15 and AY 2012-13 and also AY 2010-11 in assessee’s own case. Relevant findings of ITAT in ITA No.6620/Del/2018 for AY 2014-15 is reproduced as under :- “10. TPO noticed that assessee had given Corporate Guarantee to the lenders of the beneficiaries who are AEs of the assessee and for giving the corporate guarantee, assessee had charged guarantee fee of 0.25% aggregating to Rs 2,28,54,407/-. The AEs to whom Corporate Guarantee were issued are listed at Page 5 of the TPO order. It was submitted by the assessee that it has not incurred any cost for provision of the guarantees and that during 10 F.Y. 2013-14, it had obtained a quotation from a Bank whereby the Bank had agreed to provide corporate guarantee to the AEs of the assessee at a service fee of 0.25%. Assessee considered the quotation from the Bank of similar arrangement to be an appropriate CUP to determine the Arm’s Length nature of similar arrangement between the assessee and its AEs. It was therefore the submission of the assessee that the Corporate Guarantee fee charged by the assessee from its AEs could be considered to be at Arm’s Length Price. The submissions of the assessee were not found 28 ITA No.792/DEL/2021 acceptable to TPO. TPO was of the view that in an uncontrolled transaction like the present one, guarantee fee would have been charged taking into account the credit worthiness of the AE, margins, security or any other consideration relevant for deciding the financial solvency of the AE. He was therefore of the view that the assessee should have been compensated for the guarantee given by it in an arm’s length situation. With respect to the assessee’s contention of the benchmarking of the transaction with the offer received from bank, TPO was of the view that the offer from bank was a mere offer which was not converted into a transaction and therefore it cannot be considered to be a valid CUP. TPO thereafter by applying the interest saved approach and using the data from Bloomberg database, computed the external comparable interest rate range to be 4.45% and the rate at which the AEs obtained funds with corporate guarantee of the assessee at 3.01% and thus computed the interest saved to be at 1.44%. He thereafter worked out the total guarantee fee that should have been charged 11 by using the interest saved rate of 1.44% at Rs.172,00,08,122/-. He noted that since the assessee has already received Rs 22,854,407/-recommended the enhancement of income by AO to the extent of Rs 14,91,53,715/-. AO thereafter in the draft assessment order enhanced the income as suggested by the TPO. Aggrieved by the order of TPO, assessee carried the matter before the DRP. DRP noted that various jurisdictional decisions have held the guarantee fee rate to be near about 0.5% and TPO had not given any reason for applying a higher rate of 1.3% based on SBI general Bank guarantee fee. DRP also noted that in assessee’s own case for A.Y. 2011-12, 2012-13 & 2013-14, DRP has held that the guarantee fee of 0.5% to be fair and just. It further noted that since the facts of the case in the year under consideration being similar to that of A.Y. 2013-14, it accordingly held the guarantee fee to be at 0.5% and accordingly directed AO/TPO to re-compute the adjustment accordingly. AO thereafter made adjustment of Rs 2,28,67,811/-. 11. Aggrieved by the order of DRP, assessee is now before us. 12. Before us, Learned AR reiterated the submissions made before the lower authorities. He thereafter submitted that identical issue arose in assessee’s own case in A.Y. 2010-11, 2012-13 wherein the Co- ordinate Bench of Tribunal has upheld the corporate guarantee rate @ 29 ITA No.792/DEL/2021 0.25%. He further submitted that the Hon’ble ITAT had reversed the order of DRP for A.Y. 2012-13 & 2010-11 in assessee’s own case. He pointed to the relevant orders of the Tribunal placed in the paper book. He therefore submitted that since assessee had charged 0.25% as corporate guarantee fee to its AEs, no adjustment is required and therefore the adjustment proposed by the AO be deleted. 13. Learned DR on the other hand took us to the finding of the DRP and supported the order of DRP. 14. We have heard the rival submissions and perused the materials available on record. The issue in the present ground is with respect to the adjustment made to corporate guarantee fee charged by the assessee from its AEs. We find that identical issue arose in assessee’s own case in A.Y. 2010-11 and the Co-ordinate Bench of Tribunal in ITA No.356/Del/2015 order dated 24.02.2020 decided the issue in favour of the assessee by observing as under: “12. We have heard the rival contentions, perused the relevant findings and as well as material referred to before us at the time of hearing. The TPO and DRP has rejected the assessee’s CUP based on the ICICI Bank specific to facts of the assessee and has applied the Indian banks u/s 133(6) of the Act. First of all TPO’S rejection of assessee’s CUP merely on the ground that such quotation are merely offers and hence does not qualify as CUP is not appropriate. The assessee has obtained specific quotation for ICICI bank. The ICICI Bank after due consideration of profile of assessee and its AEs, risk involved and other market factors, issued letter of to extend guarantee to AEs of the assessee. In our view such offer from ICICI Bank does constitutes valid CUP. Further as pointed out ld Counsel, such offer from ICICI Bank is an appropriate comparable data in terms of Rule 10D (3) of the Rules. Therefore, rejection of assessee’s CUP in form of ICICI Bank quotation in not valid. 13. It is pertinent to note that even TPO has used general bank rates obtained from various Indian banks. These bank guarantee rates are also in the nature of offers which are general rates and not specific to the assessee. Therefore, the approach of 30 ITA No.792/DEL/2021 TPO itself is contradictory, when on the one hand he rejects the assessee’s specific quotation saying the same as offers while on the other hand he himself uses the general bank guarantee rates which are again the offers and that too far from being comparable to the case. 14. Further the issue of using bank guarantee rates for benchmarking corporate guarantee transaction has been put to rest by the Hon’ble Supreme Court in case of Glenmark Pharmaceuticals Ltd. [2019] 107 taxmann.com 445 (SC), where in the judgment of Hon’ble Bombay High Court was upheld. Further, DRP in assessee’s own case in subsequent years rejected the TPO’s approach of using India band guarantee rates for benchmarking corporate guarantee. Therefore, bank guarantee rates as applied by the TPO is not an appropriate comparable while benchmarking the said transaction and hence approach of TPO is rejected. 