DCIT CC 7(2).MUMBAI, MUMBAI vs. MAN INDUSTRIES (INDIA) LIMITED, MUMBAI

4. The order of the Ld. CIT(A) is erroneous in law and on The order of the Ld. CIT(A) is erroneous in law and on The order of the Ld. CIT(A) is erroneous in law and on facts of the case and is liable to be set aside and the order facts of the case and is liable to be set aside and the order facts of the case and is liable to be set aside and the order of the AO be restored? of the AO be restored? 5. The appellant The appellant craves leave to add to alter, amend, modify craves leave to add to alter, amend, modify and/or delete any or all of the above said grounds of and/or delete any or all of the above said grounds of and/or delete any or all of the above said grounds of appeal

. The appellant reserves its right to file Further appeal. The appellant reserves its right to file Further appeal. The appellant reserves its right to file Further submission submission in the appeal

2. Briefly stated facts of the case are that Briefly stated facts of the case are that the assessee company the assessee company is engaged in the business of manufa in the business of manufacturing and export of large and export of large diameter carbon steel line pipes required for high pressure diameter carbon steel line pipes required for high pressure diameter carbon steel line pipes required for high pressure transmission application for gas, crude oil, petrochemical products transmission application for gas, crude oil, petrochemical products transmission application for gas, crude oil, petrochemical products and portable water. The assessee filed its return of income for the and portable water. The assessee filed its return of income for the and portable water. The assessee filed its return of income for the year under consideration on 31.12.2020 declaring total income of nder consideration on 31.12.2020 declaring total income of nder consideration on 31.12.2020 declaring total income of Rs.94,60,38,420/-. The return of income filed by the assessee was . The return of income filed by the assessee was . The return of income filed by the assessee was selected for scrutiny assessment and statutory notices under the selected for scrutiny assessment and statutory notices under the selected for scrutiny assessment and statutory notices under the Income-tax Act, 1961 (in short ‘the Act’) were issued and complied tax Act, 1961 (in short ‘the Act’) were issued and complied tax Act, 1961 (in short ‘the Act’) were issued and complied with. The assessment order u/s 143(3) of the Act was completed on with. The assessment order u/s 143(3) of the Act was completed on with. The assessment order u/s 143(3) of the Act was completed on 06.05.2022 after making following addition: 06.05.2022 after making following addition:

(a) Rs.1,35,71,435/ (a) Rs.1,35,71,435/- u/s 40(a)(ia) of the Act.

(b) Rs.1,30,70,695/ (b) Rs.1,30,70,695/- u/s 14A and (c) Rs.59,64,352/ (c) Rs.59,64,352/- on disallowance of depreciation. on disallowance of depreciation.

3. On further appeal, the Ld. CIT(A) deleted all the three r appeal, the Ld. CIT(A) deleted all the three r appeal, the Ld. CIT(A) deleted all the three additions. Aggrieved, the Revenue is before the Income-tax additions. Aggrieved, the Revenue is before the additions. Aggrieved, the Revenue is before the Appellate Tribunal Tribunal (in short the ‘Tribunal’) by way of raising by way of raising grounds as reproduced above. grounds as reproduced above.

4.1 Addressing the ground No. 1 the ground No. 1 of the appeal, of the appeal, the Ld. Departmental Representative (DR) submitted that Ld. CIT(A) has Departmental Representative (DR) submitted that Ld. CIT(A) has Departmental Representative (DR) submitted that Ld. CIT(A) has deleted the addition u/s 40(a)(ia) of the Act merely following his deleted the addition u/s 40(a)(ia) of the Act merely following his deleted the addition u/s 40(a)(ia) of the Act merely following his finding in assessment year finding in assessment year 2014-15. Further, he submitted that the Further, he submitted that the Ld. CIT(A) has wrongly wrongly held that foreign branch of Indian Bank held that foreign branch of Indian Bank is subjected to Banking Regulation Act, 1949 and therefore, Banks subjected to Banking Regulation Act, 1949 and therefore, subjected to Banking Regulation Act, 1949 and therefore, which are covered u/s 194A(3)(iii) of the Act are exempted from which are covered u/s 194A(3)(iii) of the Act are exempted from which are covered u/s 194A(3)(iii) of the Act are exempted from liability of deduction liability of deduction tax at source on the interest received. tax at source on the interest received.

