DCIT, CHENNAI vs. M/S. AREVA T & D INDIA LTD., CHENNAI

आदेश / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER:

ITA No.561/Mds/2011 is an appeal filed by the Revenue & ITA

No.668/Mds/2011 is an appeal filed by the assessee against the Order of

the Commissioner of Income Tax (Appeals), Large Taxpayer Unit,

Chennai, in ITA No.79/09-10/LTU(A) dated 31.01.2011 for the AY 2006-

07.

Tushar Jarwal, Adv. & Shri Rahul Sateeja, Adv. represented on behalf of

the assessee.

ITA No.561/Mds/2011 – Revenue’s appeal:

grounds:

ITA Nos.561 & 668/Mds/2011 :- 3 -:

4.1. The Learned CIT(A) failed to note that the amount taken to General Reserve by the assessee was due to net asset value consequent to amalgamations scheme. The amalgamation was completed as per business expediency and in the course of ongoing business. Thus, the amount is clearly taxable u/s.28 (iv) of the IT Act. 4.2. Having regard to the decision of the jurisdictional High Court in the case of M/s.Aries Advertising Co. Ltd. (255 ITR 510) wherein, it was observed that (quoting from the Supreme Court’s decision in the case of Vazir Sultan Tobacco Co. Ltd. — (133 ITR 559) any amount transferred by the assessee to the General Reserve is treated as profits of the assessee, the Learned CIT(A) ought to have upheld the action of the Assessing Officer. 5. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set aside and that of the Assessing Officer restored.

that the issue against the action of the Ld.CIT(A) in directing the AO to

allow depreciation in respect of the Lucknow property. It was a

submission that the assessee in lieu of surrendering its tenancy rights in

respect of another property in Lucknow, had acquired the said property in

Lucknow. It was a submission before the AO that the Co-ordinate Bench

of this Tribunal in the assessee’s own case for the AY 1993-94 in ITA

No.725/Mds/1997 dated 27.05.2005 had held the issue in favour of the

assessee. The AO on the ground that the appeal had been preferred to

the Hon’ble Jurisdictional High Court had disallowed the depreciation

claimed. It was a submission that the Ld.CIT(A) had allowed the

assessee’s claim by following the decision of the Co-ordinate Bench of this

Tribunal in the assessee’s own case in ITA No.725/Mds/1997 dated

27.05.2005. It was a submission that the order of the AO was liable to be

restored.

ITA Nos.561 & 668/Mds/2011 :- 4 -:

5.1 In reply, the Ld.AR vehemently supported the order of the Ld.CIT(A)

on this issue.

5.2 We have considered the rival submissions. As it is noticed that the

issue is squarely covered by the decision of the Co-ordinate Bench of this

Tribunal in the assessee’s own case for the AY 1993-94 in ITA

No.725/Mds/1997 dated 27.05.2005 and as it is noticed that the Ld.CIT(A)

has followed the judicial discipline in following the decision, we find no

reason to interfere with the order of the Ld.CIT(A) on this issue. In the

result, Ground Nos.2.1 & 2.2 of the Revenue’s appeal stands dismissed.

the issue was against the action of the Ld.CIT(A) in directing the AO to

allow depreciation on non-compete fee paid. It was a submission that

M/s.Areva T&D Instrument Transformers Pvt. Ltd., had paid a sum of

Rs.16.00 Cr. in the nature of the non-compete fee at the time of

acquisition of running business from M/s.WS Industries and M/s.SSB

Industries. It was a submission that the AO had disallowed the

depreciation on non-compete fee on the ground that it was not a business

or commercial right, which the assessee had received. It was a

submission that on appeal the Ld.CIT(A) had allowed the assessee’s claim

by following the decision of the Co-ordinate Bench of this Tribunal in the

case of M/s.Medicorp Technologies India Ltd., in 2009-TIOL-203-ITAT MAD

dated 16.01.2009 wherein it has been held that the non-compete right

ITA Nos.561 & 668/Mds/2011 :- 5 -:

acquired by the assessee company was eligible for depreciation. It was a

submission that the order of the AO was liable to be restored.

