INCOME TAX APPELLATE TRIBUNAL - MUMBAI BENCH 'K'

IT Appeal No. 586 (Mum.) of 2013
[ASSESSMENT YEAR 2008-09]

P.M. JAGTAP, ACCOUNTANT MEMBER
AND AMIT SHUKLA, JUDICIAL MEMBER

H.P. Mahajani for the Appellant.
Ajeet Kumar Jain for the Respondent.

ORDER

The order of the Bench was delivered by

Amit Shukla, Judicial Member - The present appeal has been preferred by the assessee challenging the impugned final assessment order dated 30th November 2012, passed by the ACIT, Range-2(2), Mumbai, in pursuance of the directions given by the DRP-1, Mumbai, for the quantum of assessment passed under sections 143(3) /144C(13) of the Income Tax Act, 1961 (for short "the Act") for the assessment year 2008-09.

2. The assessee has raised as many as 23 grounds of appeal to challenge the various additions as has been made by the Assessing Officer. The assessee company, Mahindra & Mahindra, is mainly engaged in the business of manufacturing and sale of automobiles in the nature of utility vehicles, cars, agricultural tractors, vehicle engine parts and accessories of motor vehicles, rendering services in the field of automobiles and also property development activities, financing and investment and transport services.

3. In ground no.1, the assessee has challenged the disallowance of addition of Rs. 10,74,91,437 on account of expenditure debited to the Profit & Loss account by treating the same as capital expenditure. The break-up of the expenditure aggregating to Rs. 10,74,91,437, which have been claimed as revenue expenditure in the Profit & Loss account by the assessee are as under:—

4. It was submitted by the assessee that these expenditures have been incurred in the course of expanding the operations and manufacturing activities of the assessee company and in pursuance of such pursuits, these expenditures have been incurred. The detail explanation of each and every expenditures were given before the Assessing Officer which have been dealt by the Assessing Officer from Page-4 to 8 of the assessment order. The Assessing Officer rejected the assessee's contention in detail and held that these expenditures are purely capital in nature. The DRP, following the earlier year's order for the assessment years 2006-07 and 2007-08, has confirmed the action of the Assessing Officer.

5. Before us, the learned Counsel for the assessee admitted that this issue stands decided against the assessee by the Tribunal in the assessment year 2006-07, vide order dated 6th June 2012, passed in ITA no.8597/Mum./2010, which has been followed by the Tribunal in the assessment year 2007-08 in ITA no.7999/Mum./2011. However, the learned Counsel for the assessee submitted that insofar as the expenditure relating to professional fees paid to D.S. Partnership is concerned, the same was for scientific research and is allowable under section 35D. These payments were in relation to the development of engine technology, which will meet the future emission standard of Euro-III. It was for this purpose the assessee company has appointed D.S. Partnership for providing consultancy services of preparing the detail design of new Engine Development Centre (EDC) and also to monitor and certify the implementation of the design of new EDC at its R&D Centre at Chennai. This payment should be allowed under section 35D. He further submitted that as regards difference in exchange on Foreign Currency Convertible Bonds (FCCB) of Rs. 27,40,189, the same has to be treated as revenue expenditure because the premium payable on FCCB has been allowed as revenue expenditure by the Tribunal and, therefore, it is a kind of an additional liability on account of difference in the exchange rate, the same should also be treated as revenue expenditure.

6. Learned Departmental Representative relied upon the findings of the Assessing Officer as well as the DRP and submitted that this issue has been decided against the assessee by the Tribunal.

7. After carefully considering the relevant material and the submissions made before us, it is seen that most of the expenditures which have been debited by the assessee have been decided against by the Tribunal in the assessment years 2006-07 and 2007-08, wherein it has been held that these expenditures are capital in nature and forms part of cost of investment. The Tribunal, after discussing the issues in detail has held that these expenditures are capital in nature after analyzing each and every head of expenditure. Insofar as the expenditure relating to professional fees paid to D.S. Partnership for sum of Rs. 24,39,400, as submitted by the assessee and also seen from the material placed on record, it appears that these expenditures were on account of research and development activities which falls within the ambit of section 35D. However, this issue has not been examined by the Assessing Officer from this angle. Accordingly, we set aside this particular issue and restore back to the file of the Assessing Officer and direct him to examine the same afresh after verifying the contention of the assessee and decide the same in accordance with the provisions of law. As regards expenditure debited on account of difference in exchange on FCCB, it is seen that the Tribunal, while dealing the issue of premium payable on FCCBs has held that they are revenue in nature. Once that is so, the difference in the exchange which has resulted into loss of 27,40,189, on re-valuation of loan liability in the form of FCCB, the additional liability has also to be given the same treatment. Therefore, such a loss has to be allowed as revenue expenditure.

The other expenditures claimed by the assessee have been confirmed by the Tribunal and, therefore, respectfully following the same, the aforementioned expenditures; barring professional fees paid to D.S. Partnership and difference in exchange on FCCB, is confirmed. Thus, Ground no.1, is treated as partly allowed for statistical purposes.

8. In ground no.2, the assessee has challenged the disallowance of development expenditure of Rs. 54,59,350 on development of construction equipment which has been treated as capital in nature by the Assessing Officer.

9. Before the Assessing Officer, the assessee submitted that the assessee was in the process of development of Back Hoe Loaders (BHL), vehicle used as construction equipment in the Indian markets. The purpose of manufacturing of BHL, service parts parties and related components in India, the assessee appointed TecSo (Technology Solutions Sri) an Italian company for providing engineering services in relation to such development of BHL in India. A copy of the agreement entered with TecSo giving details of technical assistance and terms and conditions were also filed. It was submitted that the development of BHL falls within the category of motor vehicle and development of such vehicle is nothing but bringing into existence / manufacturing a new kind of vehicle performing different function mainly in construction activities and road development. As the company is already into business of manufacturing vehicles and tractors for the last several years, therefore, any new vehicle development is part and parcel of the existing business of the company only. Such an expenditure has to be allowed as revenue expenditure. However, the Assessing Officer has disallowed and treated the same as capital expenditure and allowed depreciation @ 12.5% and finally addition of Rs. 47,76,931, was made.

10. It has been admitted by both the parties that this issue has been decided against the assessee in the assessment years 2006-07 and 2007-08 by the Tribunal, wherein it has been held that such kind of technical consultancy is in the nature of capital only as the assessee had acquired the technical knowhow, which has an enduring benefit. The Tribunal has discussed this issue in the assessment year 2006-07, in great detail.