“7.1.1 Decision - I have considered the submission of the appellant. The I have considered the submission of the appellant. The I have considered the submission of the appellant. The disallowance of Rs 1,35,71,435 is made u/s 40a(ia) of the Act as the appellant disallowance of Rs 1,35,71,435 is made u/s 40a(ia) of the Act as the appellant disallowance of Rs 1,35,71,435 is made u/s 40a(ia) of the Act as the appellant had failed to deduct TDS on the interest of Rs 1,35,71,435/ had failed to deduct TDS on the interest of Rs 1,35,71,435/- paid to Singapore paid to Singapore branch of ICICI Bank. According to the a branch of ICICI Bank. According to the appellant, the payment is covered the ppellant, the payment is covered the proviso to section 194A(3)(iii) of the Act and is therefore not liable to deduct TDS proviso to section 194A(3)(iii) of the Act and is therefore not liable to deduct TDS proviso to section 194A(3)(iii) of the Act and is therefore not liable to deduct TDS on the interest paid to the bank. According to the AO, the foreign branches of on the interest paid to the bank. According to the AO, the foreign branches of on the interest paid to the bank. According to the AO, the foreign branches of Indian banks are not covered under the Banking Regulati Indian banks are not covered under the Banking Regulation Act, 1949 and are on Act, 1949 and are therefore not covered under section 194A(3)(iii) of the Act. I have decided an therefore not covered under section 194A(3)(iii) of the Act. I have decided an therefore not covered under section 194A(3)(iii) of the Act. I have decided an identical issue in the case of the appellant for the AY 2014 identical issue in the case of the appellant for the AY 2014-15, wherein the 15, wherein the demand was raised u/s 201 of the Act for non demand was raised u/s 201 of the Act for nondeduction of TDS on interest paid deduction of TDS on interest paid to Singapore branch of ICICI bank. The matter was decided in the favour of the to Singapore branch of ICICI bank. The matter was decided in the favour of the to Singapore branch of ICICI bank. The matter was decided in the favour of the appellant by holding that the foreign branch of Indian bank are covered under appellant by holding that the foreign branch of Indian bank are covered under appellant by holding that the foreign branch of Indian bank are covered under the Banking regulation Act ,1949 and are therefore are covered u/s 194A(3) (iii) the Banking regulation Act ,1949 and are therefore are covered u/s 194A(3) (iii) the Banking regulation Act ,1949 and are therefore are covered u/s 194A(3) (iii) of the Act. The relevant extract of the appellate order for AY 2014 levant extract of the appellate order for AY 2014 levant extract of the appellate order for AY 2014-15 is reproduced for reference reproduced for reference - “8.1 I have considered the facts of the case, discussion made in the order u/s. “8.1 I have considered the facts of the case, discussion made in the order u/s. “8.1 I have considered the facts of the case, discussion made in the order u/s. 201(1)/201(1A) and the submission of the appellant on the same. The sole issue 201(1)/201(1A) and the submission of the appellant on the same. The sole issue 201(1)/201(1A) and the submission of the appellant on the same. The sole issue in the appeal arises out of the demand of Rs. 82,08,338/ arises out of the demand of Rs. 82,08,338/- and Rs. 94,18,886/ and Rs. 94,18,886/- u/s. 201(1) raised by the ITO TDS u/s. 201(1) raised by the ITO TDS-1(3), Mumbai. The said demand has been 1(3), Mumbai. The said demand has been raised after treating the assessee to be in default for non raised after treating the assessee to be in default for non-deduction of TDS on deduction of TDS on the remittances of Rs. 8,20,83,375 and the remittances of Rs. 8,20,83,375 and Rs. 9,41,88,864/- made to the Singapore made to the Singapore branch of ICICI Bank Ltd. Consequently, the interests u/s. 201(1 A) of Rs. branch of ICICI Bank Ltd. Consequently, the interests u/s. 201(1 A) of Rs. branch of ICICI Bank Ltd. Consequently, the interests u/s. 201(1 A) of Rs. 77,15,838 and Rs. 83,82,809/ 77,15,838 and Rs. 83,82,809/has been added to the said demand. has been added to the said demand. 8.2 The appellant company had paid interest to the Singapore Branch of ICICI The appellant company had paid interest to the Singapore Branch of ICICI The appellant company had paid interest to the Singapore Branch of ICICI Bank without deducting the tax. As per the appellant, it is exempted from Bank without deducting the tax. As per the appellant, it is exempted from Bank without deducting the tax. As per the appellant, it is exempted from deduction of tax on such payment in accordance with the proviso to Section tax on such payment in accordance with the proviso to Section tax on such payment in accordance with the proviso to Section 194A(3)(iii)(a) of the I. T. Act which reads as under: 194A(3)(iii)(a) of the I. T. Act which reads as under:- 194A. 52(1) Any person, not being an individual or 194A. 52(1) Any person, not being an individual or a Hindu undivided family, a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other who is responsible for paying to a resident any income by way of interest other who is responsible for paying to a resident any income by way of interest other than income by way of interest on securities, shall, at the time of credit of such than income by way of interest on securities, shall, at the time of credit of such than income by way of interest on securities, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or income to the account of the payee or at the time of payment thereo income to the account of the payee or at the time of payment thereo by issue of a cheque or draft or by any other mode, whichever is earlier, deduct by issue of a cheque or draft or by any other mode, whichever is earlier, deduct by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force: tax thereon at the rates in force: ……….. ……….. (3) The provisions of sub (3) The provisions of sub-section (1) shall not apply (iii) to such income credited or section (1) shall not apply (iii) to such income credited or paid to Any banking company to which the Banking Regulation Act, 1949 applies, oa Any banking company to which the Banking Regulation Act, 1949 applies, oa Any banking company to which the Banking Regulation Act, 1949 applies, oa 8.3 While referring to the Banking Regulation Act, 1949, AO has observed While referring to the Banking Regulation Act, 1949, AO has observed While referring to the Banking Regulation Act, 1949, AO has observed -that the Banking Regulation Act 1949 extended to whole of India and that the Banking Regulation Act 1949 extended to whole of India and -that the that the Banking Regulation Act 1949 extended to whole of India and banking company is defined as banking company is defined as any company which transacts the business any company which transacts the business Based on these two observations , it was inferred that the Banking regulation Based on these two observations , it was inferred that the Banking regulation Based on these two observations , it was inferred that the Banking regulation Act does not apply on the foreign branches of Indian banks and therefore the Act does not apply on the foreign branches of Indian banks and therefore the Act does not apply on the foreign branches of Indian banks and therefore the payment made to such foreign branches is not covered by the payment made to such foreign branches is not covered by the proviso to Section proviso to Section 194A. AO has further referred to the notification dated 01.12.2008 issued by the 194A. AO has further referred to the notification dated 01.12.2008 issued by the 194A. AO has further referred to the notification dated 01.12.2008 issued by the Reserve Bank of India which says that “In the course of operations of the Indian Reserve Bank of India which says that “In the course of operations of the Indian Reserve Bank of India which says that “In the course of operations of the Indian banks branches and subsidiaries abroad, it is possible that while complying banks branches and subsidiaries abroad, it is possible that while complyin banks branches and subsidiaries abroad, it is possible that while complyin with the host-country regulatory requirements in certain jurisdictions, they might country regulatory requirements in certain jurisdictions, they might country regulatory requirements in certain jurisdictions, they might be required to undertake an activity which is not permitted under the BR Act be required to undertake an activity which is not permitted under the BR Act be required to undertake an activity which is not permitted under the BR Act This notification has been interpreted as an admission by the RBI that the This notification has been interpreted as an admission by the RBI that the This notification has been interpreted as an admission by the RBI that the Banking Regulation Act cannot be extended to the operation of the foreign branch Act cannot be extended to the operation of the foreign branch Act cannot be extended to the operation of the foreign branch of Indian bank. 8.4 The appellant has challenged the addition made on the grounds which are The appellant has challenged the addition made on the grounds which are The appellant has challenged the addition made on the grounds which are reproduced in the paras above. Appellant has referred to the para 3 of the reproduced in the paras above. Appellant has referred to the para 3 of the reproduced in the paras above. Appellant has referred to the para 3 of the notification of the RBI da notification of the RBI dated 01.12.2008, which was relied upon by the AO . ted 01.12.2008, which was relied upon by the AO . Same reads as under- “3. In the course of operations of the Indian banks’ branches and subsidiaries “3. In the course of operations of the Indian banks’ branches and subsidiaries “3. In the course of operations of the Indian banks’ branches and subsidiaries abroad, it is possible that while complying with the host abroad, it is possible that while complying with the host-country regulatory country regulatory requirements in certain juris requirements in certain jurisdictions, they might be required to undertake an undertake an activity which is not permitted under the BR Act/the respective statute of the activity which is not permitted under the BR Act/the respective statute of the activity which is not permitted under the BR Act/the respective statute of the public sector bank. In such circumstances, the banks are advised to ensure that public sector bank. In such circumstances, the banks are advised to ensure that public sector bank. In such circumstances, the banks are advised to ensure that they obtain from the RBI/Government of India nec they obtain from the RBI/Government of India necessary permission u/s. 6(1)(m) essary permission u/s. 6(1)(m) or 19(1)(c) as the case may be for undertaking such activities.” or 19(1)(c) as the case may be for undertaking such activities.” While referring to the Notification dated 1/12/2008, the appellant has argued While referring to the Notification dated 1/12/2008, the appellant has argued While referring to the Notification dated 1/12/2008, the appellant has argued that nowhere in the RBI notification dated 01.12.2008 is it mentioned that the that nowhere in the RBI notification dated 01.12.2008 is it mentioned that the that nowhere in the RBI notification dated 01.12.2008 is it mentioned that the business operations of the foreign branch are outside the purview of the Banking iness operations of the foreign branch are outside the purview of the Banking iness operations of the foreign branch are outside the purview of the Banking Regulation Act. I find the observation made by the appellant to be in order. The Regulation Act. I find the observation made by the appellant to be in order. The Regulation Act. I find the observation made by the appellant to be in order. The said notification stipulates that the necessary permission of the RBI/Govt, of said notification stipulates that the necessary permission of the RBI/Govt, of said notification stipulates that the necessary permission of the RBI/Govt, of India should be obtained by the Indian banks branches abroad to undertake an tained by the Indian banks branches abroad to undertake an tained by the Indian banks branches abroad to undertake an activity which is not permitted under the Banking Regulation Act, which implies activity which is not permitted under the Banking Regulation Act, which implies activity which is not permitted under the Banking Regulation Act, which implies that these branches are under the purview of the Banking Regulation Act. that these branches are under the purview of the Banking Regulation Act. that these branches are under the purview of the Banking Regulation Act. 8.5 The appellant appellant has further quoted section 35 of the Banking 35 of the Banking Regulation Act, the explanation to which reads as under: Act, the explanation to which reads as under: [Explanation - For the purpose of this section, the expression "banking company" For the purpose of this section, the expression "banking company" For the purpose of this section, the expression "banking company" (a) in the case of a banking company incorporated outside India, all its branches (a) in the case of a banking company incorporated outside India, all its branches (a) in the case of a banking company incorporated outside India, all its branches in (b) in the case of a banking company incorporated in India e of a banking company incorporated in India - (a) all its subsidiahes formed for the purpose of carrying on the business of (a) all its subsidiahes formed for the purpose of carrying on the business of (a) all its subsidiahes formed for the purpose of carrying on the business of banking exclusively outside India; and banking exclusively outside India; and (b) all its branches whether situated in India or outside India.] (b) all its branches whether situated in India or outside India.] Further ,as per the sectio Further ,as per the section 23 of the Banking Regulation Act, banks cannot open n 23 of the Banking Regulation Act, banks cannot open a new place of business in India or Abroad without the prior approval of the RBI. a new place of business in India or Abroad without the prior approval of the RBI. a new place of business in India or Abroad without the prior approval of the RBI. It is evident from the above referred sections that the foreign branches of the It is evident from the above referred sections that the foreign branches of the It is evident from the above referred sections that the foreign branches of the Indian banks are covered under the Banki Indian banks are covered under the Banking Regulation Act,1949 and thereby ng Regulation Act,1949 and thereby covered under the proviso to section 194A(3) of the Act. covered under the proviso to section 194A(3) of the Act. In the appellate proceedings, a certificate dated 01.03.2013 in the form 10FB In the appellate proceedings, a certificate dated 01.03.2013 in the form 10FB In the appellate proceedings, a certificate dated 01.03.2013 in the form 10FB issued by DCIT, Circle issued by DCIT, Circle-3(1), Mumbai was submitted. As per the same, it is 3(1), Mumbai was submitted. As per the same, it is certified that the ICICI Bank Ltd. (PAN: AAACI1195H) is a resident of India for at the ICICI Bank Ltd. (PAN: AAACI1195H) is a resident of India for at the ICICI Bank Ltd. (PAN: AAACI1195H) is a resident of India for the purpose of the Income Tax Act, 1961 and the global income including that of the purpose of the Income Tax Act, 1961 and the global income including that of the purpose of the Income Tax Act, 1961 and the global income including that of offshore branches i.e. Singapore, Hongkong, Bahrain, United States, Dubai, Sri offshore branches i.e. Singapore, Hongkong, Bahrain, United States, Dubai, Sri offshore branches i.e. Singapore, Hongkong, Bahrain, United States, Dubai, Sri Lanka, Qatar is taxable in In Lanka, Qatar is taxable in India and assessed under PAN No. AAACI1195H. The dia and assessed under PAN No. AAACI1195H. The interest paid to the Singapore Branch of the ICICI Bank is taxable in India and interest paid to the Singapore Branch of the ICICI Bank is taxable in India and interest paid to the Singapore Branch of the ICICI Bank is taxable in India and assessed as income of ICICI Bank Ltd. Payment made to the Singapore branch of assessed as income of ICICI Bank Ltd. Payment made to the Singapore branch of assessed as income of ICICI Bank Ltd. Payment made to the Singapore branch of ICICI Bank is akin to the payment made to ICICI Ban ICICI Bank is akin to the payment made to ICICI Bank Ltd and such payments k Ltd and such payments are exempt from TDS as per are exempt from TDS as per the provision of Section 194A(3) of the Act. the provision of Section 194A(3) of the Act. The appellant has relied upon the decision of Bajaj Ecotech Products Ltd. vs. ITO, The appellant has relied upon the decision of Bajaj Ecotech Products Ltd. vs. ITO, The appellant has relied upon the decision of Bajaj Ecotech Products Ltd. vs. ITO, TDS(lnternational Taxation) by Hon’ble ITAT, Mumbai, where the identical issue TDS(lnternational Taxation) by Hon’ble ITAT, Mumbai, where the identical issu TDS(lnternational Taxation) by Hon’ble ITAT, Mumbai, where the identical issu has been decided int the favour of the assessee. has been decided int the favour of the assessee. Considering the overall facts and circumstances of the case and the case laws Considering the overall facts and circumstances of the case and the case laws Considering the overall facts and circumstances of the case and the case laws relied upon I am of the view that the payment of interest made to the Singapore relied upon I am of the view that the payment of interest made to the Singapore relied upon I am of the view that the payment of interest made to the Singapore branch of ICICI Bank is covered under provision branch of ICICI Bank is covered under provision of Section 194A(3)(iii)(a) of the of Section 194A(3)(iii)(a) of the Act and is not liable for deduction of TDS. The order of the AO in raising the Act and is not liable for deduction of TDS. The order of the AO in raising the Act and is not liable for deduction of TDS. The order of the AO in raising the demand of Rs. 3,37,25,871/ demand of Rs. 3,37,25,871/- u/s. 201(1)/201(1A) cannot be sustained. The AO u/s. 201(1)/201(1A) cannot be sustained. The AO is directed to delete the demand”. is directed to delete the demand”. I find that the issue in the pr I find that the issue in the present appeal is identical to the issue for AY 2014 esent appeal is identical to the issue for AY 201415, discussed above. For the year under consideration, the appellant has relied upon discussed above. For the year under consideration, the appellant has relied upon discussed above. For the year under consideration, the appellant has relied upon the Tax Residency Certificate dated 14.05.2019 issued by the Dy. Commissioner the Tax Residency Certificate dated 14.05.2019 issued by the Dy. Commissioner the Tax Residency Certificate dated 14.05.2019 issued by the Dy. Commissioner of Income Tax2 (3)(2), Mumbai, certifying of Income Tax2 (3)(2), Mumbai, certifying that ICICI Bank Ltd is a resident of that ICICI Bank Ltd is a resident of India as per the provisions of section 6(3) of the I.T.Act, 1961 ("Act") and its India as per the provisions of section 6(3) of the I.T.Act, 1961 ("Act") and its India as per the provisions of section 6(3) of the I.T.Act, 1961 ("Act") and its global income including that of its offshore branches in Singapore, Hongkong, global income including that of its offshore branches in Singapore, Hongkong, global income including that of its offshore branches in Singapore, Hongkong, Bahrain, Sri Lanka, Dubai International Finance Centre, Qata Bahrain, Sri Lanka, Dubai International Finance Centre, Qatar and United States r and United States is taxable in India. Following my decision for the AY 2014,15, I hold that the payment of interest Following my decision for the AY 2014,15, I hold that the payment of interest Following my decision for the AY 2014,15, I hold that the payment of interest made to Singapore branch of ICICI bank is covered under proviso to section made to Singapore branch of ICICI bank is covered under proviso to section made to Singapore branch of ICICI bank is covered under proviso to section 194A(3)(iii) and is therefore not liable for deduction of TDS. 194A(3)(iii) and is therefore not liable for deduction of TDS. The appellant has The appellant has rightly not deducted TDS on the said payment. Therefore, the disallowance u/s rightly not deducted TDS on the said payment. Therefore, the disallowance u/s rightly not deducted TDS on the said payment. Therefore, the disallowance u/s 40a(ia) of the Act cannot be upheld. The AO is directed to delete the addition of 40a(ia) of the Act cannot be upheld. The AO is directed to delete the addition of 40a(ia) of the Act cannot be upheld. The AO is directed to delete the addition of Rs.1,35,71,435/-. Ground No. 1 is allowed.” Ground No. 1 is allowed.” 7.1 We find that the Tribunal in the case of Bajaj Eco Tec Products We find that the Tribunal in the case of Bajaj Eco Tec Products We find that the Tribunal in the case of Bajaj Eco Tec Products Ltd. (supra) held that interest payment to Singapore Branch of ICICI Ltd. (supra) held that interest payment to Singapore Branch of ICICI Ltd. (supra) held that interest payment to Singapore Branch of ICICI Bank Ltd. was not liable for deduction of tax at source in view of Bank Ltd. was not liable for deduction of tax at source in view of Bank Ltd. was not liable for deduction of tax at source in view of Singapore branch was was subjected to Indian Banking Regulat subjected to Indian Banking Regulation Act and hence was not liable for deduction of tax at source u/s and hence was not liable for deduction of tax at source u/s and hence was not liable for deduction of tax at source u/s 194A(3)(iii) of the Act. The relevant finding of the Tribunal(supra) is 194A(3)(iii) of the Act. The relevant finding of the Tribunal 194A(3)(iii) of the Act. The relevant finding of the Tribunal reproduced as under: reproduced as under:

