DCIT, CIRCLE - 1(1)(1), AHMEDABAD, AHMEDABAD vs. AIA ENGINEERING LTD, AHMEDABAD

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ITA 2168/AHD/2024Status: DisposedITAT Ahmedabad14 August 2025AY 2018-199 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that all the issues raised by the Revenue in the four appeals were covered by the decisions of the ITAT in the assessee's own case for preceding assessment years. Specifically, the Tribunal noted that the issue concerning M/s. Vega Industries (Middle East) FZC, UAE being treated as a proprietary concern had been decided in favour of the assessee by the ITAT since AY 2006-07, establishing it as an independent corporate entity. Similarly, the issue of depreciation on electrical fittings was decided in favour of the assessee, recognizing them as part of plant and machinery eligible for 15% depreciation, a view consistently upheld by the ITAT from AY 2010-11 onwards. The depreciation on goodwill arising from amalgamation was also decided in favour of the assessee by the ITAT in AY 2016-17. Furthermore, the disallowance of deduction under Section 80G for CSR expenditure was also covered by ITAT orders that set aside PCIT orders, holding the issue on merits in favour of the assessee. Since the CIT(A) had followed these ITAT precedents, the Tribunal found no merit in the Revenue's grounds of appeal. Consequently, all grounds raised by the Revenue were dismissed, and the appeals were dismissed in effect. No issue was expressly left undecided.

What were the facts?

The Revenue filed four appeals before the Income Tax Appellate Tribunal (ITAT) challenging the orders of the Commissioner of Income Tax (Appeals) (CIT(A)) for Assessment Years (AYs) 2017-18, 2018-19, 2020-21, and 2021-22. The assessee, AIA Engineering Limited, had appealed against additions made by the Assessing Officer (AO). The core of the dispute involved four issues: (i) treating M/s. Vega Industries (Middle East) FZC, UAE as a proprietary concern of the assessee; (ii) disallowance of depreciation on electrical fittings claimed at 15% instead of 10%; (iii) disallowance of depreciation on goodwill arising from an amalgamation; and (iv) disallowance of deduction under Section 80G for Corporate Social Responsibility (CSR) expenditure. The assessee contended that these issues were legacy issues consistently decided in its favour by the ITAT in preceding years, and the CIT(A) had followed these decisions.

What were the issues?

The Tribunal had to decide the following questions of law and mixed law and fact: 1. Whether the CIT(A) erred in treating M/s. Vega Industries (Middle East) FZC, UAE (Vega ME) as an independent body corporate instead of a proprietary concern of the Appellant, thereby deleting the addition made by the AO (related to AYs 2017-18, 2018-19, 2020-21, and 2021-22)? This issue turns on the interpretation of the corporate structure and the applicability of taxing foreign company income in the hands of the assessee. 2. Whether the CIT(A) erred in deleting the disallowance of additional depreciation on electrical fittings, which the assessee treated as plant and machinery eligible for 15% depreciation, as against the AO's view of 10% (related to AY 2017-18)? This issue concerns the classification of assets for depreciation purposes under the Act. 3. Whether the CIT(A) erred in deleting the disallowance of depreciation on intangible assets (goodwill) arising from the amalgamation of M/s. DCPL Foundries Ltd. with the assessee (related to AYs 2017-18, 2018-19, and 2020-21)? This issue involves the deductibility of depreciation on goodwill under the Act. 4. Whether the CIT(A) erred in deleting the disallowance of deduction under Section 80G of the Act for CSR expenditure (related to AY 2020-21)? This issue concerns the eligibility of CSR expenditure for deduction under Section 80G. Assessee's Contentions: The assessee argued that all these issues were identical to those decided by the ITAT in its favour in preceding years. For Vega ME, the ITAT had held it to be a corporate entity, not a proprietary concern, from AY 2006-07 onwards. For depreciation on electrical fittings, the ITAT had consistently held them to be part of plant and machinery eligible for 15% depreciation. For goodwill, the ITAT had decided in favour of the assessee in AY 2016-17. For Section 80G deduction on CSR, the ITAT had set aside PCIT orders in favour of the assessee for AYs 2017-18 and 2018-19. The assessee relied on ITAT orders in its own case. Revenue's Contentions: The Revenue's Ld. DR fairly agreed with the assessee's position that the issues were covered by ITAT decisions but heavily relied on the AO's orders.