11. After hearing both the parties and following the earlier years' precedence, this issue stands decided against the assessee. Thus, ground no.2, is treated as dismissed.

12. In ground no.3, the assessee has challenged the disallowance of pro-rata premium payable on FCCBs of Rs. 39,43,78,178.
13. The relevant facts, as noted by the Assessing Officer, are as under:—

"8.1 During the financial year 2006-07 (Assessment Year 2007-08) the Company has issued Foreign Currency Convertible Bonds (F.C.C.B.) aggregating to US $ 200 Million (Gross). The relevant terms of issue of FCCB are given as under:

8.2 The assessee company has claimed the expenditure on premium payable of Rs. 39,43,78,178 in respect of FCCB aggregating to Rs. 200 million issued during the year. Thus premium of Rs. 39,43,78,178 pertaining to FCCB has been claimed as expenditure which was not debited to the Profit & Loss account. In the books of account, the above amount was debited to share premium account."

Before the Assessing Officer, it was submitted that the assessee that FCCBs is nothing but a debt incurred by it and premium payable thereon is deductible as the cost of such debt. Though the bonds are eligible for conversion into shares, however, such option is given only to the subscribers of the bond. The company has no control over such an act and thus the bonds which converted into shares, the company is obliged to redeem the bond with premium to the bond holders. Thus, as far as the assessee assessee is concerned, the FCCBs is nothing but a debt. However, the Assessing Officer rejected such contention of the assessee.

14. It has been admitted before us that this issue has come up for consideration in assessee's own case in the A.Ys 2006-07 and 2007-08, wherein this issue has been decided in faovur of the assessee by holding it as revenue expenditure after following the various High Court decisions.

15. After considering the relevant findings of the Assessing Officer and the order of the Tribunal, we find that this issue stands squarely covered by the order of the Tribunal. The Tribunal has also relied upon the earlier decision of the Tribunal for the assessment year 1997-98 and further various High Court decisions have also been relied upon. Thus, respectfully following the earlier years' precedence, we allow the assessee's ground by treating such expenditure as revenue in nature. Ground no.3, is treated as allowed.

16. In ground no.4, the assessee has challenged the addition of 1,12,20,603, on account of unutilized CENVAT credit on raw material.

17. The Assessing Officer, on a perusal of Annexure-I to the audit report in Form 3CD, noticed that the assessee has unutilized CENVAT credit on raw material as per the following details:—

18. The Assessing Officer observed that unutilized CENVAT credit has not been added to the closing stock and, therefore, the same has not been offered for taxation and, accordingly, he rejected the assessee's explanation which has been dealt with by the Assessing Officer at Page-20 and held that in view of the provisions of section 145A, which has been brought into statute w.e.f. 1st April 1999, the unutilized CENVAT has to be added.

19. It has been admitted by both the parties that this issue has been set aside to the file of the Assessing Officer. In view of the fact that similar issue has been set aside to the file of the Assessing Officer to deal and decide the issue afresh as the decision of the Assessing Officer while giving effect to the earlier order in pursuance of the Tribunal order, will have the effect in this year also. Therefore, this ground is treated as allowed for statistical purposes.

20. In ground no.5, the assessee has challenged the disallowance of provisions for warranties for sum amounting to Rs. 21,09,63,000, on the ground that this provision is in the nature of contingent liability and hence not an ascertained liability.

21. The Assessing Officer noted that the assessee has claimed provisions for warranties at Rs. 90,77,70,716. In the note no.10 to annual accounts, it was stated that the provisions relate to warranties made in respect of certain products. In this regard, the assessee has made a very elaborate submissions which have been rejected by the Assessing Officer and held that the actual expenditure which has been incurred can only be allowed as business expenditure and the balance sum which aggregated to 21,09,63,000 was disallowed.

22. It has been admitted by both the parties that this issue has been set aside to the file of the Assessing Officer to decide the issue afresh in view of the principles laid down by the Hon'ble Supreme Court in Rotrok Control India (P.) Ltd. v. CIT [2009] 314 ITR 62/180 Taxman 422 (SC).

23. After hearing both the parties and in view of the decision of the Hon'ble Supreme Court in Rotrok Controls India (P.) Ltd. case (supra), we set aside the impugned order passed by the Assessing Officer and restore the issue back to his file and direct him to deal and decide as per the direction given by the Tribunal in assessee's own case in the assessment years 2006- 07 and 2007-08. Thus, ground no.5, raised by the assessee is treated as allowed for statistical purposes.

24. In ground no.6, the assessee has challenged the disallowance under section 40A(9) of Rs. 27,47,447 representing the actual expenditure of Rs. 18 lakhs incurred on employees welfare being contribution to Mahindra Academic.

25. Before us, it has been admitted by both the parties that the Tribunal, for the assessment years 2006-07 and 2007-08, in assessee's own case, has set aside this issue to the file of the Assessing Officer.

26. After hearing both the parties and in view of the order of the Tribunal in assessee's own case for earlier years, we set aside the impugned order passed by the Assessing Officer and restore this issue back to his file for denovo adjudication and in accordance with the law. Thus, ground no.6, is allowed for statistical purposes.

27. In ground no.7, the assessee has challenged the disallowance of deduction of Rs. 2,90,34,761, claimed by the assessee as employee cost, being difference between the fair market value of the shares offered to the employees on the date of grant of option and the price at which they were offered to the employees under ESOP claim.

28. Before us, the learned Counsel for the assessee submitted that this issue though have been decided against the assessee after following the decision of the Tribunal in Ranbaxy Laboratories Ltd., VIP Industries and PVR Ltd. However, these decisions have been considered by the Special Bench of the Tribunal vide order dated 16th July 2013 in Biocon Ltd. v Dy. CIT [2013] 35 taxmann.com 335 (Bang. - Trib.). Therefore, in view of the Special Bench decision of the Tribunal, this matter should be restored back to the file of the Assessing Officer for deciding the same following the earlier Special Bench decision of the Tribunal.

29. After carefully considering the submissions and also the relevant findings as given by the Tribunal in earlier years, we find that in the wake of the decision of the Special Bench in Biocon Ltd. case (supra), the earlier years' decision of the Tribunal cannot be followed as a precedence and the matter has to be restored back to the file of the Assessing Officer to deal and decide the issue in the light of the decision of the Special Bench in Biocon Ltd. (supra). Thus, ground no.7 is treated as partly allowed for statistical purposes.

