CASTROL INDIA LTD,MUMBAI vs. ASST CIT 9(2)(1), MUMBAI

The assessee company is engaged in the business of manufacture and sale of lubricating oils, grease etc.

We shall first take up the appeal filed by the assessee. The first issue contested by the assessee relates to the claim of depreciation. The Ld A.R

We heard Ld D.R. There is merit in the claim of the assessee that the correct amount of opening balance of WDV is required to be taken into account for allowing depreciation. Since the claim of the assessee requires verification, we restore this issue to the file of the AO for examining the claim of the assessee.

The next issue contested by the assessee relates to the addition of Rs.5,71,565/- made on the basis of AIR reports. The Ld A.R submitted that the above said amount has been offered by the assessee in AY 2010-11 and hence no addition is called for in this year.

We heard Ld D.R and perused the record. The Ld A.R has submitted that the assessee has offered the above said amount of Rs.5,71,565/- in AY 2010- 11. There should not be any doubt that the income should be assessed only in the year to which it pertains to. Hence the question here is whether the above said amount of Rs.5,71,565/- pertains to AY 2009-10 or 2010-11. If it pertains to AY 2010-11 as offered by the assessee, then the impugned addition is required to be deleted in AY 2009-10. However, if it is found that the same pertains to AY 2009-10, then the addition made by the AO is required to be sustained and in that case, the assessee may move appropriate petition before the AO to reducing the same from the total income in AY 2010-11. Since this matter requires verification and examination, we restore this issue to the file of the AO.

We shall now take up the appeal filed by the revenue. The first issue relates to the deletion of ALP adjustments in respect of Royalty payment. The Ld A.R submitted that similar ALP addition relating to Royalty payment has been made by the AO in AY 2003-04 to AY 2006-07. The said adjustment has been deleted by the Tribunal in all the above said years. He submitted that the Ld CIT(A) has followed the decision rendered by the Tribunal in AY 2003-04 for deleting the T.P adjustment made on Royalty payments. The Ld A.R submitted that the facts and circumstances and the reasoning for making T.P adjustment is identical in AY 2003-04 and in the year under consideration. Accordingly he submitted that there is no infirmity in the order passed by Ld CIT(A) on this issue.

We heard Ld D.R and perused the record. We notice that the Ld CIT(A) has followed the decision rendered by the Tribunal in AY 2003-04 in in deciding this issue in favour of the assessee. The assessee submits that there is no change in facts in respect of this issue in AY 2003-04 and in this year. Since the Ld CIT(A) has followed the decision rendered by the Tribunal, we do not find any reason to interfere with his order passed on this issue.

The next issue urged by the revenue relates to disallowance of COE3 expenses. The Ld A.R submitted that the Ld CIT(A) has restored this issue to the file of the AO and in the set aside proceedings, the AO has already deleted the disallowance. Accordingly he submitted that this ground of the revenue has become infructuous.

We heard Ld D.R on this issue. The Ld A.R submits that the assessing officer has already deleted the disallowance in the set aside proceedings. Hence, in our view, there is no point for the revenue in pursuing this ground. At the most, it may be said that the Ld CIT(A) does not have power to set aside the matters to the file of the AO. Since the assessee has got relief in the set aside proceedings, we regularise the order passed by Ld CIT(A) on this issue.

The next issue urged by the revenue relates to disallowance of advertisement films expenses. The AO treated the cost of advertisement films as capital expenses and accordingly disallowed the same. The Ld CIT(A) allowed the same by following the decision rendered by the Tribunal in the earlier years.

We heard Ld D.R and perused the record. We notice that the Ld CIT(A) has allowed the claim of the assessee by following the decision rendered by the Tribunal in the assessee’s own case in AY 2001-02 (ITA No.3245/Mum/2005). The decision rendered by the Tribunal in assessment year 2001-02 has been followed by the co-ordinate benches in other years also. Since the Ld CIT(A) has followed the decision rendered by the Tribunal, we do not find any reason to interfere with his decision rendered on this issue.

In the result, the appeal filed by the assessee is treated as allowed and the appeal of the revenue is dismissed. Order has been pronounced in the Court on 9.8.2018.