Which sections of the Income-tax Act were involved?

Section 250,Section 80G

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

Before: SMT. ANNAPURNA GUPTA & Ms. SUCHITRA KAMBLE

1.

The present four appeals relate to the same assessee and are filed by the Revenue against the orders of the Ld. Commissioner of Income Tax (Appeals), (hereinafter referred to as “CIT(A)”), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi all dated 30.10.2024 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) to 2170/Ahd/2024 [DCIT vs. AIA Engineering Limited] A.Ys. 2017-18, 2018-19, 2020-21 & 2021-22 - 2 – relating to Assessment Years (A.Ys.) 2017-18, 2018-19, 2020-21 & 2021-22.

2. At the outset itself, Ld. Counsel for the assessee contended that all the issues raised in the present appeals have been decided by the Ld. CIT(A) following the orders passed by the ITAT in the preceding year in the case of the assessee. He pointed out that the issue raised were legacy issues arising from year-to-year in the case of the assessee and stood adjudicated by the ITAT in the earlier years following which the Ld. CIT(A) had deleted addition made in the respective years in which appeals have been filed before us. He pointed out that there were common issues in all the appeals pertaining to the following additions: i. Addition made on account of taxable income of M/s. Vega Industries (Middle East) FZC, UAE (Vega ME), holding the same to be proprietary concern of the assessee. ii. Disallowance of excess claim of depreciation on electrical fittings holding them to be in the nature of fittings, eligible to depreciation @ 10%, as against depreciation claimed @ 15% by the assessee treating it as plant and machinery. iii. Disallowance of claim of depreciation on goodwill, which goodwill was generated on account of amalgamation of M/s. DCPL Foundries Ltd. with the assessee in F.Y. 2013-14. iv. Disallowance of claim of deduction u/s.80G of the Act on account of Corporate Social Responsibility (‘CSR’) expenditure to 2170/Ahd/2024 [DCIT vs. AIA Engineering Limited] A.Ys. 2017-18, 2018-19, 2020-21 & 2021-22 - 3 – incurred by the assessee holding that the said expenditure did not qualify for deduction u/s.80G of the Act.

3.

Ld. Counsel for the assessee pointed out from the orders of the ITAT in the case of the assessee in preceding years, copies of which were filed before us, that identical disallowances made in the hands of the assessee was deleted

4.

He pointed out that the issue relating to taxable income of M/s. Vega Industries (ME) FZC, UAE added in the hands of the assessee treating it as proprietary concern of the assessee had arisen for the first time in A.Y. 2006-07 wherein, the ITAT, after considering entire material available on record had decided the issue in favour of the assessee holding that the said subsidiary was a corporate entity and not a proprietary concern of the assessee and, therefore, the AO was not justified in taxing the income of the said company in the hands of the assessee. He pointed out that thereafter ITAT had consistently passed orders deciding this issue in favour of the assessee right from A.Y. 2006-07 to A.Y. 2013-14 and even in the A.Y. 2016-17. He pointed out that the Ld. CIT(A) had followed the order of the ITAT for A.Y. 2013-14.

5.

With respect to the issue of excess claim of depreciation on electrical fittings, he pointed out that the ITAT had appreciated assessee’s contention that the electrical fittings were part and parcel of plant & machinery and hence eligible for depreciation @ to 2170/Ahd/2024 [DCIT vs. AIA Engineering Limited] A.Ys. 2017-18, 2018-19, 2020-21 & 2021-22 - 4 – 15% and not 10% as held by the AO. This issue, he pointed out, had been decided by the ITAT in favour of the assessee right from A.Y. 2010-11 to 2013-14, which was followed by the Ld.CIT(A) while deciding the issue in favour of the assessee. He further pointed out that the ITAT had decided this issue in favour of the assessee in A.Y 2016-17 also.