30. In ground no.8, the assessee has challenged the disallowance under section 14A of Rs. 39,76,50,000.

31. The Assessing Officer noted that the assessee has shown dividend income at Rs. 80,25,39,956, as exempt under section 10(34). In response to the show cause notice, it was submitted that the assessee has not made any investment out of the borrowed funds and most of the borrowings of the company were for specific purpose like expansion of the existing business, long term working capital requirement and other specific purpose. Moreover, the assessee company has earned huge profit after tax and the net worth of the company as on 31st March 2008, stood at Rs. 4350 crores. As against this, the total investment up to 31st March 2008, stood at Rs. 4217 crores and after deducting foreign investment the investment in shares of Indian companies and mutual funds accounted for Rs. 3790 crores. Since no borrowed funds have been utilized by the company, therefore, no disallowance should be made. It was also submitted that the interests have been paid on the borrowings made after 1st April 2001 and, therefore, the investment made prior to 1st April 2001, needs to be excluded from the total investment while computing the notional disallowance under section 14A. Besides this, the detail submissions were made before the Assessing Officer which has been incorporated by the Assessing Officer from Page-37 to 40 of the assessment order. The Assessing Officer rejected the assessee's contention and held that provisions of rule 8D is applicable from the assessment year 2008-09 and, therefore, the disallowance has to be worked out as per rule 8D only.

32. Before us, the learned Counsel for the assessee submitted that though in the earlier years this issue has been set aside to the file of the Assessing Officer to work out some reasonable basis. However, in this year, it has to be seen whether the provisions of rule 8D can be invoked on the facts of the assessee's case or not. He submitted that the Assessing Officer has not recorded any satisfaction in terms of the provisions of sub-section (2) of section 14A with regard to the correctness of the claim of the assessee. He has not even looked into the accounts which will go to show that none of the investments have been made through borrowed funds and the assessee has sufficient surplus fund and huge profits for available making such investments. Therefore, the conditions laid down in section 14(2) has not fulfilled and hence, the provisions of rule 8D cannot be applied.

33. The learned Departmental Representative, on the other hand, submitted that the assessee itself has not made any disallowance or has given any working to the Assessing Officer, therefore, the Assessing Officer has rightly invoked the provisions of rule 8D which implies that there was a satisfaction for invoking the provisions of rule 8D r/w 14A. Therefore, the disallowance made by the Assessing Officer should be sustained.

34. After carefully considering the rival submissions and relevant findings of the Assessing Officer and the DRP, we find that insofar as the assessee's contention that no borrowed funds have been utilized for the purpose of investment and that the assessee has sufficient profit and interest free funds for making investment has not been examined by the Assessing Officer. Once that is so, then the disallowance of interest under the formula given in rule 8D cannot be applied. Thus, we are of the opinion that this matter needs to be restored back to the file of the Assessing Officer to consider this issue afresh. Accordingly, we set aside the impugned order passed by the Assessing Officer and remand this matter to the file of the Assessing Officer and direct him to examine the assessee's account and the contention that the investments have been made out of surplus funds and borrowed funds have not been utilized. If it is found so, then the disallowance of interest component has to be removed. Insofar as the other expenditures are concerned, the Assessing Officer will examine the same and can invoke the provisions of rule 8D for the purpose of disallowance after examining the accounts. Thus, ground no.8 is treated as partly allowed for statistical purposes.

35. In ground no.9, the assessee has challenged the disallowance of Rs. 1,55,25,601 on account of payment to clubs being membership fees.

36. The assessee has incurred an expenditure of Rs. 1,55,25,601 on membership and entrance fees paid to various clubs. The assessee, before the Assessing Officer, has relied upon the decision of the Jurisdictional High Court in Otis Elevator Co. (India) Ltd. v. CIT [1992] 195 ITR 682/60 Taxman 215 (Bom.) and the decision of Gujarat High Court in Gujarat State Export Corpn. Ltd. v. CIT [1994] 209 ITR 649/[1995] 80 Taxman 568. It was further submitted that in the assessment years 1997-98 and 1998-99, this issue was decided in favour of the assessee. However, the Assessing Officer disallowed the same by treating it as capital expenditure.

37. Before us, it has been admitted that this issue has come up for consideration before the Tribunal in the assessment years 2006-07 and 2007-08 wherein this issue has been set aside to the file of the Assessing Officer to consider the decision in Gujarat State Export Corp. Ltd., Framatone Connector Oen Ltd.

38. The learned Counsel for the assessee, however, brought to our notice that the Punjab & Haryana High Court in a recent Full Bench decision in case of CIT v. Groz Beckert Asia Ltd. [2013] 351 ITR 196/31 taxmann.com 155, has held that corporate membership is not capital in nature and in this decision, the Gujarat and Kerala High Court decisions as cited by the Tribunal has also been considered. Therefore, this issue should be decided following the Full Bench decision of the High Court.

39. After considering the relevant findings of the Assessing Officer and submissions made by the parties, we find that this issue has been restored to the file of the Assessing Officer to consider certain High Court decisions. The learned Counsel has also relied upon the Full Bench decision of P&H High Court decision in Groz Beckert Asia Ltd. case (supra). Thus, we also set aside the issue to the file of the Assessing Officer to consider the Full Bench decision of the P&H High Court and decide the issue accordingly. Thus, this ground is treated as partly allowed for statistical purpose.

40. In ground no.10, the assessee has challenged the transfer pricing adjustment of Rs. 3,80,63,602, which constitutes of - (i) addition on account of guarantee fee of Rs. 1,77,61,212 and (ii) addition towards notional interest of Rs. 2,03,02,396.

41. In a reference made to the TPO, an upward adjustment of transfer pricing has been made for sums aggregating to Rs. 3,80,63,608.

42. However, the disputed issue before us is adjustment of guarantee fee if by adopting 4.66% per annum and notional interest on the loan advanced to the A.E. It has been admitted before us that in the earlier year, the TPO has applied the guarantee fee rate of 3% for making adjustment on account of guarantee fee which has been confirmed by the Tribunal also. The learned Counsel submitted that in this year also, if at all any adjustment is to be made on account of guarantee fee on commission the same should be @ 3% and not 4.66%. Regarding charging of notional interest @ 17.26%, the assessee submitted that it has charged 6% per annum and the Tribunal in the assessment year 2007-08 has set aside this issue to the Assessing Officer to decide on the basis of LIBOR rate prevalent at the relevant point of time. The LIBOR rate, he submitted that is much lower than 6% charged by the assessee.

43. The learned Departmental Representative submitted that each year is different and comparative analysis has to be done on the basis of current year. Therefore, the bench marking which has been done by the Assessing Officer to arrive at 4.66% of the guarantee fee commission should be upheld. On the issue of notional interest, he strongly relied upon the order of the TPO.