15. In the instant case, the AEs to whom corporate guarantees have been extended are wholly owned subsidiaries of the assessee. The existence of special relationship between holding and its subsidiary cannot be ignored. The assessee being a parent entity is responsible for survival and growth of its subsidiary and hence extended corporate guarantees to secure funds needed for survival and growth of its subsidiaries. Further as submitted by AR, by extending corporate guarantees to secure funds needed for survival and growth of its subsidiaries. 16. Therefore in view of the above discussions, the corporate guarantee fee at the rate of 0.25% voluntary offered to tax by the assessee is upheld as the arm length price and the addition over and above this of Rs.56,17,984/- is hereby deleted.” 15. We further find that in assessee’s own case for A.Y. 2012-13 in ITA No.5784/Del/2016 order dated 24.02.2020, the Coordinate Bench of Tribunal by relying on the order in assessee’s own case for A.Y. 2010-11 had held that the transaction of corporate guarantee fee charged at 0.25% by the assessee from its AEs to be at Arm’s Length rate and accordingly deleted the addition made by TPO. Before us, 31 ITA No.792/DEL/2021 Revenue has not pointed to any distinguishing feature in the facts of the case in the year under consideration and that of the earlier years. Revenue has also not placed any material on record to demonstrate that the aforesaid decision of the Co-ordinate Bench of Tribunal in assessee’s own case for A.Y. 2010-11 & 2012-13 has been stayed/ set aside/ overruled by higher judicial forum. In view of the aforesaid facts, on relying on the decision of the Co-ordinate Bench of Tribunal for A.Y. 2010-11 in assessee’s own case, we hold that the AO was not justified in making adjustment of Rs.2,28,67,811/-. We therefore, set aside the addition made by TPO. Thus the ground of assessee is allowed.” 13. It is also noted that TPO/DRP have rejected the valid comparable data obtained by the assessee in the form of quotation received from HDFC bank without assigning any cogent reason. In view of the aforesaid discussions and respectfully following the aforesaid precedent, we deem it fit and proper to direct the TPO to delete such adjustment of Rs.2,40,32,155/- in respect of corporate guarantee fee from its AEs. Accordingly, the Grounds No. 16 to 20 are allowed. 14. Apropos grounds no.21 to 24 relating to adjustment of Rs.14,952/- on account of Inter unit Transfer – Technical Textile Business, Kashipur Division are concerned, ld. Counsel for the assessee submitted that assessee’s methodology was rejected without providing any reason. It was further submitted that on the anvil of the various judicial precedents, CUP method to be preferred over TNMM. It was further submitted that segmental margin of TTB segment computed by TPO @6.28% is incorrect 32 ITA No.792/DEL/2021 as the segmental margin from the segmental results of assessee is 12.14% and hence no adjustment is warranted in any case. Hence, he requested that the adjustment of Rs. 14,952/- need to be deleted. 15. Ld. DR of the Revenue relied upon the orders of the authorities below on this issue. 16. Considered the rival submissions and material placed on record. We find considerable cogency in the contention that assessee’s methodology was rejected without providing any cogent reason. In our view, in various judicial precedents, CUP method has been preferred over TNMM. We further note that segmental margin of TTB segment computed by TPO @6.28% is incorrect as the segmental margin from the segmental results of assessee is 12.14% and hence no adjustment is warranted in any case. Accordingly, we direct the TPO to delete the adjustment of Rs.14,952/-. Accordingly, Ground Nos.21 to 24 are allowed in the aforesaid manner. 17. Apropos Grounds No.25 to 29 relating to adjustment of Rs.58,02,000/- on account of Chemical & Polymer Business are concerned, ld. Counsel for the assessee submitted that assessee’s methodology was rejected without providing any reason. It was further submitted that on the anvil of the various judicial precedents, CUP method to be preferred over TNMM. It was further submitted that segmental margin of CPB segment computed by 33 ITA No.792/DEL/2021 TPO @(-)1.37% is incorrect as the segmental margin from the segmental results of assessee is 33.34%. It was further contended that on the other hand, the PLI of eligible unit as computed by TPO is 16.32% which is again lower than the CPB segment’s correct PLI. Thus, no adjustment is warranted even under TPO approach. It was further submitted that DRP erred in computing the adjustment twice, Rs. 40.23 lacs on cost side and Rs.17.82 lacs on revenue side, thus incorrectly applying the TNMM method. Hence, he requested that adjustment of Rs. 58,02,000/- needs to be deleted. 18. Ld. DR of the Revenue relied upon the orders of the authorities below on this issue. 19. Considered the rival submissions and material placed on record. We find considerable cogency in the contention that assessee’s methodology was rejected without providing any cogent reason. In our view, in various judicial precedents, CUP method has been preferred over TNMM. We further find that segmental margin of CPB segment computed by TPO@ (-) 1.37% is incorrect as the segmental margin from the segmental results of assessee is reported at 33.34%. It was further noticed that the PLI of eligible unit as computed by TPO is 16.32% which is again lower than the CPB segment’s correct PLI. We further find force in the contention of the Ld. AR that DRP erred in computing the adjustment twice, Rs. 40.23 lacs on 34 ITA No.792/DEL/2021 cost side and Rs. 17.82 lacs on revenue side, thus incorrectly applying the TNMM method. This issue needs proper verification by the TPO on the basis information supplied by the assessee, we direct the TPO to determine the ALP on the basis of CUP method. Accordingly, Ground Nos.25 to 29 are allowed for statistical purposes. 20. Apropos Grounds No.64 to 65 relating to non-granting of claim of deduction w.r.t. profit based deduction u/s. 80IC of the Act amounting to Rs.5,21,18,555/- in respect to its TTBK unit Rs.2,82,36,993/- & EPP Unit Rs. 2,38,81,562/- are concerned, the same are consequential in nature, hence, not adjudicated. 