“11. We have heard both the sides and perused the materials available on 11. We have heard both the sides and perused the materials available on 11. We have heard both the sides and perused the materials available on record and gone throug record and gone through the orders of the authorities below. The factual matrix h the orders of the authorities below. The factual matrix of the impugned dispute is that the assessee has borrowed 20 million USD of the impugned dispute is that the assessee has borrowed 20 million USD of the impugned dispute is that the assessee has borrowed 20 million USD external commercial borrowings by an agreement with ICICI Bank Ltd., external commercial borrowings by an agreement with ICICI Bank Ltd., external commercial borrowings by an agreement with ICICI Bank Ltd., Singapore branch. As per the said agreement dated 15.03. Singapore branch. As per the said agreement dated 15.03.2007, the ICICI Bank 2007, the ICICI Bank Ltd. acted as an arranger and agent to facilitate 20 milliion USD external Ltd. acted as an arranger and agent to facilitate 20 milliion USD external Ltd. acted as an arranger and agent to facilitate 20 milliion USD external commercial borrowings to the assessee. The assessee has paid interest on commercial borrowings to the assessee. The assessee has paid interest on commercial borrowings to the assessee. The assessee has paid interest on external commercial borrowings to ICICI Bank Ltd, Singapore branch aggregating external commercial borrowings to ICICI Bank Ltd, Singapore branch aggregating external commercial borrowings to ICICI Bank Ltd, Singapore branch aggregating to Rs.11,69,45,505/- for the assessment years 2009-10 to 2011 10 to 2011-12. The Assessing Officer held that the assessee as an assessee in default u/s. Assessing Officer held that the assessee as an assessee in default u/s. Assessing Officer held that the assessee as an assessee in default u/s. 201(1)/201(1A) of the Act, on the ground that the assessee has paid interest to a 201(1)/201(1A) of the Act, on the ground that the assessee has paid interest to a 201(1)/201(1A) of the Act, on the ground that the assessee has paid interest to a non resident entity located outside Indi non resident entity located outside India which comes within the provision of a which comes within the provision of section 195 of the Act. The Assessing Officer further observed that since the section 195 of the Act. The Assessing Officer further observed that since the section 195 of the Act. The Assessing Officer further observed that since the assessee has failed to deduct tax at source u/s. 195, he held the assessee as an assessee has failed to deduct tax at source u/s. 195, he held the assessee as an assessee has failed to deduct tax at source u/s. 195, he held the assessee as an assessee in default and computed short deduction of tax and assessee in default and computed short deduction of tax and interest u/s. 201(1)/201(1A) of the Act. 201(1)/201(1A) of the Act. 12. basis of Form 15CA and 15CB that the assessee has made payment to a non 12. basis of Form 15CA and 15CB that the assessee has made payment to a non 12. basis of Form 15CA and 15CB that the assessee has made payment to a non resident entity ICICI Bank Ltd., Singapore branch. The Assessing Officer further resident entity ICICI Bank Ltd., Singapore branch. The Assessing Officer further resident entity ICICI Bank Ltd., Singapore branch. The Assessing Officer further observed that as per the clauses of agreement dated 15.0 observed that as per the clauses of agreement dated 15.03.2017, the assessee 3.2017, the assessee is a borrower and ICICI Bank Ltd, Singapore branch is an arranger cum facility is a borrower and ICICI Bank Ltd, Singapore branch is an arranger cum facility is a borrower and ICICI Bank Ltd, Singapore branch is an arranger cum facility agent which arranged external commercial borrowings from a group of financial agent which arranged external commercial borrowings from a group of financial agent which arranged external commercial borrowings from a group of financial institutions to be assembled by the arranger. The Assessing Officer has referred institutions to be assembled by the arranger. The Assessing Officer has referr institutions to be assembled by the arranger. The Assessing Officer has referr a letter dated 31.01.2007 of ICICI Bank Ltd., Singapore branch addressed to the a letter dated 31.01.2007 of ICICI Bank Ltd., Singapore branch addressed to the a letter dated 31.01.2007 of ICICI Bank Ltd., Singapore branch addressed to the assessee. As per which, the assessee is a borrower, ICICI Bank Ltd is an assessee. As per which, the assessee is a borrower, ICICI Bank Ltd is an assessee. As per which, the assessee is a borrower, ICICI Bank Ltd is an arranger cum facility agent and the lender of the loan are a group of financial arranger cum facility agent and the lender of the loan are a group of financial arranger cum facility agent and the lender of the loan are a group of financial institutions assembled to by the arranger. According to the Assessing Officer, ed to by the arranger. According to the Assessing Officer, ed to by the arranger. According to the Assessing Officer, although the assessee claims to have made payment to a resident entity, he although the assessee claims to have made payment to a resident entity, he although the assessee claims to have made payment to a resident entity, he failed to file any evidences to justify its arguments other than the agreement failed to file any evidences to justify its arguments other than the agreement failed to file any evidences to justify its arguments other than the agreement dated 15.03.2007. The Assessing Officer fur dated 15.03.2007. The Assessing Officer further observed that as per the said ther observed that as per the said agreement, the various clauses in agreement as well as the letter addressed by agreement, the various clauses in agreement as well as the letter addressed by agreement, the various clauses in agreement as well as the letter addressed by the ICICI Bank Ltd., categorically states that ICICI Bank Ltd., Singapore branch the ICICI Bank Ltd., categorically states that ICICI Bank Ltd., Singapore branch the ICICI Bank Ltd., categorically states that ICICI Bank Ltd., Singapore branch is only the agent for arranging external commercial borrowing is only the agent for arranging external commercial borrowings.

