PRINCIPAL COMMISSIONER OF INCOME TAX DELHI 4 vs. M/S NESTLE INDIA LTD.

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ITA/302/2023HC DelhiDLHC01001933202204 July 2023Bench: HON'BLE MR. JUSTICE RAJIV SHAKDHER,HON'BLE MR. JUSTICE GIRISH KATHPALIA3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arose for its consideration in the present appeal. For proposed question (i), the court referred to its prior decision in ITA 662/2005, where the revenue's appeal was dismissed, indicating the ITAT's deletion of the addition was upheld. For proposed questions (ii) and (iv), the court relied on its judgment in ITA 281/2023, wherein it concluded that no substantial question of law arose and sustained the ITAT's view. Regarding proposed question (iii), the court noted that this issue was decided in ITA 303/2023, where the revenue's appeal was dismissed and the questions of law were answered in favor of the assessee. Consequently, the appeal was closed without deciding the merits of the proposed questions, as they were covered by previous judgments of the High Court.

What were the facts?

The appeal concerns Assessment Year (AY) 2011-12 and challenges a common order of the Income Tax Appellate Tribunal (ITAT) dated 31.07.2020. The appellant, Principal Commissioner of Income Tax, Delhi 4, is the revenue, and the respondent is Nestle India Ltd. The revenue has proposed four questions of law. The High Court notes that question (i) is covered by a previous decision of a coordinate bench in ITA 662/2005, which dismissed the revenue's appeal. Questions (ii) and (iv) are covered by the High Court's judgment dated 17.05.2023 in ITA 281/2023, where it was held that no substantial question of law arose. Question (iii) was the subject of another appeal, ITA 303/2023, where the revenue's appeal was dismissed and the questions of law were answered in favor of the assessee.

What were the issues?

The Tribunal had to decide four questions of law proposed by the revenue: 1. Whether the ITAT was correct in deleting the addition of Rs.90,77,99,068/- made by the Assessing Officer (AO) on account of disallowance of license fee. 2. Whether the ITAT was correct in reducing the disallowance under Section 14A of the Income Tax Act to Rs. 17,58,758/- from Rs. 18,33,783/-, made by the AO in accordance with Rule 8D and CBDT Circular 5/2014. 3. Whether the ITAT was correct in allowing higher depreciation at 60% instead of 15% allowed by the AO, overlooking the functional test and establishing perversity, especially when the case of BSES Rajdhani Powers was overruled by the Madras High Court in Dinamalar Vs ITO. 4. Whether the ITAT was correct in confirming the order of the CIT(A) deleting the addition of Rs.50,82,770/- made by the AO on account of disallowance of depreciation on energy-saving and pollution control devices not put to use during the year. The revenue argued that the ITAT's decisions on these issues were incorrect and perverse. The judgment does not record specific arguments from the assessee for each issue, but it indicates that the assessee's position was upheld by the ITAT and subsequently by the High Court in related matters.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

ITA 302/2023

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$~ * IN THE HIGH COURT OF DELHI AT NEW DELHI

Judgement reserved on: 24.05.2023 %

Judgement pronounced on 04.07.2023

+ ITA 302/2023

PRINCIPAL COMMISSIONER OF INCOME TAX DELHI 4

..... Appellant Through: Mr Abhishek Maratha, Sr Standing Counsel with Mr Akshat Singh, Standing Counsel.

versus

NESTLE INDIA LTD

..... Respondent Through: Mr Ajay Vohra, Sr Advocate with Mr Neeraj Jain, Mr Aniket D. Agarwal and Mr Saksham Singhal, Advs. CORAM: HON'BLE MR JUSTICE RAJIV SHAKDHER HON'BLE MR JUSTICE GIRISH KATHPALIA

RAJIV SHAKDHER, J.:

1.

This appeal concerns Assessment Year (AY) 2011-12. 2. Via the above-captioned appeal, the appellant/revenue has assailed the common order of the Income Tax Appellate Tribunal [in short, “Tribunal”] dated 31.07.2020 passed in ITA No.4390/Del/2016. The following questions of law have been proposed by the appellant/revenue in the above-captioned appeal: “(i) Whether in the facts and circumstances of the case and in law Hon'ble IT AT is correct in deleting the addition of Rs.90,77,99,068/- made by AO, on account of disallowance of license fee?

Digitally Signed By:ATUL JAIN Signing Date:05.07.2023 14:23:48 Signature Not Verified

ITA 302/2023

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(ii) Whether in the facts and circumstances of the case and in law Hon'ble IT AT is correct in reducing the disallowance u/s 14A of the Act to Rs. 17,58,758/- from Rs. l8,33,783/- made by the Assessing Office in accordance with Rule 8D and according to CBDT Circular 5/2014 dated 11/02/2014?

(iii) Whether in the facts and circumstances of the case and in law Hon'ble ITAT is correct in allowing higher depreciation @60% as against depreciation @15% allowed by the AO overlooking the functional test proving and establishing perversity in the order passed by them both on facts and in law, especially when the case of BSES Rajdhani Powers has been overruled by Hon'ble Madras High Court in the case of Dinamalar Vs ITO Ward 1 (1) Madurai [(2016) 74 taxmann.com 14 (Madras)}?

(iv) Whether in the facts and circumstances of the case and in law Hon'ble ITAT is correct in confirming the order of CIT(A) deleting the addition of Rs.50,82,770/- made by AO on account of disallowance of depreciation on energy saving & pollution control devices, which were not put to use by the assessee, during the year under consideration?”

3.

Insofar as proposed question no. (i) is concerned, it is covered by the decision dated 11.05.2011 of the coordinate bench of this court rendered in ITA 662/2005. Via this decision, appellant/revenue’s appeal was dismissed. Likewise, proposed question nos. (ii) and (iv) are covered by our judgement dated 17.05.2023, rendered in ITA 281/2023. Via the aforesaid judgement, we concluded that no substantial question of law arose for consideration and thus, sustained the view taken by the Tribunal. 4. The remaining question i.e., proposed question no. (iii) was also subject matter of another appeal preferred by the appellant/revenue i.e., ITA 303/2023 in which arguments were heard and judgement was reserved on 24.05.2023. 5. In ITA 303/2023, the appeal of the appellant/revenue has been dismissed and the questions of law, as framed, have been answered in favour of the respondent/assessee. Digitally Signed By:ATUL JAIN Signing Date:05.07.2023 14:23:48 Signature Not Verified

ITA 302/2023

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6.

Hence, in the above-captioned appeal, no substantial question arises for our consideration. 7. The appeal is, accordingly, closed.

(RAJIV SHAKDHER) JUDGE

(GIRISH KATHPALIA) JUDGE

JULY 4, 2023/vg

Digitally Signed By:ATUL JAIN Signing Date:05.07.2023 14:23:48 Signature Not Verified

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