21. Apropos Ground no. 30 to 34 relating to transfer of power by Captive Power Plant (CPP) at Bhiwadi Adjustment of Rs.18,72,72,104/- are concerned, ld. Counsel for the assessee submitted that no reason provided by TPO for rejection of assessee's MAM. He also placed reliance of the Hon’ble Supreme Court decision in case of M/s Jindal Steel and Others [TS- 731-SC-2023] wherein, it has been settled that in order to benchmark the transfer of electricity by captive power plants, the rate at which state electricity board sells electricity to Industrial consumer in the market should be adopted as the open market value u/s 80-IA(8). It was further submitted that issues of transfer of electricity being benchmarked w.r.t. SEB rates has 35 ITA No.792/DEL/2021 been favourably adjudicated by ITAT in the case of DCM Shriram Limited by order dated 21.10.2021. He further submitted that on the anvil of various judicial pronouncements advocating the adoption of SEB rates for benchmarking the electricity transfer, Rule of Consistency has also been filed before Ld. DRP. It was further submitted that data of various discom rates obtained u/s 133(6) were not available in public domain, hence cannot be used and no opportunity to examine and rebut the data. It was submitted that assessee's internal CUP to be preferred over an external CUP, by placing reliance on the case of Technimont ICB P Ltd. (TS-557-ITAT-2012 (Mum). In view of the above, he requested that adjustment of Rs.18,72,72,104/- needs to be deleted. 22. Ld. DR of the Revenue relied upon the orders of the authorities below on this issue. 23. Considered the rival submissions and material placed on record. We find considerable cogency that no reason provided by TPO for rejection of assessee's MAM. We further find that Hon’ble Supreme Court ruling in case of M/s Jindal Steel and Others (supra)has settled the law that in order to benchmark the transfer of electricity by captive power plants, the rate at which state electricity board sells electricity to Industrial consumer in the market should be adopted as the open market value u/s 80-IA(8).It is also 36 ITA No.792/DEL/2021 noticed that issues of transfer of electricity being benchmarked w.r.t. SEB rates has been favourably decided by ITAT in the case of DCM Shriram Limited by its order dated 21.10.2021. We also observed that various judicial pronouncements advocated the adoption of SEB rates for benchmarking the electricity transfer and Rule of Consistency has also been followed by the assessee before Ld. DRP. The data of various discom rates obtained u/s 133(6) were not available in public domain, hence cannot be used. It is also noted that no opportunity was given to examine and rebut the data. In view of the Tribunal decision in the case of Technimont ICB P Ltd. (supra), we observed that assessee's internal CUP to be preferred over an external CUP, which was not done. 24. It is brought to our notice that in AY 2014-15 and AY 2015-16, similar bench marking was carried by the assessee adopting the CUP method based on SEB rates, which was accepted by the AO in AY 2014-15 and on the basis of CBDT instruction no 3/2016 in AY 2015-16. Hence, for the sake of bench marking the correct ALP on the electricity charges, we are inclined to remit this issue back to the file of AO/TPO to redo the bench marking based on the decision of Hon’ble Supreme Court in the case of Jindal Steels and others (supra) and as per law. Accordingly, Ground Nos. 30 to 34 are allowed as indicated above. 37 ITA No.792/DEL/2021 25. Apropos Ground no. 35 to 39 relating to purchase of Electricity from VRETPL – adjustment of Rs.8,86,15,614/- are concerned, ld. AR of the assessee submitted that assessee’s methodology was rejected without providing any reason. Ld. Counsel for the assessee submitted that in view of the Hon’ble Supreme Court ruling in case of M/s Jindal Steel and Others [TS-731-SC-2023] wherein, it has been settled that in order to benchmark the transfer of electricity by captive power plants, the rate at which state electricity board sells electricity to Industrial consumer in the market should be adopted as the open market value u/s 80-IA(8). It was further submitted that issues of transfer of electricity being benchmarked w.r.t. SEB rates has been favourably adjudicated by ITAT in the case of DCM Shriram Limited by order dated 21.10.2021. On the basis of various judicial pronouncements advocating the adoption of SEB rates for benchmarking the electricity transfer have been submitted, it was further submitted that copy of sample invoices of power purchase by assessee from Tamil Nadu State Electricity Board (SEB) as an evidence to depict that the purchase rate of SEB is way higher than the rate charged by VREPL. He further submitted that detailed note explaining the basis of pricing of electricity and the benchmarking of the same in contrast to the rate of electricity purchase by the assessee from the SEB. It was further contended that date of various discom rates obtained 38 ITA No.792/DEL/2021 u/s 133(6) not available in public domain, hence cannot be used. It was submitted that assessee's internal CUP to be preferred over an external CUP, by placing reliance on the case of Technimont ICB P Ltd. (supra). In view of above, he requested that adjustment of Rs.8,86,15,614/- needs to be deleted. 26. Ld. DR of the Revenue relied upon the orders of the authorities below on this issue. 27. Considered the rival submissions and material placed on record. We find considerable cogency in the submissions of the assessee that no reason provided by TPO for rejection of assessee's methodology. We further find that Hon’ble Supreme Court ruling in case of M/s Jindal Steel and Others (supra) has settled the law that in order to benchmark the transfer of electricity by captive power plants, the rate at which state electricity board sells electricity to Industrial consumer in the market should be adopted as the open market value u/s 80-IA(8).It is noticed that issues of transfer of electricity being benchmarked w.r.t. SEB rates has been favourably decided by ITAT in the case of DCM Shriram Limited by order dated 21.10.2021. We further observed that various judicial pronouncements advocated the adoption of SEB rates for benchmarking the electricity transfer. We further noted that copy of sample invoices of power purchase by assessee from Tamil Nadu State Electricity Board (SEB) as an evidence to depict that the 39 ITA No.792/DEL/2021 purchase rate of SEB is way higher than the rate charged by VREPL. We further note that detailed note explaining the basis of pricing of electricity and the benchmarking of the same in contrast to the rate of electricity purchase by the assessee from the SEB and the date of various discom rates obtained u/s 133(6) not available in public domain, hence it cannot be used. In view of the Tribunal decision in the case of Technimont ICB P Ltd. (supra), assessee's internal CUP to be preferred over an external CUP, which was not done, hence no adjustment is warranted in any case. 28. Hence, for the sake of bench marking the correct ALP on the electricity charges, we are inclined to remit this issue back to the file of AO/TPO to redo the bench marking by following the decision of Hon’ble Supreme Court in the case of Jindal Steel and others (supra) case and as per law. Accordingly, Ground Nos.35 to 39 are allowed as indicated above. 