Mumbai dated 27.04.2011 as per whi Mumbai dated 27.04.2011 as per which the ICICI Bank Ltd including its offshore ch the ICICI Bank Ltd including its offshore branches at Singapore and Hongkong are the part of the ICICI Bank Ltd., India branches at Singapore and Hongkong are the part of the ICICI Bank Ltd., India branches at Singapore and Hongkong are the part of the ICICI Bank Ltd., India having its registered office at Vadodra. The letter further states that ICICI Bank having its registered office at Vadodra. The letter further states that ICICI Bank having its registered office at Vadodra. The letter further states that ICICI Bank Ltd is an Indian resident company in terms of sect Ltd is an Indian resident company in terms of section 6(3) of the Act, and the ion 6(3) of the Act, and the global income of the ICICI Bank Ltd., including that of the offshore branches is global income of the ICICI Bank Ltd., including that of the offshore branches is global income of the ICICI Bank Ltd., including that of the offshore branches is chargeable to tax in India and is assessed to tax under the PAN: AAACI1145H in chargeable to tax in India and is assessed to tax under the PAN: AAACI1145H in chargeable to tax in India and is assessed to tax under the PAN: AAACI1145H in Mumbai, India. The assessee contended that as per the provisions of section Mumbai, India. The assessee contended that as per the provisions of Mumbai, India. The assessee contended that as per the provisions of 194A(3)(iii) of the Act, any payment made to a banking company are outside the 194A(3)(iii) of the Act, any payment made to a banking company are outside the 194A(3)(iii) of the Act, any payment made to a banking company are outside the purview of provisions of TDS, therefore, the Assessing Officer was erred in purview of provisions of TDS, therefore, the Assessing Officer was erred in purview of provisions of TDS, therefore, the Assessing Officer was erred in invoking the provision of section 195 to compute short deduction of tax and invoking the provision of section 195 to compute short deduction of tax and invoking the provision of section 195 to compute short deduction of tax and interest u/s. 201(1)/201(1A) of the Act. 1(1)/201(1A) of the Act.