6.

With regards to the issue of claim of depreciation on goodwill, Ld. Counsel pointed out that the said claim related to goodwill generated in the hands of the assessee on account of amalgamation of M/s. M/s. DCPL Foundries Ltd. with the assessee in F.Y. 2013-14. He pointed out that the ITAT had decided this issue in favour of the assessee in A.Y. 2016-17 following which the Ld. CIT(A) had deleted the disallowance made by the AO in the years before us.

7.

With regards to the issue of disallowance of claim of deduction u/s.80G of the Act, Ld. Counsel for the assessee pointed out that the CSR expenditure incurred by the assessee had been claimed as deduction u/s.80G of the Act which had been disallowed by the AO holding that the said expense did not qualify for deduction u/s.80G of the Act. Ld. Counsel for the assessee pointed out that the identical issue had been decided by the ITAT in the assessee’s own case for A.Y. 2017-18 and 2018-19 where orders passed by the Ld. PCIT u/s.263 of the Act with respect to disallowance of deduction u/s.80G of the Act claimed on CSR to 2170/Ahd/2024 [DCIT vs. AIA Engineering Limited] A.Ys. 2017-18, 2018-19, 2020-21 & 2021-22 - 5 – expenses was set aside by the ITAT holding that the issue on merits was covered in favour of the assessee.

8.

Thus, the Ld. Counsel for the assessee contended that Revenue’s appeal before us related to above issues and being covered by the decision of ITAT in the case of the assessee itself in preceding year, following which the Ld. CIT(A) had deleted the addition, the Revenue had no case before us.

9.

Ld. DR fairly agreed with the same, though, he heavily relied on the order of the AO in respective years before us.

10.

Considering the admitted position as noted above vis a vis all issues raised in the present appeals of the Revenue being covered in favour of the assessee by the orders of the ITAT in the case of assessee in preceding years, we shall now proceed to decide each appeal before us. pertain to A.Y. 2017-18

11.

Grounds of appeal raised by the Revenue read as under:

“1. Whether the CIT(A) has erred both on facts and in law in treating Vega Industries (Middle East) FZC, UAE (Vega ME) as an independent body corporate/company Incorporated outside India instead of the proprietary concern of the Appellant and deleting of addition of Rs. 58,97,08,158/-made by the Assessing Officer in the hands of the Appellant?" to 2170/Ahd/2024 [DCIT vs. AIA Engineering Limited] A.Ys. 2017-18, 2018-19, 2020-21 & 2021-22 - 6 –

2. "Whether the CIT(A) has erred both on facts and in law in deleting the Disallowance of additional depreciation of Rs.2,78,58,045/- without appreciating the facts of the case? 3. Disallowance of depreciation on intangible assets (Goodwill) of Rs.80,97,963/- without appreciating the facts of the case?" 4. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary. 5. It is, therefore, prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Officer be restored".

12.

The issue raised by the Department in the above appeal relate to addition made by treating M/s. Vega Industries (ME) as proprietary concern of the assessee, disallowance of depreciation on electrical fittings, disallowance of depreciation on goodwill. The above issues are admittedly covered in favour of the assessee by the decision of the ITAT in the preceding years. We, therefore, do not find any merit in the grounds raised by the Revenue. All the grounds raised by the Revenue are dismissed.

13.

In effect, appeal of the Revenue is dismissed.

14.

Grounds of appeal raised by the Revenue read as under:

“1. Whether the CIT(A) has erred both on facts and in law in treating Vega Industries (Middle East) FZC, UAE (Vega ME) as an independent body corporate/company incorporated outside India instead of the proprietary concern of the Appellant and deleting of addition of Rs. 72,17,09,380/- made by the Assessing Officer in the hands of the Appellant?" to 2170/Ahd/2024 [DCIT vs. AIA Engineering Limited] A.Ys. 2017-18, 2018-19, 2020-21 & 2021-22 - 7 –

2.