44. After carefully considering the rival submissions and also the relevant findings of the TPO as well as the earlier years' orders of the Tribunal, we find that insofar as the application of rate of 4.66% by the TPO on account of guarantee fee is concerned, the same cannot be upheld as in the earlier year, it has been held that the rate of 3% should be applied for the guarantee fee. In fact, there are many cases of the co-ordinate bench of the Tribunal where guarantee fee commission between 0.20% to 0.5% have been upheld. Thus, under the facts and circumstances wherein 3% has been upheld in the earlier year in case of the assessee, the same rate should be applied in this year also as a matter of consistency without there being any change in the facts and the circumstances.

45. Coming to the disallowance of interest after applying the interest paid @ 17.26% on the advance given to the A.E., we find that the Tribunal in the earlier year has restored this issue back to the file of the Assessing Officer to deal and decide on the basis of LIBOR rate prevalent at the relevant point of time. Therefore, we also restore back this issue to the file of the Assessing Officer to apply LIBOR rate, in case LIBOR rate is less than 6%, then the charging of interest rate of 6% by the assessee should be taken at ALP. Thus, ground no.10 is treated as partly allowed for statistical purposes.

46. Ground no.11 relates to disallowance of capital loss on sale of R&D assets of Rs. 1,98,44,153.
47. The assessee has claimed a sum of Rs. 98,44,153 on the R&D assets in the computation of income. The Assessing Officer observed that 100% deduction of such assets was allowed in the year under the asset was put to use under section 35(1)(iv). In response to the show cause notice, the assessee submitted that inspite of claiming deduction under section 35(1)(iv), the capital asset continued to be held by the company in the normal course on which it is not claimed any depreciation under section 32. However, if the capital asset held for R&D purpose is transferred then the gain / loss has to be computed under section 48 and by virtue of provisions of section 35, the company is required to offer sale proceeds to tax in the year of such transfer. During the relevant previous year, the company has sold capital asset having indexed cost of Rs. 12,67,79,761 for consideration of Rs. 69,35,208, as a result, long term capital loss had incurred to the assessee and the balance sum of Rs. 69,35,208 was shown as taxable as business income. This has been rejected by the Assessing Officer in view of the provisions of sub-section (3) of section 41.

48. It has been admitted by both the parties that this issue stands decided by the Tribunal in the assessment years 2006-07 and 2007-08 in assessee's own case, wherein, it has been held that the assessee had been allowed 100% depreciation on the asset used for R&D purpose in the first year itself and if indexation for claiming capital loss is also allowed it will amount to double benefit. Section 35 is part of Chapter-IV dealing with computation of business income and section 43 is part of the same heading. The provisions of capital gain cannot be imported to allow the assessee one more deduction.

49. After considering the submissions of the parties, we find that this issue stands decided by the Tribunal in earlier years against the assessee, therefore, consistent with the view taken therein, in this year also, the said issue is decided against the assessee and accordingly ground no.11 is treated as dismissed.

50. Ground no.12 relates to the addition of 9,00,35,392, on account of disallowance under section 40a(ia) in respect of the year end provisions, the Assessing Officer noted that the auditors in clause 17(f) and 27(b) of Form 3CD, had stated that the assessee company is not deducting TDS on certain, year end provisions as the company is of the view that the liability to deduct TDS arises in the subsequent years when the bill of the party is booked. In response to the show cause notice, the assessee made a very detail submission which has been dealt by the Assessing Officer from Page-47 to 49 of the assessment order. It was submitted by the assessee that the obligation to deduct tax arises at the time when the sum is payable to the contractor / professional is paid or when the said sum is credited to his account, whichever is earlier. The company makes year end provisions based on services rendered by various persons and these provisions represents cost of the various activities carried out by the company during the relevant financial period. Since the company is following mercantile system of accounting, it is required to account for such expenses even though the concerned parties have not submitted their bills or are pending for approval. No debt is due in favour of that part till the bill is received. The Assessing Officer rejected the assessee's entire submission on the ground that these expenses are liable for TDS as, once the assessee is debiting the payments in its Profit & Loss account it is automatically credited to the parties account based on matching principle. Accordingly, he disallowed such sum under section 40(a)(ia).

51. Before us, it has been admitted by the parties that this issue has come up for consideration in the assessment years 2006-07 and 2007-08 in assessee's own case wherein this issue has been decided in favour of the assessee, holding that the provisions of TDS are not applicable in the year and provisions, as the TDS have been deducted by the assessee, when the bills have been booked. Reliance was also placed on the amendment brought by the Finance Act, 2005 in section 40(a)(ia) with retrospective effect from 1st April 2005 in the first proviso.

52. In view of the fact that this issue has been decided in favour of the assessee by the Tribunal in the earlier years, therefore, consistent with the view taken by the Tribunal in assessee's own case, this issue is also decided in favour of the assessee. Thus, ground no.12 is treated as allowed.

53. Ground no.13 relates to disallowance of weighted deduction under section 35(2AB) of Rs. 128,39,81,081.

54. The assessee has claimed deduction under section 35(2AB) amounting to Rs. 385,19,43,243, in respect of scientific research expenditure of Rs. 256,79,62,162, being @ 150%. The assessee was required to produce Form 3CL issued by the Department of Scientific and Industrial Research (DSIR). In response, the assessee filed necessary details such as auditors' certificates, Form 3LK and Form 3CM. Regarding Form 3CL, it was submitted that rule-3, sub-rule (7A)(b), the prescribed authorities are required to submit their report in relation to approval of inhouse R&D facilities in Form no.3CL, within sixty days of its granting approval to the Director General (I.T. Exemp.). The assessee does not get the copy of form DISR. In the absence of any express provisions to furnish copy of Form 3CL, it cannot be said that the assessee is not entitled for deduction. All the relevant details for R&D activities and furnishing of form to DSIR authorities has already been furnished. The Assessing Officer, after detail discussion, rejected the assessee's contention and held that the weighted deduction of R&D deduction on Rs. 128,39,81,081 cannot be given.

55. Before us, it has been admitted that this issue has been decided in favour of the assessee on the ground that once the R&D facilities are approved in Form 3CL and DSIR has not rejected the application submitted by the assessee, then it can be presumed that the application has been accepted. Secondly, the failure on the part of the DSIR to inform the I.T. authorities in time cannot be the reason for denying weighted deduction to the assessee.