6.1 In reply, the Ld.AR drew our attention to the decision of the Hon’ble

Jurisdictional High Court in the case of M/s.Pentasoft Technologies Ltd.,

reported in [2014] 41 taxmann.com 120 (Mad) wherein it has been held

that the non-compete fee is in the nature of commercial right of similar

nature such as patents, copyrights and trademarks and therefore, the

assessee was entitled to the depreciation.

6.2 We have considered the rival submissions. As it is noticed that the

issue is squarely covered by the decision of the Hon’ble Jurisdictional High

Court in the case of M/s.Pentasoft Technologies Ltd., respectfully following

the decision of the Hon’ble Madras High Court in the case of M/s.Pentasoft

Technologies Ltd., the findings of the Ld.CIT(A) on this issue stands

confirmed. In the result, Ground Nos.3 & 3.1 of the Revenue’s appeal

stands dismissed.

that the issue was against the action of the Ld.CIT(A) in deleting the

addition made by the AO towards the amount taken to the General

Reserve by the assessee representing the difference between the value of

the assets over the value of the liabilities of the transferor companies after

adjusting the aggregate face value of the new shares issued. The Ld.DR

ITA Nos.561 & 668/Mds/2011 :- 6 -:

drew our attention to Page No.13 of the Assessment Order, it was a

submission that M/s.Areva T&D Systems India Ltd., M/s.Areva T&D

Instrument Transformers India Pvt. Ltd. and M/s.Areva T&D Lightning

Arresters India Pvt. Ltd., was amalgamated with the assessee company.

It was a submission that the assets and liabilities of the erstwhile

companies were transferred to the assessee company w.e.f. 01.01.2006.

On account of the said transfer, a net excess assets value over liabilities of

the amalgamating companies to an extent of Rs.54,26,56,000/- had

arisen, which had been adjusted under General Reserve of the company.

The AO had proposed to tax the said surplus added to the General

Reserve as income u/s.28(1)(iv) of the Act as a value of any benefit or

perquisite, whether convertible into money or not, arising from the

business or the exercise of a profession. It was replied by the assessee in

the course of the assessment that the said amount could not be taxed as

a trading receipt as a ‘surplus’ arisen in the hands of the assessee’s

company consequent to the merger. It was a submission that the AO had

rejected the assessee’s explanation and had held that the amalgamation

was completed as per the agreements between these companies and the

assessee and it was in the course of the ongoing business and

consequently the excess of the amalgamation amount was brought to tax

under the head ‘profits & gains’ of business by invoking the provisions of

Sec.28(1)(iv) of the Act. On appeal, the Ld.CIT(A) had held that the

assessee having taken over the assets & liabilities of the three companies

and paid a consideration, which was a lower than net book value of those

ITA Nos.561 & 668/Mds/2011 :- 7 -:

entities, the assessee had reflected the book value of the assets &

liabilities of the three merger entities in its book and credit the difference

between the net book value of the assets and the value of the shares

allotted to them to its reserve. The Ld.CIT(A) had held that the assessee

has only purchased three entities and therefore, there was no question of

making any profit on the said transaction. Consequently, the Ld.CIT(A)

had deleted the addition. The Ld.DR vehemently supported the order of

AO.

7.1 In reply, the Ld.AR submitted that the AO had held that the excess

of the net book value of the three entities as against the consideration

paid as income in the Revenue field. It was a submission that the

assessee having acquired the three companies, the excess of the net book

value over the consideration paid was, in effect, a capital receipt which

was liable to be adjusted only to the General Reserve. He vehemently

supported the order of the Ld.CIT(A) on this issue.