29. Apropos Grounds no.40 to 43 relating to sale of Electricity by WPP unit at Tamilnadu – adjustment of Rs.6,53,67,880/- are concerned, ld. AR of the assessee submitted that in view of the Hon’ble Supreme Court ruling in case of M/s Jindal Steel and Others (supra) wherein, it has been settled that in order to benchmark the transfer of electricity by captive power plants, the rate at which state electricity board sells electricity to Industrial consumer in the market should be adopted as the open market value u/s 80-IA(8). It was 40 ITA No.792/DEL/2021 further submitted that issues of transfer of electricity being benchmarked w.r.t. SEB rates has been favourably adjudicated by ITAT in the case of DCM Shriram Limited by order dated 21.10.2021. On the anvil of various judicial pronouncements advocating the adoption of SEB rates for benchmarking the electricity transfer, it was submitted that assessee’s rate of power sale at 6.35 p.u. is already lower than the effective rate at which power is purchased by the non eligible units which after considering all costs comes out to Rs.15.26 per unit. It was further contended that the basis of the adjustment i.e. TNERC rates obtained by the TPO u/s 133(6) not available in public domain hence cannot be used. It was further submitted that rule of consistency has also been filed before the DRP. It was submitted that assessee's internal CUP to be preferred over an external CUP, by placing reliance on the case of Technimont ICB P Ltd. (supra). In view of above, he requested that adjustment of Rs.6,53,67,880/- needs to be deleted. 30. Ld. DR of the Revenue relied upon the orders of the authorities below on this issue. 31. Considered the rival submissions and material placed on record. We find considerable cogency that no reason provided by TPO for rejection of assessee’s methodology. We further find that Hon’ble Supreme Court ruling in case of M/s Jindal Steel and Others (supra) has settled the law that 41 ITA No.792/DEL/2021 in order to benchmark the transfer of electricity by captive power plants, the rate at which state electricity board sells electricity to Industrial consumer in the market should be adopted as the open market value u/s 80-IA(8). It is noticed that issues of transfer of electricity being benchmarked w.r.t. SEB rates has been favourably decided by ITAT in the case of DCM Shriram Limited by order dated 21.10.2021. We further observed that various judicial pronouncements advocated the adoption of SEB rates for benchmarking the electricity transfer. We further observed that the basis of the adjustment i.e. TNERC rates obtained by the TPO u/s 133(6) not available in public domain, hence cannot be used. In view of the Tribunal decision in the case of Technimont ICB P Ltd. (supra),assessee's internal CUP to be preferred over an external CUP, which was not done. However, rule of consistency has been followed and submitted with DRP. 32. It is brought to our notice that in AY 2013-14 and 2014-15, the assessee had bench marked by adopting CUP method based on EB purchased by assessee for other units from Tamil Nadu State Electricity Corporation, the same was accepted by the TPO and in AY 2015-16 accepted on the basis of CBDT instruction no 3/2016. Hence, for the sake of bench marking the correct ALP on the electricity charges, we are inclined to remit this issue back to the file of AO/TPO to redo the bench marking based on the decision of Hon’ble 42 ITA No.792/DEL/2021 Supreme Court in the case of Jindal Steel and others (supra) case and as per law. Hence, Ground Nos.40 to 43 are allowed as indicated above. 33. Apropos Ground No. 62 to 63 relating to disallowance of deduction u/s. 80IA of the Act amounting to Rs. 9,63,12,743/- in respect of WPP unit at Tamil Nadu are concerned, the same are consequential in nature, hence, not adjudicated. 34. Apropos Ground no. 44 to 47 relating to disallowance of deduction u/s. 32AC of the Act amounting to Rs.5,63,55,983/- are concerned, ld. Counsel for the assessee submitted that there is no requirement of certificate for claiming the deduction u/s 32AC of the Act. He further submitted that AO disregarded the various details like addition to P&M, sample copy of the bills, transaction wise details of additions, capex completion report, location wise details of addition to fixed assets, which are available at page no. 826 of paper book and calculation of investment allowance, available at page no. 825 of P.B.) including the certificate from a Chartered Accountant available at page no. 872 of paper book for claim of deduction u/s 32AC of the Act which was submitted during the course of assessment proceedings vide its submission dated 11.12.2018 at pages 417-418 of paper book and submission dated 27.12.2019 at pages 518-523 of paper book. It was further submitted that AO and consequently the DRP incorrectly alleged that the 43 ITA No.792/DEL/2021 assessee failed to justify the claim in spite of several opportunities.AO and consequently the DRP have not appreciated that the assessee has discharged its onus of substantiating its claim with documentary evidence. With regard to bonafide claim of the assessee, he submitted that it is required to be appreciated that under the provisions of the Act, it is a settled law that only correct amount of taxes can be collected and where an assessee is eligible to a particular relief as per the provisions of law, the same is required to be granted. To support this contention, he placed reliance on the judgement of Hon’ble Delhi High Court in the case of Clix Capital Services Pvt. Ltd. (2024-TIOL-343-HC-DEL-IT), a copy thereof is placed at Page no. 676-679 of PB-Case Law Compilation wherein, by referring to Article 265 of the Constitution of India, the Hon’ble Delhi High Court in para no. 15 of the judgment has held as under:- “15. At this juncture, it is also apposite to refer to Article 265 of the Constitution which eschews any illegal collection of taxes in any form at the behest of the State. The State is entrusted with dealing of public money and engaged in a fiduciary relationship with the common citizen. It cannot be unjustly enriched at the cost of the citizens. Reference can be made to the decision of the Hon'ble Supreme Court in the case of Vikram Cement v. State of M.P. [(2015) 11 SCC 708], wherein, it was held that Article 265 imposes a limitation on the taxing power of the State insofar as it shall not levy or collect tax by a mere executive fiat and rather, it has to be done only by an authority of law. The act of retaining the refund amount would tantamount to imposition of tax without any authority of law.”. 