56. After hearing both the parties and in view of the aforesaid judicial precedence in the earlier year wherein this issue has been decided in favour of the assessee, in this year also, we hold that the assessee is entitled for weighted deduction under section 35(2AB) with reference to the expenditure of Rs. 128,39,81,081 incurred on scientific expenditure. Accordingly, ground no.13 is treated as allowed.

57. Ground no.14, relates to disallowance under section 40(a)(ia) on account of incentive of Rs. 104,43,22,000 and service coupon of Rs. 44,82,92,000.

58. The A.O. noted that the TDS has not been deducted on expenses on commission debited under the head "sales promotion" and commission on sales / contracts. The assessee was asked to furnish the details of all the expenses debited under this head on which tax was not deducted at source. In response, the assessee furnished the following details:—

59. In response to the show cause as to why the disallowance under section 40(a)(ia) should not be made, the assessee made detail submissions which has been incorporated by the Assessing Officer from Page-55 to 57 of the assessment order. The sum and substance of such submissions were that such a payment will not attract provisions of section 194H as the assessee was not acting on behalf of the other person for only services rendered in the course of buying or selling but the transaction with the dealers were made on principal-to-principal basis. Regarding the issue of service coupon, the dealer does not render any service or carry out any work for the company. The dealer renders services to the customers whose vehicle is serviced by him in exchange of free service coupon. The assessee's only obligation is to reimburse the dealer the specified sum of money in exchange of service coupon. However, the Assessing Officer rejected the assessee's explanation after detail discussion.
60 It has been admitted that this issue has been decided by the Tribunal in assessee's own case for the assessment year 2007-08 in detail. Insofar as the issue of payment of dealer incentive is concerned, the Tribunal has held that the TDS is not required to be deducted as the provisions of section 194H is not applicable as the sale was made on principal-to-principal basis. Regarding service coupon, the matter has been set aside to the file of the Assessing Officer to look into the issue of service coupon. The learned Counsel also relied upon the decision of the Delhi Bench of the Tribunal in Hero Motocop Ltd., ITA no.1980/Del./2012, order dated 11th June 2013, wherein the Tribunal has held that the provisions of section 194J is not applicable on the reimbursement to the dealers against service coupon as no service has been rendered by the dealers to the auto manufacturers.

61. After considering the relevant findings of the Assessing Officer and the decision relied upon by the learned Counsel, we find that the issue of dealer incentive has been decided by the Tribunal wherein, the Tribunal has decided the issue in favour of the assessee by holding that the dealer incentive is not covered by the provisions of section 194H as the sale was made on principal-to-principal basis. Regarding the issue of service coupon, the same has been restored back to the file of the Assessing Officer. Thus, consistent with the view taken therein, we also restore this issue back to the file of the Assessing Officer for fresh adjudication and also to consider the case law as relied upon by the learned Counsel for the assessee. Thus, ground no.14, is partly allowed for statistical purposes.

62. Ground no.15 relates to disallowance of depreciation on intangible asset of Rs. 22,92,344.

63. In the computation of income, the assessee claimed deduction for depreciation on intangible asset being knowhow acquired for advance system not debited to Profit & Loss account @ 25%. It was submitted that it has acquired technology for Defence vehicle from M/s. I.D.O. The payment was made for acquisition of technology and accordingly, the same has been treated as intangible asset. It was also submitted that such a technology could not be put to use because the orders for the concerned products were not placed with the assessee company. The Assessing Officer held that in the absence of any evidence of using the technology knowhow, the depreciation claimed for Rs. 22,92,344 is disallowed.

64. It has been admitted before us that this issue has been decided against the assessee by the Tribunal in the assessment year 2007-08.

65. In view of the fact that this issue has been decided by the Tribunal in the assessment year 2007-08 against the assessee on the ground that the existence of an agreement to acquire technology is not sufficient to claim depreciation. There has to be some active or passive use of technology knowhow during the year. Accordingly, consistent with the view, this ground is decided against the assessee . Thus, ground no.15 is treated as dismissed.

66. Ground no.16 relates to disallowance of deduction under section 28,39,000 being reversal of provisions for medical benefits disallowed in the earlier years on the ground that the assessee is in appeal before the Tribunal.

67. The relevant fact, as noted by the Assessing Officer, are as under:—

'21. During the assessment year 2007-08, the company has made a claim of Rs.321.71 lakhs in respect of future obligation under the "Post Retiral Medical Scheme". But during the assessment, the Assessing Officer has disallowed Rs.307.84 lakhs. In the Assessment year 2008- 09, there was reduction in the said liability vis -a-vis the liability as at 31st March, 2007 to the tune of Rs.42.26 lakhs, which has been offered to tax in the Return of Income. Since the Assessing Officer has already disallowed medical benefit to the tune of Rs. 307.84 in the assessment year 2007-08, we submit that a deduction to the extent of Rs.28.39 lakhs ( 42.26 - (321. 71 +307 .84) be allowed while finalising assessment as in the absence of which there would be double taxation for the said amount.

21.2 The contention of the assessee has been examined and the same is not acceptable. This liability has been disallowed by the Income-tax Department as prior period expenses in AY 2007-08. However, the assessee is in appeal on this ground before the Hon'ble ITAT. Therefore, the deduction cannot be granted at this stage till the disposal of appeal by the Hon'ble !TAT or higher appellate authorities. Therefore, the claim of the assessee is hereby rejected.'

68. It has been submitted before us that this is consequential to the disallowance made in the assessment year 2007-08 and whatever has been reversed out of the amount confirmed in the assessment year 2007-08, the same should not be taxed in this year.

69. We agree with the contention of the assessee that the amount which has been disallowed in the assessment year 2007-08 then in the assessment year 2008-09, deduction has to be allowed on the amount reversed in this year as it will lead to double taxation, one in the assessment year 2007-08 and the other in the assessment year 2008-09. Thus, the contention raised by the assessee is accepted and the Assessing Officer is directed to allow the deduction on account of reversal of the provisions of medical benefit of Rs. 28,39,000 which stood disallowed in the earlier yea. Ground no.16 is thus treated as allowed.

70. Ground no.17 relates to the treatment of octroi incentive of Rs. 92.89 crores given under the scheme by the Maharashtra Government as subsidy, as revenue receipt.