7.2 We have considered the rival submissions. A perusal of the

provisions of Sec.28(iv) shows that the said provision is to treat the

income as profits & gains of business or profession, the value of any

benefit or perquisite, whether convertible into money or not, arising from

business or the exercise of profession. In the present case, it is clearly

shows that the acquisition, more so, the amalgamation of the three

companies with the assessee company is not the business of the assessee

ITA Nos.561 & 668/Mds/2011 :- 8 -:

company. Consequently, it cannot be said that the provisions of

Sec.28(1)(iv) of the Act applied to the excess of the net book value of the

entities over the consideration paid in any way nor is it income liable to

tax under the head ‘profits & gains’ of business in the hands of the

assessee company. Further clearly, the Revenue has not been able to

point out any defects in the findings of the Ld.CIT(A) on this issue.

Consequently the finding of the Ld.CIT(A) on this issue stands confirmed.

In the result, Ground Nos.4, 4.1 & 4.2 of the Revenue’s appeal stands

dismissed.

7.3 In the result, the appeal filed by the Revenue stands dismissed.

ITA No.668/Mds/2011 – Assessee’s appeal:

ITA Nos.561 & 668/Mds/2011 :- 9 -:

c. Provision for Warranties — Rs.4,02,21,000/- d. Provision for Contract Losses Rs.36,84,000/- e. Provision for Vacation Pay — Rs.66,28,000/- 7. The learned officer has erred in not appreciating the fact that by transferring the above said provisions & by accepting a lower consideration, the appellant had in fact discharged its liabilities & should be entitled to full deduction. 8. The learned officer has erred in taxing under capital gains, the excess consideration received on transfer of business ignoring the submissions of the appellant that the transfer of business under a Scheme of Arrangement did not attract capital gains u/s.50B. 9. The learned officer has erred in not granting deduction for Excise duty paid on Closing Stock. He has further erred in ignoring all the judicial precedents in favour of the appellant. 10. The appellant craves leave to add, withdraw, amend or forego any or all of the above grounds of appeal during the appellate proceedings.

press the Ground Nos.1 & 2 of the assessee’s appeal. It was however,

submitted that the legal issue is to be kept open.

9.1 We have considered the rival submissions. Considering the

submissions of the Ld.AR, Ground Nos.1 & 2 of the assessee’s appeal is

dismissed as not pressed. Liberty is given to the assessee to raise legal

issues, if any, in respect of the issues raised in the said grounds.

submitted that the issue was against the action of the Ld.CIT(A) in

confirming the disallowance of the contributions made to the Employee

Welfare Funds. It was a submission that the AO had disallowed the

contributions to the various Employees Welfare Funds on the ground that

the payments were not statutory obligations. It was a submission that the

payments to the Employees Welfare Funds were on account of the

ITA Nos.561 & 668/Mds/2011 :- 10 -:

settlement schemes arrived at between the assessee and its employees

u/s.12(3) of the Industrial Disputes Act. It was a submission that the

issue was squarely covered by the decision of the Co-ordinate Bench of

this Tribunal in the assessee’s own case for the AYs 2003-04 & 2004-05 in

ITA Nos.799 & 800/Mds/2010 dated 21.06.2011 wherein this issue was

restored to the file of the AO for re-adjudication. It was a further

submission that for the AY 2001-02 also the Co-ordinate Bench of this

Tribunal had restored the issue to the file of the AO for re-adjudication in

ITA No.2317/Mds/2005 dated 16.05.2007 wherein it has been held as

follows:

Sl. Description Amount (Rs.) No. 1 Contribution to retirement cum death relief fund 3,03,224/- 2 Contribution to staff recreation club 1,71,437/- 3 Contribution to death benefit fund 1,70,880/- Total 6,45,541/-