44 ITA No.792/DEL/2021 30. Further ld. AR of the assessee submitted that the AO have to compute the correct claim of the assessee and the reliance is placed on recent judgement of the ITAT, Delhi in the case of Mankind Pharma Ltd. (ITA No. 2313/Del/2022) (P. no. 680-720 of Case Law Compilation). He submitted that AO is statutory bound under law to verify claim of assessee with documentary evidence and shall compute correct total income and relied on the decision of MIT Mohan Singh Kahlon [2013] 39 taxmann.com 145 (Chandigarh-Trib.) (P. no. 721-726 of Case Law Compilation). He further submitted that the AO is duty bound to grant exemption or deduction even where assessee failed to claim the same and in this regard, relied on the decision of Mrs. Meena S. Banerji vs. ITO [2007] 14 SOT 569 (Mumbai- Trib.) (P. no. 727-735 of Case Law Compilation) and Anchor Pressings (P.) Ltd. vs. CIT [1986] 27 taxman 295 (SC) (P. no. 736-739 of Case Law Compilation). 31. He also relied on the following decisions :- (i) International Tractors Ltd. vs. DCIT {[2021] 127 taxmann.com 822 (Delhi)} (P. no.740-747 of Case Laws Compilation); (ii) E-Funds International India Pvt. Ltd. [TS-587-HC-2015(DEL)] (P. no. 748-757 of Case Laws Compilation); (iii) Oracle (OFSS) BPO Services Ltd. {TS-27-HC-2019(DEL)} (P. no. 758-771 of Case Laws Compilation); (iv) Sam Global Securities Ltd. {[2013] 38 taxmann.com 129 (Delhi)} (Annexure to CT Synopsis). 45 ITA No.792/DEL/2021 32. Ld. DR of the Revenue relied upon the orders of the authorities below on this issue. 33. Considered the rival submissions and material placed on record. We find that the assessee has submitted the relevant information on the claim of investment in new plant and machinery during the year. It has submitted the relevant documents in the form of paper book. We observed that AO and Ld DRP have concluded that the assessee has not substantiated the claim. After careful consideration of the various documents submitted by the assessee, we direct the AO to consider the various information de novo after giving the proper opportunity of being heard to the assessee. The claim made by the assessee cannot be rejected mechanically and the assessee has made huge investments in the plant and machinery in order to claim the benefit u/s 32AC of the Act. Therefore, we are remitting these grounds back to file of AO and the same are allowed for statistical purposes. 34. Apropos Grounds no.48 to 54 relating to disallowance u/s. 14A of the Act amounting to Rs.15,32,818/- are concerned, ld. Counsel for the assessee submitted that the issue is fully covered by the orders of the ITAT, DRP and CIT(A) in assessee’s own case in different years wherein, the appellate forum had deleted the additions made u/s. 8D2(ii) of the Rules. 46 ITA No.792/DEL/2021 35. Ld. DR of the Revenue relied upon the orders of the authorities below, but she did not controvert the contention of the ld. AR for the assessee that the issue is covered in favour of the assessee by the decision of the Tribunal in assessee’s own case in the assessment years 2006-07, 2007-08, 2008-09, 2010-11 & 2012-13 and neither produced any contrary decision. 36. Considered the rival submissions and material placed on record. We find considerable cogency in the contention of the Ld. AR that the instant issue is fully covered by the order of the Coordinate Bench of the Tribunal in assessee's own case for 2006-07, 2007-08, 2008-09, 2010-11 & 2012-13 wherein the Bench deleted the similar additions. In view of the aforesaid discussions and respectfully the aforesaid precedents, we deem it fit and proper to direct the AO to delete such disallowance of Rs.15,32,818/- in the light of the aforesaid precedents in assessee’s own case. Accordingly, Grounds No.48 to 54 are allowed in the aforesaid manner. 37. Apropos Grounds no.55 to 61 relating to disallowance of weighted deduction u/s. 35(2AB) of the Act amounting to Rs.82,61,65,610/- in respect of In-House Research and Development Units, in this regard Ld AR submitted as under :- “The assessee has Five in-house R&D facilities duly recognized by the competent authority i.e. Department of Scientific & Industrial Research (DSIR). The assessee has claimed an amount of Rs. 47 ITA No.792/DEL/2021 8,261.65 lakhs as weighted deduction of capital & revenue expenditure under section 35(2AB) of the Act during the relevant assessment year. Such expenses are required to be certified by the auditors of the company as part of the compliance to the DSIR guidelines and the assessee has claimed the deduction based on such said certificates. The assessee submitted that deduction has also been reported by the tax auditor in form no. 3CD as well (P. no. 59 of P.B.). The assessee also submitted the DSIR letter approving the eligible expenditure along with comparison of amount claimed & amount claimable based on the DSIR approval. The comparison is shown below: - Particulars Amount claimed (in lakhs) Amount approved by DSIR (in lakhs) Difference (in lakhs) Capital Expenditure (other than land & building) Rs.2,194.81/- Rs.2,184.19/- Rs.10.62/- Weighted deduction @ 200% of above capital expenditure (a) Rs.4,389.62/- Rs.4,368.38/- Rs.21.24/- Additional 100% weighted deduction of revenue expenditure (b) Rs.3,872.03/- Rs.2,726.22/- Rs.1,145.81 Total (a + b) Rs.8,261.65/- Rs.7,094.60/- Rs.1,167.05/- The unit wise details of the amount of deduction of Rs. 82,61,65,610/- u/s 35(2AB) of the Act is as follows: - S.No. Particulars Revenue Expenditure Capital Expenditure 1 Chemical Business, Bhiwadi 18,06,53,915 20,37,85,981 2 Chemical Business, Manali 6,44,56,580 1,32,55,557 3 Techncial Textiles, Manali 2,64,37,723 11,67,659 4 Engineering Plastics, Manali 1,54,33,247 1,99,000 48 ITA No.792/DEL/2021 5 Chemical Technology, Gurgaon 10,02,21,675 10,63,128 Total 38,72,03,140 21,94,81,235 Eligible in percentage 100% 200% Eligible in amount 38,72,03,140 43,89,62,470 Grand Total 82,61,65,610 Action of the Ld. AO in the Draft Order: - The Ld. AO has disallowed the deduction to the extent of Rs.1167.05 lakhs on the basis of DSIR short approval (P. no. 13-14 of Ld. AO's Draft Order I P. no. 194-195 of Appeal Set). Directions of the Ld. DRP: - The Ld. DRP had held that DSIR had approved the Gurgaon R&D unit from 01.04.2016 only & therefore eligible for deduction from F.Y. 2016-17 relevant to A.Y. 2017-18 and accordingly directed to Ld. AO to disallow deduction on entire amount w.r.t. Gurgaon R&D unit (P. no. 80 of Hon'ble DRP's Directions I P. no. 172 of Appeal Set). The Ld. DRP has erred in facts & circumstances of the assessee's case & held that Gurgaon R&D research facility is an approved facility from 01.04.2016 to 31.03.2020 vide Form No. 3CM dated 08.09.2017 (P. no. 927 of P.B.). However, the DSIR had approved such Gurgaon R&D unit vide order dated 11.09.2015 at P. no. 891 of P.B. from 31.07.2015 to 31.03.2016 and thereafter, the DSIR had further extend approval vide its order dated 08.09.2017 (P. no. 927 of P.B.) for all five units from 01.04.2016 to 31.03.2020 which was relied by the Ld. DRP above. Therefore, the Ld. DRP had ignored the earlier approval of Gurgaon R&D unit by DSIR vide order dated 11.09.2015 