71. Before the Assessing Officer, it was submitted that the said incentive was received on the basis of package scheme of incentive" declared by the Government of Maharashtra, the main objects of which were to intensify and accelerate the process of dispersal of development areas and for development of under developed regions of the State particularly away from Bombay-Thane-Pune belt. The scheme clearly provided that octroi incentive was not granted for carrying out day-to-day business of the unit but to provide impetus in the process of dispersal of industries from developed areas to the backward areas. The octroi refund is only a measure to determine the quantum of incentive and cannot be construed as to mitigate the operational cost of the business. Heavy reliance was placed on the decision of the Tribunal in Dy. CIT v. Reliance Industries Ltd. [2004] 88 ITD 273 (Mum.)(SB). The Assessing Officer, however, rejected the assessee's contention on the ground that similar issue had been decided against the assessee in the assessment year 2007-08.

72. Before us, it has been submitted that this issue has been partly allowed by the Tribunal wherein it has been held that the subsidy received to the extent of purchase of raw material cannot be held as capital receipt and subsidy for purchase of capital goods should be treated as capital receipt.

73. However, the learned Counsel for the assessee submitted that the entire matter of package scheme of incentive was with the object of dispersal of industries to the backward areas. The main object was to see the growth in the underdeveloped areas and not to assist any industry for running of its business. He strongly relied upon the decision of the Hon'ble Supreme Court in CIT v. Ponni Sugars & Chemicals Ltd. [2008] 306 ITR 392/174 Taxman 87 and the decision of the Jurisdictional High Court in CIT v. Chaphalkar Bros. [2013] 351 ITR 309/215 Taxman 145 (Mag.)/33 taxmann.com 431 (Bom.) and the decision of the Gujarat High Court in Dy.CIT v. Inox Leisure Ltd. [2013] 351 ITR 314/213 Taxman 160/30 taxmann.com 127. He submitted that the purpose of the scheme has not been considered by the Tribunal and also that in the assessment year 1996-97 similar issue was decided in favour of the assessee by the Tribunal in assessee's own case. A copy of the said judgment has also been placed before us.

74. On the other hand, the learned Departmental Representative strongly relied upon the decision of the Tribunal given in the assessment years 2006- 07 and 2007-08 and submitted that following the said decision, the matter should be decided accordingly.

75. We have carefully considered the submissions of the parties, relevant findings of the Assessing Officer and also the relevant findings of the Tribunal. The relevant facts are that the assessee has received octroi incentive as per the "package scheme of incentive" declared by the Government of Maharashtra. The main preamble which highlighted the objects of the said scheme is as under:—

"In order to achieve dispersal of industries outside the Bombay-Than Pune belt and to attract them to the underdeveloped and developing areas the State, Government has been giving a Package of Incentives to New Unit Expansion set-up in the developing region of" {he State since 1964 und a Scheme popularly known as the Package Scheme of Incentives, The 1964 Package Scheme of Incentives first introduced in 1964, was amended from time to time. The amended Schemes are commonly known as-the 1969 Scheme from 1st April 1969), the 1973 Scheme (from 1st August 1973), the 1976 Scheme (from 1st August 1976), the 1979 Scheme (from 1st August 1979) and the 1983 Scheme (from 1st April 1983). The 1983 Scheme was to operative upto March 31, 1988. It was. however, extended and remained operation till September 30, 1988.

Government has under consideration the question of revising the 1983 Scheme to rationalize the scope of incentives,' the various scales and mode of release of incentives, to intensify and accelerate the process of dispersal of industries from the developed areas and for development of the under developed regions of the State particularly those farther away from the Bombay-Thane-Pune belt. In the light of the experience .gained in implementation of the earlier Schemes and particularly the 1983 Scheme and especially with the view to achieve the objectives outlined above, the Government has decided to revise and to bring into force a New Scheme i.e., Package Scheme of Incentives, 1988."

The scheme further provided that for the pioneer unit which has set up a new unit with a fixed capital investment exceeding Rs. 25 crores, will be provided "octroi incentive" for ten years which would be eligible from the date of commencement of the commercial production. On a perusal of the preamble, it is evident that the main object was to disperse the industries outside the Bombay-Thane-Pune belt and to attract them to establish their industries in the underdeveloped and developing areas. The "octroi incentive" was mainly to achieve this object and not for only operation of the business. Hon'ble Supreme Court in Ponni Sugars & Chemicals Ltd. case (supra) has laid down the proposition / test for deciding, whether the incentive or the subsidy should be treated as revenue receipt or capital receipt. After considering the earlier decision of the Hon'ble Supreme Court, Their Lordships held that the character of the receipt in the hands of the assessee has to be seen with respect to the purpose for which subsidy / incentive is given. The purpose test for which subsidy is given has to be applied for deciding such issues. The point of time at which subsidy is paid and the form or the mechanism through which subsidy is given is wholly irrelevant. If the object of the subsidy is to enable the assessee to set up a new unit or to expand the existing unit then the receipt of the subsidy is on capital account and if the subsidy claimed is to enable the assessee to run the business more profitably then the receipt is on the revenue account. This principle laid down by the Hon'ble Supreme Court has to be kept in mind. The Jurisdictional High Court in Chaphalkar Bros. case (supra) has reiterated this principle while applying the subsidy given in the form of waiver of entertainment tax to promote construction of multiplex theater and held that the same is on capital account. The object of the scheme is most relevant factor in deciding this issue of whether the subsidy received is on capital account or revenue account. Since this fundamental principle has not been examined either by the Assessing Officer or by the Tribunal, therefore, we are of the considered opinion that this matter should be restored back to the file of the Assessing Officer to consider the scheme and the objects for which such incentive was given and to decide the issue in view of the principle laid down by the Hon'ble Supreme Court and the Jurisdictional High Court. We order accordingly. Needless to mention here that the Assessing Officer shall provide adequate opportunity of hearing to the assessee to present its case. Thus, ground no.17 is allowed for statistical purposes.

76. Ground no.18, relates to disallowance of deduction of part reversal of FCCB premium of Rs. 1,24,41,145.

77. In the computation of income, the assessee has claimed that the reversal of FCCB premium which has been offered for taxation should be ignored because the same has already been disallowed in the earlier assessment years. Before the Assessing Officer, it was submitted as under:—

"In the Assessment Years 2005-06, 2006-07 and 2007-08, the Company had claimed an amount of Rs.1,303.52 Lakhs (100% claim of Rs. 1,303.52 lakhs and Rs. 539.95 Lakhs (35.27 % of Rs.1,530.90 lakhs) and Rs.43.63 (2.85% of Rs.1530.90 lakhs) respectively. During the year under review, bond holders holding further 97.15% have opted for conversion of FCCB's into GDR's/ shares of the Company. Accordingly, amount of premium of Rs.124.41 lakhs (2.85 % of Rs.4365.30 Lakhs (Rs.1,303.52 lakhs plus Rs.1,530.90 lakhs plus Rs.1530.90)} is no longer payable and hence the same has been offered to tax in the computation under Section 41 (1) of the Income Tax Act, 1961.