7.2 Since in the instant case under consideration also the Since in the instant case under consideration also the Since in the instant case under consideration also the assessee has made payment to ICICI Bank Ltd. Singapore Branch assessee has made payment to ICICI Bank Ltd. Singapore Branch assessee has made payment to ICICI Bank Ltd. Singapore Branch and therefore, any interest payment and therefore, any interest payment to said branch is not liable for to said branch is not liable for deduction at source u/s 194A(3)(iii) of the Act. But in view of deduction at source u/s 194A(3)(iii) of the Act. But in view of deduction at source u/s 194A(3)(iii) of the Act. But in view of agreement entered into by the assessee with the ICICI Bank Ltd. agreement entered into by the assessee with the ICICI Bank Ltd. agreement entered into by the assessee with the ICICI Bank Ltd. Bahrain and Singapore Branch of ICICI Bank Ltd. acted as facility Bahrain and Singapore Branch of ICICI Bank Ltd. act Bahrain and Singapore Branch of ICICI Bank Ltd. act agent and the lender bank is agent and the lender bank is Bahrain branch of ICICI Bank so Bahrain branch of ICICI Bank so whether the payment made to Singapore Branch include any whether the payment made to Singapore Branch include any whether the payment made to Singapore Branch include any payment toward facility agent and whether such payment is payment toward facility agent and whether such payment toward facility agent and whether such subjected to deduction of tax at source need to be examined. deduction of tax at source need to be examined. deduction of tax at source need to be examined. Accordingly, we restore the issue in dispute to Accordingly, we restore the issue in dispute to the file of the Assessing Officer for adjudicating following finding of the Co- Assessing Officer for adjudicating following finding of the Co Assessing Officer for adjudicating following finding of the Co ordinate Bench of the Tribunal in the case of Bajaj Eco Tec Product ordinate Bench of the Tribunal in the case of Bajaj Eco Tec Product ordinate Bench of the Tribunal in the case of Bajaj Eco Tec Product Ltd. (supra). The ground No. 1 of the appeal of the Revenue is Ltd. (supra). The ground No. 1 of the appeal of the Revenue is Ltd. (supra). The ground No. 1 of the appeal of the Revenue is accordingly allowed for statistical purposes allowed for statistical purposes.