The Assessing Officer held that these contributions were not allowable as they were specifically barred by the provisions of Sec.40A(9) of the Act. The Commissioner (Appeals), relying on the earlier decision, deleted the addition. Copy of the earlier decision was not placed before us. The learned Departmental Representative relied on the decision of the Tribunal rendered in assessee’s own case for the assessment year 1998-99 in ITA No.154(Mds)/2003 dated 28-3-2005. In that case, the assessee did not produce the settlement deed and the agreement entered into with the labour union and has also not demonstrated that the payment was in accordance with the Industrial Disputes Act and was for the discharge of statutory obligation. As such the appeal was dismissed. The learned counsel for the assessee submitted that in the present case all the documents were produced and as such the earlier order should not be applied to adjudicate the issue involved in the present case. Having heard both the parties on the point we find that there is no sufficient discussion on the point. The nature of the payment needs to be examined. It is not clear as to whether the payment was made to discharge the statutory obligation. This fact can be examined with reference to the records. As there was no enquiry on this count by the Revenue authorities, we in the interest of justice set aside the impugned order and restore the matter to the file of the Assessing Officer with a direction to decide the issue de nova in accordance with law after providing adequate opportunity to the assessee of being heard.

ITA Nos.561 & 668/Mds/2011 :- 11 -:

10.1. It was a further submission that the Hon’ble Madras High Court had

held in the assessee’s own case in Tax Case Appeal No.2537 & 2546 of

2006 dated 03.09.2012 has categorically held that the agreements being

statutory agreements there cannot be any reason to disbelieve the claim

of the assessee for deduction under the Income Tax Act. After the said

findings the Hon’ble Jurisdictional High Court restored the issue to the file

of the AO for re-adjudication after verifying the copy of the agreements

and settlements. It was a submission that the assessee had no objection

if the issue is restored to the file of the AO for re-adjudication after

examining the said settlement agreements entered into by the assessee

with its employees u/s.12(3) of the Industrial Disputes Act.

10.2 In reply, the Ld.DR vehemently supported the order of the

Ld.CIT(A).

10.3 We have considered the rival submissions. As it is noticed that it

has been categorically held by the Hon’ble High Court of Madras in the

assessee’s own case for the AY 1997-98 that the settlement agreement

entered into by the assessee with its employees u/s.12(3) of the Industrial

Disputes Act are Statutory Agreements, we are of the view that only for

the purpose of examining, as to whether the quantification is correct, the

issue is restored to the file of the AO. In the result, Ground Nos.3 & 4 of

the assessee’s appeal is partly allowed for statistical purposes.

ITA Nos.561 & 668/Mds/2011 :- 12 -:

issue was against the action of the Ld.CIT(A) in disallowing the

depreciation on goodwill. It was a submission that the assessee had

claimed the depreciation on goodwill related to M/s.Areva T&D Systems

India Ltd. It was a submission that M/s.Areva T&D Systems India Ltd.,

had paid an additional consideration in respect of the business taken over

of M/s.ALSTOM Projects India Ltd., on the additional consideration paid

which was treated as goodwill by the assessee in its book. The assessee

had claimed depreciation and the same had been disallowed on the

ground that the depreciation was not a business or commercial right of

similar nature specified in Sec.32(1)(ii) of the Act. It was a submission

that the issue had been held against the assessee in ITAT Delhi Benches.

It was a submission that on appeal the Hon’ble Delhi High Court in the

assessee’s own case in ITA No.315/2010 dated 30.03.2012 had held that

the depreciation was an intangible asset acquired under slump sale

agreement and was in the nature of business or commercial right of

similar nature specified in Sec.32(1)(ii) of the Act and was accordingly

eligible for depreciation. It was a submission that in view of the decision

of the Hon’ble Delhi High Court in the assessee’s own case for the AY

2005-06, the assessee was entitled to the claim of the depreciation.

11.1 In reply, the Ld.DR vehemently supported the order of the AO and

the Ld.CIT(A).