It may be noted that in the assessment order for A Y 2005-06, A Y 2006-07 & A Y 2007-08 the deduction for premium of FCCB has not been allowed as deductible expenditure. Hence, the computation of income for A Y 2008-09 does not require any addition in respect of reversal of premium as stated above (though such addition has been made in the computation of income).

Thus the company hereby claims deduction of Rs.1,24,41,145 being reversal of premium of FCCB-not requiring any adjustment under section 41 of the Act."

78. However, the Assessing Officer disallowed the assessee's claim on the ground that similar issue had arisen in the assessment year 2007-08 which has been disallowed by the Assessing Officer.

79. Before us, the learned Counsel for the assessee submitted that the assessee has offered the reversal of FCCB premium as taxable in this year. However, the same has already been subjected to taxation in the assessment years 2005-06, 2006-07 and 2007-08, therefore, the same was claimed not to be taxed again. He, however, submitted that the amount which has been allowed by the Tribunal in the assessment years 2005-06, 2006-07 and 2007-08 can be taxed only. He submitted that in the earlier years, the Tribunal has held that there should not be double taxation and direct the Assessing Officer to tax it only in one assessment year.

80. We agree with the contention of the learned Counsel for the assessee that there should not be a double taxation and if any amount which has been taxed in the earlier year on this score should not be added here and if the same has been allowed by the Tribunal in the earlier year, that amount alone should be taxed in this year. Thus, the Assessing Officer is directed to verify this contention of the assessee and grant appropriate relief or tax the same. Thus, ground no.18 is treated as partly allowed for statistical purposes.

81. Ground no.19 relates to disallowance of deduction of Rs. 69,35,208 as sale proceeds of R&D assets.

82. The assessee, before the Assessing Officer, submitted as under:—

"In the computation of income for A Y 2008-09 we have added to taxable income Rs.69,35,208 as sale proceeds of R&D assets being taxable under section 41 of the Income-tax Act.

However, while claiming deduction for R&D expenses (capital and revenue expenditure under section 35(2AB) we have already reduced the sale proceeds and thereby made claim of lesser amount as deductible expenditure. The copy of report under section 35(2AB) has already been submitted to you in earlier submissions. A copy is attached for your reference.

Thus we submit that by adding the sale proceeds to taxable income we have offered the same twice. This has happened through oversight.

Therefore we submit that the addition made by us to the taxable income be ignored (being duplication) and taxable income be reduced by Rs.69,35,208."

83. The A.O. rejected the assessee's contention on the ground that such a claim is not arising out of the return of income and such a claim can only be made by filing revised return of income in view of the decision of the Hon'ble Supreme Court in Goetze India Ltd. v. CIT [2006] 284 ITR 323/157 Taxman 1.

84. Before us, the learned Counsel for the assessee submitted that initially this issue was decided against the assessee by the Tribunal in the assessment year 2007-08, however, later on, the assessee had moved a miscellaneous application before the Tribunal, wherein this issue was allowed after detailed discussion. The relevant observation and the finding of the Tribunal in order dated 3rd October 2012 in M.A. no.397/Mum./2012, is reproduced hereunder:—

8 In the Additional Grounds of Miscellaneous Application, assessee-company further submitted that Ground Nos. 21 & 22 were dismissed by the Tribunal relying on the decision of the Supreme Court in the case of Goetze (India) Ltd. v. CIT [2006] 284 ITR 323, that jurisdictional High Court in the case of CIT v. Pruthvi Brokers & Shareholders (P.) Ltd. [2012] 349 ITR 336/208 Taxman 498/23 taxmann.com 23 (Bom.) had held that even if a claim was not made before the AO it could be made ibefore the Appellate Authorities, that judgment in the case of Goetze' (India) Ltd. v.CIT [2000] 284 ITR 323 did not impinge the powers of the Tribunal u/s. 254. In the light of the subsequent r decision of the jurisdictional High Court dt. 21.06.2012 i.e. Pruthvi Brokers (supra) order dt. 08.06.2012 passed by the Tribunal could be said to suffer from mistake apparent from record, that following the decision of the Hon'ble Supreme Court in the case of Asstt. CIT v. Saurashtra Kutch Stock Exchange Ltd. [2008] 305 ITR 227 mistakes appearing in Ground Nos. 21 & 22 should be rectified. We have perused the matter before us. It is found that Hon'ble Bombay High Court vide its order dt. 08.06.2012 in the case of Pruthvi Brokers & Shareholders (P.) Ltd. (supra) has held that appellate authorities can accept the new claims that were not made before the AO. We would like to re-produce the para 11(B) of the order:

It is clear, therefore, that an assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional claims before them. The appellate authorities have the discretion whether or not to permit such additional claims to be raised. It cannot, however, be said that they have no jurisdiction to consider the same. They have the jurisdiction to entertain the new claim. That they may choose not to exercise their jurisdiction in a given case is another matter. The exercise of discretion is entirely different from the existence of jurisdiction. Respectfully following the above order of the Bombay High Court, we direct the AO to allow the claim made for deduction u/s. 35 of the Act after verification of the evidences produced by the assessee company. Assessee is directed to file the details of expenditure before the A.O. As far as ground no.22 is concerned, the A.O. is directed to allow the claim made by the assessee company."

85. In view of the aforesaid fact that this issue stands allowed by the Tribunal in the subsequent order, the claim of the assessee is allowed subject to verification of the evidence filed by the assessee before the Assessing Officer as directed by the Tribunal. Accordingly, the claim of the assessee is allowed subject to verification by the Assessing Officer. Ground no.19 is thus treated as allowed.

86. Ground no.20 relates to disallowance of Rs. 25,55,112, on account of deduction for special pension received for the assessment year 2004-05.

87. In the return of income for the assessment year 2004-05, special pension of Rs. 1,27,75,558 has been claimed as deductible expenditure. In the assessment year 2004-05, the claim has been restricted to Rs. 25,55,112 being 1/5th as deductible expenditure under section 35DDA. Similarly, in the return of income for the assessment year 2005-06, special pension of Rs. 66,06,878 was claimed as deductible expenditure, however, the same was restricted again to 1/5th of Rs. 13,21,400 under section 35DDA. In the return of income for the assessment year 2006-07 also, the special pension of Rs. 48,87,957 was claimed which was again restricted to 1/5th at Rs. 9,77,591. In this year also, the assessee has requested to allow Rs. 25,55,112, Rs. 13,21,400 and Rs. 9,77,591 as deduction while computing taxable income for the assessment year 2008-09. The learned Counsel submitted that the assessee was claiming 100% of the claim, whereas the Revenue has been restricting it to 1/5th as allowable. Therefore, in view of this consistent stand taken by the Revenue, he admitted that only 1/5th should be allowed as done in the earlier years.