at P. no. 891 of P.B. from 31.07.2015 to 31.03.2016 and accordingly assessee company is eligible for the deduction w.r. t. Gurgaon R&D unit for the F. Y. 2015 -16 relevant to A. Y. 2016-17 as well. Action of the Ld. AO in the Final Order: - However, after the Ld. DRP's direction, the Ld. AO had made the disallowance of Rs. 8261.65 lakhs pertaining to all five R&D units, 49 ITA No.792/DEL/2021 instead of disallowing the claim of Rs. 10,23,47,9311- pertaining to \"Gurgaon R&D unit\" as directed by the Hon'ble DRP (P. no. 10 of Ld. AO's Final Order I P. no. 54 of Appeal Set). Passing of the Rectification Order by the Ld. AO: - Further, after filing the rectification application by the assessee company, the Ld. AO had restricted the amount of disallowance to Rs. 10,23,47,931/- pertaining to \"Gurgaon R&D unit\" by passing Rectification Order u/s 154 of the Act dated 06.01.2023 (P. no. 124- 125 of Case Law Compilation). After passing of the Rectification Order by the Ld. AO, the only issue under consideration: - Now, the issue under dispute is disallowance of weighted deduction u/s 35(2AB) of the Act amounting to Rs. 10,23,47,9311- in respect of Gurgaon R&D unit vide above Rectification Order. The action of the Ld. DRP that DSIR had approved the Gurgaon R&D unit from 01.04.2016 to 31.03.2020 vide Form No. 3CM dated 08.09.2017 (P. no. 927 of P.B.) is not correct on the facts & circumstances of the assessee's case as the Ld. DRP failed to appreciate that the before such approval, the DSIR had also approved the Gurgaon R&D unit vide order dated 11.09.2015 at P. no. 891 of P.B. from 31.07.2015 to 31.03.2016 and thereafter, the DSIR had further extend approval vide its order dated 08.09.2017 (P. no. 927 of P.B.) for all five units from 01.04.2016 to 31.03.2020 which was relied by the Ld. DRP above. Therefore, the assessee company is eligible for the deduction w.r.t. Gurgaon R&D unit from the F.Y. 2015-16 relevant from the A.Y. 2016-17 as well to the F.Y. 2019-20 relevant to the A.Y. 2020-21. Therefore, the Ld. DRP had ignored the earlier approval of Gurgaon R&D unit by DSIR vide order dated 11.09.2015 at P. no. 891 of P.B. from 31.07.2015 to 31.03.2016 and accordingly assessee company is eligible for the deduction w.r.t. Gurgaon R&D unit for the F.Y. 2015- 16 relevant to A.Y. 2016-17 as well. 50 ITA No.792/DEL/2021 Therefore, it is prayed before your honour that kindly allow the deduction of Gurgaon R&D unit U/S 35(2AB) of the Act as the contention of the Ld. DRP is not correct. Quantification of expenditure by DSIR is not a pre-condition of allowability of weighted deduction u/s 35(2AB) of the Act read with rule 6(7 A)(b) of the Rules: - The statute does not prescribe that the quantification of expenditure by DSIR is a pre-condition of allowability of weighted deduction U/S 35(2AB) of the Act, the only requirement, is that in-house R&D activities should be approved by the DSIR, which is yes in our case as enumerated above. The condition or requirement of obtaining the quantification from the DSIR had been come w.e.f. 01.07.2016 by the amendment made in Rule 6(7A)(b) of the Rules. Although it should be noted that provision of rules can't supersede provision of the Act. Such requirement of quantification of expenditure by DSIR may be for tracking & reporting purpose but the law has not intended that claim of deduction should be allowed on the basis of quantification by DSIR. In this regard, reliance can be made on the following judicial precedent. • Crompton Greaves Ltd. {[2019] III taxmann.com 338 (Mumbai - Trib.)}; • Crest Composites and Plastics A.Y. 2014-15 (2022-TIOL-675- ITAT-AHM); • Crest Composites and Plastics A.Y. 2013-14 (2022-TIOL-205- ITAT-AHM); • Cummins India Ltd. [2018] 96 taxmann.com 576 (Pune - Trib.); • Force Motors Ltd. [2021] 133 taxmann.com 71 (Pune - Trib.) and • Natural Remedies Pvt. Ltd. [TS-36-ITAT-2021 (Bang)]. The reliance may be placed on the following judgments which held that claim of assessee in form of deduction u/s 35(2AB) of the Act shall not be denied even on account of non-receiving of approval in Form No. 3CL from DSIR. • DCIT vs. M/s. STP Ltd. (2021-TIOL-128-ITAT-KOL); 51 ITA No.792/DEL/2021 • CIT vs. Sun Pharmaceutical Industries Ltd. [2017] 85 taxmann.com 80 (Gujarat); \"5. Having heard learned counsel for the parties and having perused the orders on record, we are broadly in agreement with the view of the Tribunal. Undisputedly, the research and development facility set up by the assessee was approved by the prescribed authority and necessary approval was granted in the prescribed format. The communication in Form 3CM was thereafter, between the prescribed authority and the department. If the same was not so, surely, the assessee cannot be made to suffer. To this extent, the Tribunal was perfectly correct and the Commissioner was not, in observing that in absence of such certification, claim of deduction under section 35(2AB) was not allowable. However, neither the prescribed authority nor the Assessing Officer has applied the mind as to the expenditure, be it revenue or capital in nature, actually incurred in developing the in-house research and development facility. To the limited extent, the Commissioner desired the Assessing Officer to verify such figures, we would allow the Assessing Officer to do so. In other words, in principle, we accept the Tribunal's reasons and conclusions. Merely because the prescribed authority failed to send intimation in Form 3CL, would not be reason enough to deprive the assessee's claim of deduction under section 35(2AB) of the Act. However, in facts of the present case, it would be open for the Assessing Officer to verify the actual expenditure incurred by the assessee. \" • Special Leave Petition filed by revenue against ruling of the Hon'ble Gujrat High Court, has been dismissed by Hon'ble Supreme Court [2018-TIOL- 282-SC-ITJ) \"The assessee company, engaged in manufacture & sale of pharmaceutical products, also conducted research & development for developing new drugs and formulations. During the relevant A Y, the assessee incurred expenditure on in-house research and development facility & claimed various deductions U/S 35(2AB). On assessment, such claims were accepted by the AO. However, the CIT exercised power of 52 ITA No.792/DEL/2021 revision U/S 263 & held that the AO failed to make proper enquiries before accepting the claim. The CIT held that the AO did not send intimation in Form 3CL to the Revenue without which the assessee's claim could not be accepted. On appeal, the Tribunal held that he prescribed authority shall submit its report in relation to the approval of the in-house research and development in Form 3CL to the DGIT(E) within 60 days of its granting approval. The Tribunal also held that the same was merely in form of intimation to be sent by the prescribed authority to the department. In case of assessee, the research and development activity having already been approved in Form 3CM, the assessee thereafter, had no further role to play in the inter-departmental correspondence. The Tribunal therefore, held that the assessee was entitled to deduction on the capital and revenue expenses incurred on in house research and development. In writ, the Apex Court was of the view that, delay condoned. The Special Leave Petition is dismissed leaving the question of law open. Revenue's SLP Dismissed. \" • Minilec India (P.) Ltd. vs. Asstt. CIT {[2018] 93 taxmann.com 213 / 171 ITD 124 (Pune - Trib.)