7.2.1 Before me, appellant has argued that the net worth of the 7.2.1 Before me, appellant has argued that the net worth of the 7.2.1 Before me, appellant has argued that the net worth of the company as on 01.04.2017 was Rs. company as on 01.04.2017 was Rs.701 Crores and it has 701 Crores and it has investments worth Rs.133 0Crs, which works out to only 20% of investments worth Rs.133 0Crs, which works out to only 20% of investments worth Rs.133 0Crs, which works out to only 20% of the net-worth of the appellant. The appellant thus stated that it worth of the appellant. The appellant thus stated that it worth of the appellant. The appellant thus stated that it has utilized its own funds for investments in shares and hence the has utilized its own funds for investments in shares and hence the has utilized its own funds for investments in shares and hence the question of disallowance u/s 14A r.w.s question of disallowance u/s 14A r.w.s rule 8D of Income Tax Act, rule 8D of Income Tax Act, 1961 does not arise. It is seen that in appellant's case for A.Y 1961 does not arise. It is seen that in appellant's case for A.Y 1961 does not arise. It is seen that in appellant's case for A.Y 2013-14 covered by Hon'ble ITAT in 14 covered by Hon'ble ITAT in 14 covered by Hon'ble ITAT in wherein the net wherein the net-worth of the appellant as on 31.03.20213 was worth of the appellant as on 31.03.20213 was Rs.412.32Crs and the closing investments consi Rs.412.32Crs and the closing investments considered for 14A was dered for 14A was Rs. 10,55,59,000/ Rs. 10,55,59,000/- , the addition made u/s 14A was deleted. It is , the addition made u/s 14A was deleted. It is further argued that the investment was made for having further argued that the investment was made for having further argued that the investment was made for having controlling controlling controlling stake stake stake on on on the the the subsidiary subsidiary subsidiary companies companies companies and and and therefore should should not be considered for working u/s 14A. not be considered for working u/s 14A. 7.2.2. I have considered the submission of the appellant. In the AY ve considered the submission of the appellant. In the AY ve considered the submission of the appellant. In the AY 2013-14, the disallowance u/s 14A was made under Rule 8D(ii) of 14, the disallowance u/s 14A was made under Rule 8D(ii) of 14, the disallowance u/s 14A was made under Rule 8D(ii) of the Income Tax Rules, where proportionate interest on interest the Income Tax Rules, where proportionate interest on interest the Income Tax Rules, where proportionate interest on interest bearing funds was disallowed. In the present case, the bearing funds was disallowed. In the present case, the bearing funds was disallowed. In the present case, the disallowance is m disallowance is made under new Rule 8 where 1% of average of ade under new Rule 8 where 1% of average of total investment is disallowed. The decision of Hon'ble ITAT for AY total investment is disallowed. The decision of Hon'ble ITAT for AY total investment is disallowed. The decision of Hon'ble ITAT for AY 2013-14 may not be applicable for the present year. Appellant has 14 may not be applicable for the present year. Appellant has 14 may not be applicable for the present year. Appellant has further argued that the disallowance, be restricted to the exempt further argued that the disallowance, be restricted to the exempt further argued that the disallowance, be restricted to the exempt income, which is Rs Nil for this year. I have considered the case h is Rs Nil for this year. I have considered the case h is Rs Nil for this year. I have considered the case laws relied upon by the appellant, wherein it is held that the laws relied upon by the appellant, wherein it is held that the laws relied upon by the appellant, wherein it is held that the disallowance u/s 14A should not exceed the exempt income. I disallowance u/s 14A should not exceed the exempt income. I disallowance u/s 14A should not exceed the exempt income. I further refer to the decision of Hon'ble Supreme Court in the case further refer to the decision of Hon'ble Supreme Court in the case further refer to the decision of Hon'ble Supreme Court in the case of CIT(Central) 1 v. Chettinad Logistics (P.) Ltd., [2018] 95 al) 1 v. Chettinad Logistics (P.) Ltd., [2018] 95 al) 1 v. Chettinad Logistics (P.) Ltd., [2018] 95 taxmann.com 250 (SC), where in it is held as under taxmann.com 250 (SC), where in it is held as under Section 14A, of the Income "Section 14A, of the Income-tax Act, 1961, read with rule BD of the tax Act, 1961, read with rule BD of the Income-Tax Rules, 1962 Tax Rules, 1962 -Expenditure incurred in relation to Expenditure incurred in relation to income not includible in to income not includible in total income (General principle) tal income (General principle) - Assessment year 2011 Assessment year 2011-12-High Court by impugned order held that High Court by impugned order held that section 14A can only be triggered, if, assessee seeks to square off section 14A can only be triggered, if, assessee seeks to square off section 14A can only be triggered, if, assessee seeks to square off expenditure against income which does not form part of total expenditure against income which does not form part of total expenditure against income which does not form part of total income under Act; rule 8D only income under Act; rule 8D only provides for a method to determine provides for a method to determine amount of expenditure incurred in relation to income, which does amount of expenditure incurred in relation to income, which does amount of expenditure incurred in relation to income, which does not form part of total income of assessee and it cannot go beyond not form part of total income of assessee and it cannot go beyond not form part of total income of assessee and it cannot go beyond what is provided in section 14A what is provided in section 14A - It further held that where no It further held that where no exempt income i.e., divide exempt income i.e., dividend, was earned in relevant assessment nd, was earned in relevant assessment year by assessee, section 14A could not be invoked Whether SLP year by assessee, section 14A could not be invoked Whether SLP year by assessee, section 14A could not be invoked Whether SLP against said impugned order was to be dismissed against said impugned order was to be dismissed against said impugned order was to be dismissed - Held, yes [Para 1] [In favour of assessee) [Para 1] [In favour of assessee) Hon'ble High Court of Bombay in the case of The PCIT Hon'ble High Court of Bombay in the case of The PCIT Hon'ble High Court of Bombay in the case of The PCIT-3, Civil Lines, Nagpur v. Ballarpur Industries Ltd, Bombay Lines, Nagpur v. Ballarpur Industries Ltd, Bombay Lines, Nagpur v. Ballarpur Industries Ltd, Bombay High Court of 2016 High Court ITA no. 51 of 2016 has held as under:

"On hearing the learned Counsel for the Department and on a "On hearing the learned Counsel for the Department and on a "On hearing the learned Counsel for the Department and on a perusal of the impugned orders, it appears that both the perusal of the impugned orders, it appears that both the perusal of the impugned orders, it appears that both the Authorities have recorded a clear findi Authorities have recorded a clear finding of fact that there was no ng of fact that there was no exempt income earned by the assessee. While holding so, the exempt income earned by the assessee. While holding so, the exempt income earned by the assessee. While holding so, the Authorities relied on the judgment of the Delhi High Court in Authorities relied on the judgment of the Delhi High Court in Authorities relied on the judgment of the Delhi High Court in Income Tax Appeal No. 749/2014, which holds that the expression Income Tax Appeal No. 749/2014, which holds that the expression Income Tax Appeal No. 749/2014, which holds that the expression "does not form part of the total income" "does not form part of the total income" in Section 14A of the in Section 14A of the Income Tax Act, 1961 envisages that there should be an actual Income Tax Act, 1961 envisages that there should be an actual Income Tax Act, 1961 envisages that there should be an actual receipt of the income, which is not includible in the total income, receipt of the income, which is not includible in the total income, receipt of the income, which is not includible in the total income, during the relevant previous year for the purpose of disallowing during the relevant previous year for the purpose of disallowing during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to any expenditure incurred in relation to the said income. The the said income. The Income Tax Appellate Tribunal held that the provisions of Section Income Tax Appellate Tribunal held that the provisions of Section Income Tax Appellate Tribunal held that the provisions of Section 14A of the Income Tax Act, 1961 would not apply to the facts of 14A of the Income Tax Act, 1961 would not apply to the facts of 14A of the Income Tax Act, 1961 would not apply to the facts of this case as no exempt income was received or receivable during this case as no exempt income was received or receivable during this case as no exempt income was received or receivable during the relevant previous year. It is not th the relevant previous year. It is not the case of the Assessing e case of the Assessing Officer that any actual income was received by the assessee and Officer that any actual income was received by the assessee and Officer that any actual income was received by the assessee and the same was includible in the total income. In the facts of the the same was includible in the total income. In the facts of the the same was includible in the total income. In the facts of the case, the Authorities held that since the investments made by the case, the Authorities held that since the investments made by the case, the Authorities held that since the investments made by the assessee in the sister concerns were assessee in the sister concerns were not the actual income not the actual income received by the assessee, they could not have been included in the received by the assessee, they could not have been included in the received by the assessee, they could not have been included in the total income." total income." Respectfully following the judicial pronouncements cited above Respectfully following the judicial pronouncements cited above Respectfully following the judicial pronouncements cited above and the case laws relied upon by the appellant, I hold that no and the case laws relied upon by the appellant, I hold that no and the case laws relied upon by the appellant, I hold that no disallowance u/s 14A can b disallowance u/s 14A can be made since the appellant has not e made since the appellant has not received exempt income in the year. AO is directed to delete the received exempt income in the year. AO is directed to delete the received exempt income in the year. AO is directed to delete the addition of Rs 1,30,70,695/ addition of Rs 1,30,70,695/-. Ground no 2 is allowed.”