ITA Nos.561 & 668/Mds/2011 :- 13 -:

11.2 We have considered the rival submissions. A perusal of the decision

of the Hon’ble Delhi High Court in the assessee’s own case for the AY

2005-06 in ITA No.315/2010 dated 30.03.2012 shows that the Hon’ble

Delhi High Court has held as follows:

ITA Nos.561 & 668/Mds/2011 :- 14 -:

claims; business information; business records; contracts; employees; and knowhow, are all assets, which are invaluable and result in carrying on the transmission and distribution business by the assessee, which was hitherto being carried out by the transferor, without any interruption. The aforesaid intangible assets are, therefore, comparable to a license to carry out the existing transmission and distribution business of the transferor. In the absence of the aforesaid intangible assets, the assessee would have had to commence business from scratch and go through the gestation period whereas by acquiring the aforesaid business rights along with the tangible assets, the assessee got an up and running business. This view is fortified by the ratio of the decision of the Supreme Court in Techno Shares and Stocks Ltd.(supra) wherein it was held that intangible assets owned by the assessee and used for the business purpose which enables the assessee to access the market and has an economic and money value is a “license” or “akin to a license” which is one of the items falling in Section 32(1)(ii) of the Act. 14. In view of the above discussion, we are of the view that the specified intangible assets acquired under slump sale agreement were in the nature of “business or commercial rights of similar nature” specified in Section 32(1)(ii) of the Act and were accordingly eligible for depreciation under that Section. 15. In view of the above, it is not necessary to decide the alternative submission made on behalf of the assessee that goodwill per se is eligible for depreciation under Section 32(1)(ii) of the Act. In the circumstances, the substantial question of law is decided in the affirmative and this appeal is allowed in favour of the assessee and against the Revenue and the impugned order is set aside.

11.3 As it is noticed that the Hon’ble Delhi High Court has decided this

issue in favour of the assessee for the AY 2005-06, respectfully following

the decision of the Hon’ble Delhi High Court, the findings of the Ld.CIT(A)

on this issue stands reversed. The AO is directed to grant the assessee

the benefit of depreciation on the goodwill as claimed. In the result,

Ground No.5 of the assessee’s appeal stands allowed.

the issue was against the action of the Ld.CIT(A) in confirming the

disallowance of various provisions which had been claimed as an

expenditure in respect of the non-transmission and distribution business.

It was submitted by the Ld.AR that the assessee had a business of

transmission and distribution of power as also non-T&D business. The

non-T&D business was transferred to its subsidiary M/s.ALSTOM Industrial

ITA Nos.561 & 668/Mds/2011 :- 15 -:

Products Ltd. In lieu of the transfer of non-T&D business, the assessee

had received Rs.41.30 Crs. in the form of 39 lakhs equity shares of

Rs.10/- each at a premium of Rs.96/- per share fully paid up. It was a

submission that the assessee had created certain provisions in its books

when it was doing the business and the same had also been written back.

The provisions for Bad & doubtful debts amounting to Rs.6,90,01,000/-,

provision for unamortized portion of the Voluntary Retirement Scheme to

an extent of Rs.44,22,000/-, provision for Warranties to an extent of

Rs.4,02,21,000/-, provision for Contract Losses to an extent of

Rs.36,84,000/- and provision for Vacation Pay Rs.66,28,000/-. It was a

submission that as the non-T&D business had already been hived off to

M/s.ALSTOM Industrial Products Ltd., the said provisions were claimed as

an expenditure. It was a submission that the AO had disallowed the same

by holding that the company had transferred these provisions to the new

entity and consequently, it could not be allowable as a deduction. It was a

submission that these provisions are related to the non-T&D business and

consequently, the same could not be maintained in its books and was

eligible for write off.

12.1 In reply, the Ld.DR submitted that the non-T&D business had been

transferred as an ongoing concern and consequently, all the assets and

liabilities of the said business had been transferred and consequently, the

said provisions could not be allowed in the hands of the assessee.