}.” 38. Ld. DR of the Revenue relied upon the orders of the authorities below on this issue. 39. Considered the rival submissions and material placed on record. We considered the submissions of the parties carefully and observed following facts: a. The assessee has filed letter dated 17.09.2015 for recognition of new R&D in-house facility at Gurgaon -Pg 889 of PB b. The other 4 units of in-house facilities were already recognized 53 ITA No.792/DEL/2021 vide approval letter dated 18.07.2012 – Pg 890 of PB c. The DSIR upon application for renewal and recognition of 5 units including Gurgaon facilities, accordingly recognized all the 5 units dated 11.09.2015. The above recognition was from 31.07.2015 to 31.03.2016, subject to the terms and conditions pertaining to the above recognition was communicated in the back side of the same letter. The DSIR withdrawn the earlier approval granted for 4 units. d. In compliance to the above terms and conditions, filed the relevant Form 3CK, actually filed the same only on 12.07.2016. The assessee has submitted various reasons for not submitting the same on time. Pg 892 of PB. e. What is relevant is the final approval granted by the DSIR only upon the letter finally submitted by the assessee on 12.07.2016. For renewal of 4 facilities vide letter dated 27.09.2016. f. The DSIR has approved all the 5 facilities of R&D on 8.09.2017 for the period 1.04.2016 to 31.03.2020.In the same order of approval, they have clearly mentioned the date of application as application dated 12.07.2016 to new facility of Gurgaon and application for renewal of 4 facilities dated 27.09.2016. 40. The above facts clearly shows that the DSIR has only recognized the 5 facilities vide letter dated 11.09.2015 and subject to fulfillment of terms and conditions. The assessee has actually filed the relevant terms and conditions and other formalities only on 12.07.2016 and 27.09.2016. Accordingly, the 54 ITA No.792/DEL/2021 DSIR has approved all the five facilities back dated from 1.04.2016. Therefore, in our considered view, the findings of Ld DRP are just and proper. 41. Coming to the case law relied by the assessee, we observed that the procedure for granting deductions u/s 35(2AB) has under gone change, earlier it was AO to send the intimation in Form 3CL to revenue and the same was approved by the authorities for deductions. The process was to send the intimation by the prescribed authorities to the department. However, the process was simplified and the assessee has to obtain the approval directly. The assessee has relied on the case law were relating to the old method of approval. Now the process of approval was streamlined and from the above facts available on record, the assessee has actually filed the letter for approval to the Gurgaon unit only on 12.07.2016 and the same application was approved by the DSIR for approval granted for the period 1.04.2016 to 31.03.2020. The short comings in the complying to the application and meet the terms of conditions is upon the assessee and it cannot be considered as the short coming in the inter departmental approval between the DSIR and revenue as held in the various case law in the old regime of approval. In the new regime, it is the assessee has to follow up the approval process diligently and submit the same for claiming the deduction 55 ITA No.792/DEL/2021 under the Act. Therefore, we are inclined to agree with the findings of Ld DRP. 42. Coming to the final assessment order, the AO has wrongly disallowed all the deductions claimed by the assessee including the old 4 approved facilities. Therefore, we direct the AO to allow the genuine claim of the assessee relating to approved facilities and disallow the excess deductions claimed by the assessee for the Gurgaon facility alone. In the result, grounds raised by the assessee are partly allowed. 43. Apropos Grounds no.66 to 70 relating to disallowance of depreciation of goodwill amounting to Rs.14,36,387/- are concerned, ld. Counsel for the assessee submitted that the issue is fully covered by the order of the ITAT in assessee’s own case in different years wherein, the ITAT upheld that goodwill is an intangible assets and eligible for depreciation. 44. Ld. DR of the Revenue relied upon the orders of the authorities below, but she did not controvert the contention of the ld. AR for the assessee that the issue is covered in favour of the assessee by the decision of the Tribunal in assessee’s own case in the assessment years 2009-10, 2012-13, 2014-15 & 2015-16 and neither produced any contrary decision. 45. Considered the rival submissions and material placed on record. We find considerable cogency in the contention of the Ld. AR that the instant issue is 56 ITA No.792/DEL/2021 fully covered by the order of the Coordinate Bench of the Tribunal in assessee's own case for years 2009-10, 2012-13, 2014-15 & 2015-16 wherein, the Bench upheld that goodwill is an intangible asset and eligible for depreciation. In view of the aforesaid discussions and respectfully following the aforesaid precedents, we deem it fit and proper to direct the TPO to delete such disallowance of Rs.14,36,387/- in light of the aforesaid precedents in assessee’s own case. Accordingly, the Grounds No.66 to 70 are allowed in the aforesaid manner. 46. Apropos Grounds no.71 to 73 relating to disallowance on account of inventories written off amounting to Rs.2,04,00,000/- are concerned, ld. Counsel for the assessee submitted that the assessee had claimed expense on account of fixed assets / inventories provided / written off as part of other expense in note no.29 of annual report amounting to Rs.2.22 crores. However, the assessee has added back Rs.0.18 crores (Rs.17,98,117/-) of fixed assets written off in its computation of income. He further submitted that assessee furnished the submission dated 14.12.2018 and submission dated 23.12.2019 stating that the said amount of Rs.2.22 crores include fixed assets written of Rs.0.18 crores and inventories written off of Rs.1.77 crores and non – performing assets (raw material devaluation) provision of Rs.0.27 crores alongwith detailed note regarding the writing off of assets / 57 ITA No.792/DEL/2021 inventories etc also. In support of his contention, he relied upon the following case laws: (i) CIT vs. Alfa Laval (India) Ltd. [2003] 133 Taxmann.com 740 (Bom). (ii) CIT vs. Alfa Laval (India) Ltd. [2008] 170 Taxman 615 (SC). (iii) CIT vs. Hotline Teletube & Components Ltd. [2008] 175 Taxman 286 (Delhi). (iv) CIT vs. Sicom Ltd. (2017-TIO:-1144-HC-Mum-IT). 