88. Accordingly, we direct the Assessing Officer to allow 1/5th only and not 100% as claimed by the assessee. Thus, the Assessing Officer will verify the quantum of deduction of special pension in this year and allow 1/5th in view of the stand taken by the Department in the earlier years. Thus, ground no.20 is treated as partly allowed.

89. In ground no.21, the assessee has challenged the addition of Rs. 7,43,000 being difference in rent received by the Ridge Business Centre Pvt. Ltd. for sub-letting of the property.

90. Brief facts, apropos this issue, are that the assessee has let out its certain properties to one of its group concern Ridge Business Centre Pvt. Ltd. and has been receiving rent of Rs. 16.84 crores. The said property was again sub-let by Ridge Business Center Pvt. Ltd. to a third party for a total consideration of Rs. 20.37 crores. In respect to the show cause notice, the assessee submitted as under:—

"that as stated earlier, income from letting out the said property has always been assessed as income from business. This was because the said property was always held as stock in trade. The concept of annual letting value, being the sum for which the property might reasonably be expect to let from year to year is not applicable to the computation of income from this property. The said concept is relevant to computation of income u/s.23 and not u/s 28 of the Income Tax Act.

Under section 28 r.w.s. 5 of the Act, income earned, received or accrued from any business carried on during the year is chargeable to tax under the head profits and gains of business. The rent realized by Ridge from letting of the property to a third party cannot be said to have been earned, received or accrued to the company.

It is respectfully submitted that this arrangement has been going on for last several years and has been accepted as such by the department in the past. In the light of this subsisting arrangement it would not have been possible for the company to change the rent merely because Ridge was in a position to negotiate a better rent from its clients.

It is, therefore, respectfully submitted that the addition is uncalled for. If the proposed addition is made under section 23, the submission made in our earlier our submission may be taken into account."

91. The assessee's submissions were rejected by the Assessing Officer and held that the difference in the rent as received from the third party for letting out the same property and what has been received from Ridge Business Centre by the assessee should be added as assessee's income. Accordingly, the addition of Rs. 7.43 crores was made. This has been affirmed by the DRP also.

92. Before us, the learned Counsel submitted that the property which has been let out has been held as stock-in-trade by the assessee and the rent received has always been taxed as business income not only in the earlier years but also in this year. The said business income has been accepted by the Department all through out. Once there is no dispute regarding the taxability of rental income under the head business income, then, there is no such provision for taxing the notional income on account of difference of rent. Moreover, Ridge Business Centre is a tax paying company and, therefore, there is no evasion of tax. He relied upon the decision of the Jurisdictional High Court in CIT v. Akshay Textile & Trading Agency (P.) Ltd. [2008] 304 ITR 401/167 Taxman 324 (Bom.) wherein it has been held that even in the context of income from house property differential income cannot be taxed in the hands of the owner.

93. The learned Departmental Representative, on the other hand, submitted that it is not a question of notional income which has been taxed but the correct appreciation of what should have been the actual income. Once the assessee has let out the property for a particular amount and the same has been sub-let at a higher amount, then the higher is the correct value of the income to be earned from such property and this is what has been taxed by the Assessing Officer. Thus, he strongly relied upon the findings of the Assessing Officer.

94. We have carefully considered the submissions of the parties and also perused the relevant findings of the Assessing Officer. It is not in dispute that the income from letting out the property to Ridge Business Centre has been assessed as business income right from the earlier years and the same position has been accepted by the Department. Once the income which has been derived from stock-in-trade and has been accepted as business income, then the computation has to be made under section 28 and not under section 23. The assessee has duly shown the income received / accrued from Ridge Business Centre as business income, then any further rent realized by Ridge Business Centre form the third party cannot be said to have been earned / received or accrued to the assessee company. Thus, we are inclined to agree with the contention of the learned Counsel for the assessee that no further income can be attributed to the assessee once the rental income has been assessed as business income and not from the income from house property. Accordingly, ground no.21 is treated as allowed.

95. In ground no.22, the assessee has challenged the valuation by the Assessing Officer to allow credit of TDS of Rs. 2,21,35,830.

96. It has been admitted that in the earlier years also the Tribunal has given direction to the Assessing Officer that the credit of TDS should be given if the details were filed before the Assessing Officer before the finalization of the assessment proceedings. Accordingly, we also direct the Assessing Officer to give credit of TDS after verifying the necessary details for the tax deduction at source. Ground no.22 is thus treated as allowed.

97. In ground no.23 the assessee has challenged the disallowance of deduction under section 80IC.
98. The relevant facts of the claim for such deduction as stated before the Assessing Officer are as under:—

"During the financial year 2005-06, the Assessee had set up a new undertaking at Haridwar in the State of Uttaranchal for the manufacture of Three Wheeler. The said unit commenced it operation on 2nd January, 2006. The said unit is eligible for deduction in accordance with the provisions of Section 80IC of the Income Tax Act, 1961 commencing from the Assessment Yea 2006-07.

As the said unit had incurred loss during the year under assessment i.e. Assessment Year 2008-09, no deduction was claimed in the computation of income. In the year of profits in subsequent year, the said deduction will be claimed in accordance with the provisions of section 80IC of the Act."

99. The Assessing Officer rejected the said claim on the ground that similar claim was disallowed in the assessment year 2007-08.

100. It has been admitted by both the parties that this issue was involved in the earlier years also before the Tribunal, wherein the Tribunal has directed the Assessing Officer to quantify the loss for the year under consideration and give clear cut findings as to whether the unit at Haridwar was set up in January 2006 or not.

101. In view of the submissions made by both the parties that this issue was involved in the earlier years also before the Tribunal, wherein the Tribunal has directed the Assessing Officer to quantify the loss for the year under consideration and give clear cut findings as to whether the unit at Haridwar was set-up in January 2006, we also, consistent with the view taken by the Tribunal in assessee's own case for earlier assessment year, give similar direction to the Assessing Officer to quantify the loss and allow the same in accordance with law. Ground no. 23 is treated as partly allowed for statistical purposes.

The order pronounced in the open court on November 29, 2013.