10. In ground No. 3 Revenue has challenged disallowance of In ground No. 3 Revenue has challenged disallowance of In ground No. 3 Revenue has challenged disallowance of depreciation claimed by the assessee on written down value of the depreciation claimed by the assessee on written down value of the depreciation claimed by the assessee on written down value of the capitalized withholding tax paid on the premium for the redemption capitalized withholding tax paid on the premium for the capitalized withholding tax paid on the premium for the of foreign currency convertible bonds. The facts in brief qua the of foreign currency convertible bonds. The facts in brief qua the of foreign currency convertible bonds. The facts in brief qua the issue in dispute are that during the year under consideration, the issue in dispute are that during the year under consideration, the issue in dispute are that during the year under consideration, the Assessing Officer disallowed depreciation claimed of Rs.59,64,352/- Assessing Officer disallowed depreciation claimed of Rs.59,64,352/ Assessing Officer disallowed depreciation claimed of Rs.59,64,352/ on the portion of withholding tax capitalize on the portion of withholding tax capitalized on on payment for premium paid on foreign currency convertible bonds (FCCB). It was foreign currency convertible bonds (FCCB). It was foreign currency convertible bonds (FCCB). It was submitted by the assessee that submitted by the assessee that while redeeming the while redeeming the FCCB, the assessee paid total premium of Rs.12 see paid total premium of Rs.124,45,40,750/- - in AY 2013-14 by grossing up the amount amount of withholding tax. It was claimed that was claimed that payment of withholding tax of Rs. payment of withholding tax of Rs. 124,45,40,750/- was nothing but was nothing but premium on redemption and had the assessee not borne the premium on redemption and had the assessee not borne the premium on redemption and had the assessee not borne the amount of TDS, it would had to pay higher premium to the amount of TDS, it would had to pay higher premium to the amount of TDS, it would had to pay higher premium to the bondholders and thus the TDS so deducted forms part of premium bondholders and thus the TDS so deducted forms part of pre bondholders and thus the TDS so deducted forms part of pre and allowable expenditure. In the year under consideration, the and allowable expenditure. In the year under consideration, the and allowable expenditure. In the year under consideration, the assessee redeemed FCCB and paid total premium of Rs. assessee redeemed FCCB and paid total premium of Rs. assessee redeemed FCCB and paid total premium of Rs. 1,12,05,07,097/- by grossing up the amount of withholding tax. by grossing up the amount of withholding tax. by grossing up the amount of withholding tax. Identical provision was claimed by the assessee in assessment year Identical provision was claimed by the assessee in assessment year Identical provision was claimed by the assessee in assessment year 2014-15 to 2017- -18, wherein wherein the the Tribunal Tribunal deleted deleted such such disallowance made by the Assessing Officer observing as under: disallowance made by the Assessing Officer observing as under: disallowance made by the Assessing Officer observing as under: 9. We heard the rival contentions and perused the record. The We heard the rival contentions and perused the record. The We heard the rival contentions and perused the record. The facts relevant to the issue are that the assessee has borne the TDS facts relevant to the issue are that the assessee has borne the TDS facts relevant to the issue are that the assessee has borne the TDS payable on payable on the FCCB premium paid by the assessee. The the FCCB premium paid by the assessee. The withholding tax liability so borne by the assessee was Rs. 12.40 withholding tax liability so borne by the assessee was Rs. withholding tax liability so borne by the assessee was Rs. crores. In the normal course, the TDS amount would be reduced crores. In the normal course, the TDS amount would be reduced crores. In the normal course, the TDS amount would be reduced from the amount payable to the payee and the net amount alone from the amount payable to the payee and the net amount alone from the amount payable to the payee and the net amount alone will be paid to him. The will be paid to him. The TDS amount will be remitted to the credit TDS amount will be remitted to the credit of the payee, who can adjust the same against his tax liability. In of the payee, who can adjust the same against his tax liability. In of the payee, who can adjust the same against his tax liability. In the instant case, since the assessee has borne the TDS deductible the instant case, since the assessee has borne the TDS deductible the instant case, since the assessee has borne the TDS deductible on the amount of premium payable on FCCD, the same would on the amount of premium payable on FCCD, the same would on the amount of premium payable on FCCD, the same would become additional cost become additional cost to the assessee. Hence it will go to increase to the assessee. Hence it will go to increase the premium payable on FCCB. The assessee has capitalized a the premium payable on FCCB. The assessee has capitalized a the premium payable on FCCB. The assessee has capitalized a portion of premium amount, which included the above said amount portion of premium amount, which included the above said amount portion of premium amount, which included the above said amount of Rs. 12.40 crores. The amount was capitalized by the assessee in crores. The amount was capitalized by the assessee in crores. The amount was capitalized by the assessee in the year relevant to AY 2013-14 and it also claimed depreciation the year relevant and it also claimed depreciation thereon, which was disallowed by the assessing officer in AY thereon, which was disallowed by the assessing officer in AY thereon, which was disallowed by the assessing officer in AY 2013-14. The Ld CIT(A), however, deleted the disallowance and The Ld CIT(A), however, deleted the disallowance and The Ld CIT(A), however, deleted the disallowance and hence the revenue filed appeal before the Tribunal in that year. As hence the revenue filed appeal before the Tribunal in that year. As hence the revenue filed appeal before the Tribunal in that year. As stated by Ld A.R, stated by Ld A.R, the ITAT has confirmed the order passed by Ld the ITAT has confirmed the order passed by Ld 25.11.2021 CIT(A), CIT(A), vide vide its its order order dated dated passed passed in in ITA Mum/2019, with the following observations:- "98. The issue raised in the The issue raised in the 6th ground of appeal

is against the th ground of appeal is against the deletion of addition of Rs.1,68,96,638/- by CIT(A) as made by deletion of addition of Rs. by CIT(A) as made by the AO on account of Depreciation of claimed on account of the AO on account of Depreciation of claimed on account of the AO on account of Depreciation of claimed on account of premium.

99. During the course of Assessment Proceeding the A.O. During the course of Assessment Proceeding the A.O. During the course of Assessment Proceeding the A.O. observed that the assessee has made excess payment to the observed that the assessee has made excess payment to the observed that the assessee has made excess payment to the bond holder to the extent of Rs.12,40,33,655/- and accordingly bond holder to the extent of Rs. and accordingly deprecation deprecation deprecation on on on capitalized capitalized capitalized premium premium premium amounting amounting amounting to to to Rs.1,68,96, ,338/- was claimed by the assesse. The AO during was claimed by the assesse. The AO during the assessment proceedings noted that depreciation on the the assessment proceedings noted that depreciation on the the assessment proceedings noted that depreciation on the excess payment made to FCCB holders can not be allowed and excess payment made to FCCB holders can not be allowed and excess payment made to FCCB holders can not be allowed and added the same to the income of the assessee. dded the same to the income of the assessee.