47. Ld. CIT-DR relied upon the orders of the authorities below on this issue. 48. Considered the rival submissions and material placed on record. We observed from the record that the assessee has claimed separate line item in its profit and loss account as expense for writing off of obsolete inventory to the extent of Rs. 2.04 crores by taking proper approval and declaring the same in its note no 29 of notes to account. Upon the query from the bench at the bar, the Ld AR submitted that the assessee has not claimed double deduction in such writing off inventory as separate line item. The assessee also filed a auditor certificate in this regard. 49. We are aware that in the conventional method of accounting, while calculating the cost of material consumed, the opening stock plus relevant purchases for the year and reducing the closing stock of Raw material, you 58 ITA No.792/DEL/2021 get the final material consumption. In case you revalue the closing stock for obsolete or completely write off the value, the consumption value for year will automatically get adjusted for the above said revaluation or write off. In case assessee claims as a separate line item in its profit and loss account, it has to declare separately how it is not amounts to double claim of expenditure. The assessee has failed to submit the rationale for claiming separately the write off of inventory. Therefore, the submissions of the assessee are not appealing to us and we are inclined to sustain the additions made by the AO. We observed that the case relied by the assessee are on the facts that the relevant assessee’s claimed the revaluation of inventory for reduction in the value of closing stock and the AO has rejected the same on the basis of non submission of item wise details or for other reasons. The Courts have decided the issues in favour of the assessee. The facts in the present case is distinguishable to facts of those decisions relied by the assessee. In the result, grounds raised by the assessee are dismissed. 50. Apropos GroundsNo.74 to 76 relating to disallowance on account of software expenses amounting to Rs.8,19,870/- are concerned, ld. Counsel for the assessee submitted that these charges include payment for recurring items, such as, purchase of annual software licenses for Adobe, annual subscription renewal charges, updating the barcode software, renewal of 59 ITA No.792/DEL/2021 auto CAD software etc., which are revenue in nature. Further, details of software expenses alongwith major invoices are at page nos. 968-983 of the paper book. He also submitted that assessee has bonafide claim due to the fact that the AO is statutory bound under law to verify claim of assessee with documentary evidences and shall compute correct total income, in view of decision of ITAT, Chandigarh in the case of MIT Mohan Singh Kahlon [2013] 39 taxmann.com 145. It was further submitted that the AO is duty bound to grant exemption or deduction even where assessee failed to claim the same in view of the decision of the Mumbai Tribunal in the case of Mrs. Meena S. Banerji vs. ITO [2007] 14 SOT 569. 51. Ld. DR of the Revenue relied upon the orders of the authorities below on this issue. 52. Considered the rival submissions and material placed on record. We find considerable cogency in the claim of the assessee. It is settled law that the software expenses are allowable expenses, which are recurring in nature and are meant to renew every year. Therefore, we are inclined to direct the AO to delete the above software expenses. In the result, the grounds raised by the assessee are allowed. 53. Apropos GroundsNo.77 & 78 relating to additional claim made with respect to allowance of additional depreciation of Rs.17,36,90,694/- @ 10% u/s. 60 ITA No.792/DEL/2021 32(1)(iia) of the Act are concerned, ld. Counsel for the assessee submitted that the issue is fully covered by the orders of the ITAT in assessee’s own case in different years wherein, the ITAT remitted back the issue to the file of the AO in the assessment years 2009-10, 2010-11, 2012-13, 2014-15 and 2015-16. Further, it has been submitted that same had been allowed / granted by AO vide its appeal effect order dated 22.3.2023. 54. Ld. DR of the Revenue relied upon the orders of the authorities below, but she did not controvert the contention of the ld. AR for the assessee that the issue is covered in favour of the assessee by the decision of the Tribunal in assessee’s own case in the assessment years 2009-10, 2010-11, 2012-13, 2014-15 and 2015-16 and neither produced any contrary decision. 55. Considered the rival submissions and material placed on record. We find considerable cogency in the contention of the Ld. AR that the instant issue is fully covered by the order of the Coordinate Bench of the Tribunal in assessee's own case for different assessment years specifically Assessment Year 2015-16 wherein the Bench remitted back the issue to the file of the AO and AO had allowed / granted its appeal effect order dated 22.03.2023. In view of the aforesaid discussions and respectfully the aforesaid precedents, we deem it fit and proper to remit back the issue to the file of the TPO with the similar directions. Accordingly, the Grounds No.77& 78 are 61 ITA No.792/DEL/2021 allowed for statistical purposes. 56. Grounds No.79 to 81 relating to deduction of education cess amounting to Rs.2,15,79,405/- u/s. 37 of the Act are not pressed, hence, the same are dismissed as such. 57. Apropos GroundsNo.82 to 85 relating to penalty proceedings u/s. 271(1)(c) and chargeability of interest u/s. 234A and 234B of the Act are consequential in nature, hence, the same are not being adjudicated. 58. In the result, the appeal of the assessee is partly allowed as indicated above and partly for statistical purposes. Order pronounced in the open court on this 19TH day of March, 2025. SD/- SD/- (VIMAL KUMAR) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 19.03.2025 TS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "
Other Referred Cases
Engineering Analysis Centre of Excellence Pvt. Ltd. vs. CIT, Vedanta Ltd. vs. ACIT, Mankind Pharma Ltd. vs. CIT, CIT vs. Alfa Laval (India) Ltd., CIT vs. Hotline Teletube & Components Ltd., CIT vs. Sicom Ltd., CIT vs. Sun Pharmaceutical Industries Ltd., DCIT vs. M/s. STP Ltd., Crest Composites and Plastics vs. CIT
Laws Referred To
Income-tax Act, 1961
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Assignment of Registered Trademark
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