ITA Nos.561 & 668/Mds/2011 :- 16 -:

12.2 We have considered the rival submissions. The Scheme of

Arrangement between the assessee and M/s.ALSTOM Industrial Products

Ltd., in respect of the transfer of the assessee’s non-T&D business to

M/s.ALSTOM Industrial Products Ltd., were shown at Page No.11 onwards

of the Paper Book. A perusal of Para No.4 of the said scheme being the

salient features of the scheme shows that the entire business including the

assets and liabilities and even the employees, the Contracts and

Warrantees in respect of non-T&D business had been transferred to

M/s.ALSTOM Industrial Products Ltd., for a consideration of Rs.41.30 Crs.

Once the whole of the non-T&D business has been transferred then

admittedly there is nothing left of the said business representing a liability

which is liable to be allowed in the assessee’s hands in respect of the said

business. This being so, we find that the order of the Ld.CIT(A) and the

AO on this issue to be on a right footing. Further, it is noticed that the

Ld.CIT(A) has accepted the claim of the assessee that the sale of the non-

T&D business was on a slump sale by applying the provisions of Sec.50B

and the liabilities which have been claimed for deduction now have also

not crystallized during the year as also the issue that the claim of the

assessee is in respect of the provisions and mere provisions cannot be

allowed as a deduction. This being so, the finding of the Ld.CIT(A) & the

AO on this issue stands confirmed. In the result, Ground Nos.6 & 7 of the

assessee’s appeal stands dismissed.

ITA Nos.561 & 668/Mds/2011 :- 17 -:

issue was against the action of the Ld.CIT(A) in taxing under capital gains,

the excess consideration received on the transfer of the non-T&D

business. It was a submission that the transfer of non-T&D business of

the assessee to M/s.ALSTOM Industrial Products Ltd., could not be

considered as a slump sale giving rise to capital gains u/s.50B in so far as

there was no sale consideration in monetary terms but the whole

transaction was one of exchange wherein the value of Rs.41.30 Crs. had

been paid by M/s.ALSTOM Industrial Products Ltd., by way of issuance of

shares. The Ld.AR drew our attention to the Scheme of Arrangement

between the assessee and M/s.ALSTOM Industrial Products Ltd., in Clause-

4(l) at Page No.17 to show that the consideration of the transfer of the

non-T&D business was by issuance and allotment to the assessee 39 lakhs

equity shares of Rs.10/- each in M/s.ALSTOM Industrial Products Ltd., at

premium of Rs.96/-. The Ld.AR placed reliance on the decision of the

Hon’ble Bombay High Court in the case of M/s.Bharat Bijlee Ltd., [2014]

365 ITR 258 (Bom) to submit that the transfer of division of undertaking

under Scheme of Arrangement, transfer taking place in exchange for issue

of preference shares and bonds no monetary consideration for transfer,

the transfer was an exchange was not a sale nor a slump sale u/s.50B of

the Act. It was a submission that the order of the Ld.CIT(A) and the AO

on this issue was liable to be reversed.

ITA Nos.561 & 668/Mds/2011 :- 18 -:

13.1 In reply, the Ld.DR submitted that originally the assessee had filed

Writ before the Hon’ble Jurisdictional High Court of Madras claiming

exemption u/s.54EC in respect of the capital gains. It was a submission

that now the claim of the assessee has been changed to say that Sec.50B

itself does not apply. It was a further submission that the Writ Petition

filed by the assessee in respect of the investment u/s.54EC bonds had

been dismissed by the Madras High Court as also dismissed in SLP No. by

the Hon’ble Supreme Court in its order dated 04.05.2009. It was a

submission that the order of the Ld.CIT(A) and the AO was liable to be

upheld on this issue.