Disallowance of depreciation on intangible assets (Goodwill) of Rs.60,73,472) without appreciating the facts of the case?"

3. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary. 4."It is, therefore, prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Officer be restored.” 15. The issue raised by the Department in the above appeal relate to addition made by treating M/s. Vega Industries (ME) as proprietary concern of the assessee and disallowance of depreciation on goodwill. The above issues are admittedly covered in favour of the assessee by the decision of the ITAT in the preceding years. We, therefore, do not find any merit in the grounds raised by the Revenue. All the grounds raised by the Revenue are dismissed.

16.

In effect, appeal of the Revenue is dismissed. pertain to A.Y. 2010-21

17.

Grounds of appeal raised by the Revenue read as under:

“1. Whether the CIT(A) has erred both on facts and in law in treating Vega Industries(Middle Est) FZC, UAE(Vega ME) as an independent body corporate/company incorporated outside India instead of the proprietary concern of the Appellant and deleting of addition of Rs. 115,40,17,203/- made by the Assessing Officer in the hands of the Appellant? 2. Whether the CIT(A) has erred both on facts and in law in deleting the disallowance of depreciation on intangible assets (Goodwill) of Rs. 34,16,328/-, without appreciating the facts of the case? to 2170/Ahd/2024 [DCIT vs. AIA Engineering Limited] A.Ys. 2017-18, 2018-19, 2020-21 & 2021-22 - 8 –

3. Whether the CIT(A) has erred both on facts and in law in deleting the disallowance of deduction for donation of Rs. 5,49,12,500/- u/s 80G of the Act without appreciating the facts of the case? 4. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary. 5. It is, therefore, prayed that the order of Ld. CITT(A) may be set aside and that of the Assessing Officer be restored.”

18.

The issue raised by the Department in the above appeal relate to addition made by treating M/s. Vega Industries (ME) as proprietary concern of the assessee, disallowance of depreciation on goodwill and disallowance of claim of deduction u/s.80G of the Act. The above issues are admittedly covered in favour of the assessee by the decision of the ITAT in the preceding years. We, therefore, do not find any merit in the grounds raised by the Revenue. All the grounds raised by the Revenue are dismissed.

19.

In effect, appeal of the Revenue is dismissed. pertain to A.Y. 2021-22

20.

Grounds of appeal raised by the Revenue read as under:

1. Whether the CIT(A) has erred both on facts and in law in treating Vega Industries (Middle East) FZC, UAE (Vega ME) as an independent body corporate/company Incorporated outside India Instead of the proprietary concem of the Appellant and deleting of addition of Rs. 64,50,98,329/- made by the Assessing Officer in the hands of the Appellant?

2. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary. to 2170/Ahd/2024 [DCIT vs. AIA Engineering Limited] A.Ys. 2017-18, 2018-19, 2020-21 & 2021-22 - 9 –

3."It is, therefore, prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Officer be restored".

21.

The issue raised by the Department in the above appeal relate to addition made by treating M/s. Vega Industries (ME) as proprietary concern of the assessee. The above issue is admittedly covered in favour of the assessee by the decision of the ITAT in the preceding years. We, therefore, do not find any merit in the grounds raised by the Revenue. All the grounds raised by the Revenue are dismissed.

22.

In effect, appeal of the Revenue is dismissed.

23.

In the combined result, all four appeals filed by the Revenue are dismissed.

This Order pronounced on 14/08/2025 Sd/- Sd/- (SUCHITRA KAMBLE) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 14/08/2025 S. K. SINHA True Copy आदेश क� �ितिल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. 2. ��यथ� / The Respondent. संबंिधत आयकर आयु� / Concerned CIT 3. 4. आयकर आयु�(अपील) / The CIT(A)- �वभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER,

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