Mum/2011-Tribunal, Mumbai wherein the issue has Tribunal, Mumbai wherein the issue has been decided in favour of the assesse. We therefore respectfully been decided in favour of the assesse. We therefore respectfully been decided in favour of the assesse. We therefore respectfully following the ratio laid down in the above decision uphold the the ratio laid down in the above decision uphold the the ratio laid down in the above decision uphold the order of Id. CIT(A) by dismissing the ground. no.6 of the order of Id. CIT(A) by dismissing the ground. no. order of Id. CIT(A) by dismissing the ground. no. Revenue's appeal." Revenue's appeal." Thus, we notice that the claim of depreciation has been allowed in Thus, we notice that the claim of depreciation has been allowed in Thus, we notice that the claim of depreciation has been allowed in the first year of claim. the first year of claim.

11. In our view, the issue before us can be looked at from another In our view, the issue before us can be looked at from another In our view, the issue before us can be looked at from another angle also. There should not be any dispute that the identity and angle also. There should not be any dispute that the identity and angle also. There should not be any dispute that the identity and character of the asset, which character of the asset, which has entered into the block of asset, has entered into the block of asset, would be lost. It was so held by Hon'ble Delhi High Court in the would be lost. It was so held by Hon'ble Delhi High Court in the would be lost. It was so held by Hon'ble Delhi High Court in the case of Bharat Aluminium Co Ltd (ITA No.532 and others of and others of 2006 case of Bharat Aluminium Co Ltd (ITA No. dated 15-10-2009 2009) as under:- "(i) The rationale and purpose for which the concept of block i) The rationale and purpose for which the concept of block i) The rationale and purpose for which the concept of block asset was introduced, as reflected in the CBDT's Circular asset was introduced, as reflected in the CBDT's Circular asset was introduced, as reflected in the CBDT's Circular dated 23.09.1988 is that once the various assets are dated is that once the various assets are clubbed together and become 'block asset within the clubbed together and become 'block asset within the clubbed together and become 'block asset within the meaning of s. 2(11), it becomes one asset. Every time, a new meaning of s. , it becomes one asset. Every time, a new asset is acquired, it is to be asset is acquired, it is to be thrown into the common thrown into the common hotchpotch, ie., block asset on meeting the requirement of hotchpotch, ie., block asset on meeting the requirement of hotchpotch, ie., block asset on meeting the requirement of depreciation being allowable at the same rate. Individual depreciation being allowable at the same rate. Individual depreciation being allowable at the same rate. Individual assets lose their identity and become an inseparable part of assets lose their identity and become an inseparable part of assets lose their identity and become an inseparable part of block asset insofar as calculation of depreciation is block asset insofar as calculation of depreciation is block asset insofar as calculation of depreciation is concerned; oncerned; (ii) The fusion of various assets into the block asset gets ii) The fusion of various assets into the block asset gets ii) The fusion of various assets into the block asset gets disturbed only when the eventuality contained in clause (iii) disturbed only when the eventuality contained in clause (iii) disturbed only when the eventuality contained in clause (iii) of s. 32 32 takes place, viz., when a particular asset is sold, takes place, viz., when a particular asset is sold, discarded or destroyed in the previous year (other than the discarded or destroyed in the previous year (other than the discarded or destroyed in the previous year (other than the previous year in which first brought in use). Even in that evious year in which first brought in use). Even in that evious year in which first brought in use). Even in that event, the amount by which the moneys payable in respect event, the amount by which the moneys payable in respect event, the amount by which the moneys payable in respect of that particular building, machinery, etc. together with the of that particular building, machinery, etc. together with the of that particular building, machinery, etc. together with the amount of scrap value is to be deducted from total written amount of scrap value is to be deducted from total written amount of scrap value is to be deducted from total written down value of the 'b down value of the 'block asset'; (iii) Though as per s. iii) Though as per s. 32(1) the asset is to be owned and the asset is to be owned and "used" for the purpose of business or profession, the "used" for the purpose of business or profession, the "used" for the purpose of business or profession, the expression "used for the purpose of business when applied expression "used for the purpose of business when applied expression "used for the purpose of business when applied to block asset would mean use of block asset and not any to block asset would mean use of block asset and not any to block asset would mean use of block asset and not any specific items in the said block as individual assets have specific items in the said block as individual assets have specific items in the said block as individual assets have lost their identity after becoming inseparable part of the lost their identity after becoming inseparable part of the lost their identity after becoming inseparable part of the block asset; (iv) The fact that under the second proviso to s. block asset; (iv) The fact that under the second proviso to s. block asset; (iv) The fact that under the second proviso to s. 32 assets acquired assets acquired after 30th Sept shall be entitled to th Sept shall be entitled to 50% depreciation depreciation depreciation of of of amount amount amount admissible admissible admissible does does does not not not mean mean mean requirement of user of individual asset remains intact. In the requirement of user of individual asset remains intact. In the requirement of user of individual asset remains intact. In the first year when the particular asset is acquired, user of the first year when the particular asset is acquired, user of the first year when the particular asset is acquired, user of the asset is required. In subsequent years, the user of asset is required. In subsequent years, t asset is required. In subsequent years, t individual assets is not required." individual assets is not required." In the instant case also, the TDS liability borne by the assessee on In the instant case also, the TDS liability borne by the assessee on In the instant case also, the TDS liability borne by the assessee on the premium amount, after it is thrown into the common hotchpotch the premium amount, after it is thrown into the common hotchpotch the premium amount, after it is thrown into the common hotchpotch of block asset in AY 2013-14 has lost its identity and become an of block asset in AY has lost its identity and become an inseparable part of block Asset insofar as calculation of le part of block Asset insofar as calculation of le part of block Asset insofar as calculation of depreciation is concerned. Hence the AO could not have disallowed depreciation is concerned. Hence the AO could not have disallowed depreciation is concerned. Hence the AO could not have disallowed the depreciation claim as made in the first year. the depreciation claim as made in the first year.

10.1 The issue in dispute being identical to t The issue in dispute being identical to the issue decided by the he issue decided by the Co-ordinate Bench in t ordinate Bench in the case of the assessee itself, therefore, he case of the assessee itself, therefore, respectfully following the finding of the Tribunal espectfully following the finding of the Tribunal (supra) (supra), we uphold the order of the Ld. CIT(A) on the issue in dispute. The ground of the order of the Ld. CIT(A) on the issue in dispute. The ground of the order of the Ld. CIT(A) on the issue in dispute. The ground of appeal of the Revenue is accor appeal of the Revenue is accordingly dismissed.

Order pronounced in the open Court on 24 ounced in the open Court on 24/11/2025. /11/2025.