13.2 We have considered the rival submissions. A perusal of the

Assessment Order in respect of the said issue at Page No.12 Para No.10

shows that the transfer of non-T&D business to its subsidiary company is

a transfer u/s.50B had been claimed by the assessee itself. The assessee

had also not made this either in the return filed nor in the revised return

filed. Further, a perusal of the Scheme of Arrangement shows that the

value of the net assets of the non-T&D business has been determined at

Rs.31.30 Crs. in the said scheme. However, the consideration of the

transfer has been specified in the said scheme at Rs.41.30 Crs. How this

difference of Rs.10.00 Crs. has taken place, has not been explained by the

assessee? Nor the assessee has been able to explain as to why the

additional sum of Rs.10.00 Crs. has been paid. If at all, it can be

considered as an exchange, the question that arises is when the total net

ITA Nos.561 & 668/Mds/2011 :- 19 -:

assets only Rs.31.30 Crs. why the shares of the value of Rs.41.30 Crs.

has been allotted. Though, the assessee has mentioned that the valuation

is as per the valuation done by the Accountants still the valuation arrived

at by the Accountants is to an extent of Rs.41.70 Crs. and even that is not

the consideration of the transfer because as per the Scheme, the

consideration for the transfer is shown at Rs.41.30 Crs. Even otherwise, a

perusal of the Scheme clearly shows that the term used is ‘consideration

for the transfer’, the words are not ‘exchange’. This being so, we find no

error in the findings of the AO and the Ld.CIT(A) on this issue and the

same stands confirmed. In the result, the Ground No.8 of the assessee’s

appeal stands dismissed.

in not granting the deduction on Excise Duty paid on the Closing Stock.

The Ld.AR placed before us that the decision of the Hon’ble Special Bench

of the ITAT Delhi ‘B’ Bench in the case of Indian Communication Network

(P) Ltd., wherein it has been held as follows:

Section 43B of the Income—Tax Act, 1961 — Business disallowance - Certain deductions to be only on actual payment — Assessment year 1984—85 Assessee—company claimed deduction under section 43B of amounts paid on account of customs duty and excise duty, included in value of closing stock but taken out in revised return —Assessing Officer rejected assessee’s claim on ground that amounts included in closing stock would be carried over to next year in shape of opening stock —Whether removal of aforesaid amounts from Figure of closing stock would mean not ‘tinkering’ with closing stock but allowing to assessee effective deduction under section 43B and, consequently, deduction of impugned amounts could be allowed to assessee, followed by corresponding reduction in assessee’s opening stock in subsequent assessment year.

14.1 In reply, the Ld.DR vehemently supported the order of the Ld.CIT(A)

and the AO.

ITA Nos.561 & 668/Mds/2011 :- 20 -:

14.2 We have considered the rival submissions. As it is noticed that the

issue is squarely covered by the decision of the Hon’ble Special Bench of

this Tribunal, respectfully following the said decision, the AO is directed to

grant the assessee, the deduction of the Excise Duty to the extent that the

same has been actually paid during the relevant AY u/s.43B of the Act.

14.3 The assessee has raised the additional grounds wherein the

assessee has claimed additional depreciation in respect of the additions

made to the plant & machinery in the second half of the AY 2005-06. A

perusal of the Assessment Order as also the order of the Ld.CIT(A) does

not show how this issue has arisen or adjudicated. Consequently, in the

absence of the facts required for the adjudication of the said issue, the

said additional grounds stands not admitted and consequently dismissed.

the appeal filed by the assessee is partly allowed.

Order pronounced in the Open Court on November 27, 2017, at

Chennai.

Sd/- Sd/- (अ�ाहम पी. जॉज�) (जॉज" माथन) (ABRAHAM P GEORGE) (GEORGE MATHAN) �या%यक सद�य/JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER

ITA Nos.561 & 668/Mds/2011 :- 21 -:

चे�नई/Chennai, 1दनांक/Dated: November 27, 2017. TLN

आदेश क, )%त2ल3प अ4े3षत/Copy to: 1. अपीलाथ(/Appellant 4. आयकर आयु5त/CIT 2. )*यथ(/Respondent 5. 3वभागीय )%त%न�ध/DR 3. आयकर आयु5त (अपील)/CIT(A) 6. गाड" फाईल/GF