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Income Tax Appellate Tribunal, BENCH ‘D’, CHENNAI
Before: SHRI SANJAY ARORA & SHRI DUVVURU RL REDDY
आदेश /ORDER
These are cross Appeals by the Assessee and the Revenue, directed against the assessment u/s. 143(3) r/w s.144C(1) of the Income Tax Act, 1961 (‘the Act’ hereinafter) for the assessment year (AY) 2011-12 dated 29.01.2016, made in pursuance to the directions by the Dispute Resolution Panel-2, Bangalore (‘DRP’ for short) dated 30.11.2015.
The assessment involves both transfer pricing (TP) related and corporate tax (CT) issues; the Revenue’s appeal concerning only the latter. We shall take them in that order.
Transfer Pricing Matters 3. The assessee is in the business of: a) manufacturer of mechanical seals, parts and sealing systems; b) provision of CAD design services. The engineering design center operates from Bangalore, catering to design and drawing requirements of John Crane UK Limited (JCUK). The assessee’s products are used primarily used in pumps, turbines and compressors. Besides, the assessee is also engaged in the manufacture of electrical and related products, which thus represent the third division, titled ‘Others’. The manufacturing know-how, design, etc. is provided by the Smiths Group, of which the assessee is a part, also being supplied key raw materials, such as membrane, import of which therefore constitutes an international transaction. The products manufactured are sold under the brand name ‘John Crane’ for seal products and ‘Metastream’ for coupling products. Some products are also exported to the Associated Enterprise/s (AE/s). The principal issue arising in the transfer pricing is if the results of the ‘Others’ segment should be included for evaluating the results of the manufacturing division, i.e., manufacture of seals and couplings, as done by the assessee per its TP study. The Transfer Pricing
3 & 785/Mds/2016 (AY 2011-12) John Crane Sealing Systems India Pvt. Ltd. Officer (TPO) did not find any fault with the Transactional Net Margin Method (TNMM), using Operating Profit (OP) to Operating Cost (OC) as the Profit Level Index (PLI), adopted by the company as the Most Appropriate Method (MAM) for bench marking the Manufacturing and CAD services divisions; in fact, finding the results of the two segments better than that disclosed by the comparables, so that no TP adjustment was called for. However, the ‘Others’ division, being in relation to electrical components, functionally different product from industrial seals and couplings, had to be separately tested for its margin. Besides, there were differences in scale of operations; the Hypertac and Polyphaser divisions, falling under the ‘Others’ segment, being in the initial stages of launch. The losses of these divisions, therefore, could not be set off against the manufacturing division. The ‘Others’ segment disclosing a loss of 25.61 per cent, as against an operating margin of comparables, drawn from the electrical industry, at 10.42 per cent, thus resulted in an upward TP adjustment of �. 36,93,828/-. The same found favour with the ld. DRP for the same reasons, the relevant part of which whose order reads as under: ‘3.1 As regards above objections of the assessee the TPO has observed that the other segment represents the Hypertac and Polyphaser divisions of John Crane India, which is engaged in manufacture of specific products, viz. connectors and surge protection devices, The assessee submitted that Hypertac and Polyphraser divisions were in the initial stages of launch, resulting in additional costs of selling and marketing costs, travel costs, legal and professional fee. This office was of the opinion that the scales of operations of the two segments vary and the costs relating to a product in initial stages has been set off against the profits generated by a more mature segment, generating profits. Also the same has been disclosed as separate in the financials of the assessee. Hence a SCN was issued to assessee proposing to test two segments independently and an adjustment proposed to the international transactions of the "other" segment on account of losses. On consideration of reply of the assessee, the TPO observed that this office does not find merit in the argument that the manufacturing of the two products namely, Industry Seals and Electric components, of different scale of operations and end use, constitute an interlinked transaction or a bundle of products. As evident from the examples given in the OECD guidelines, such guidelines are applicable for aggregates such as 4 & 785/Mds/2016 (AY 2011-12) John Crane Sealing Systems India Pvt. Ltd. equipments and consumables. Accordingly the TPO treated "Others" as a separate segment. Considering the above, this Panel finds the action of TPO to treat the activities as two independent segments fully justified. 3.2 For the reasons mentioned above the TPO has to reject the TP study of assessee and initiate a fresh TP study by searching for the comparables in the data base. Eleven comparables were selected by the TPO with average operating margin of 10.24% and the assessee was issued a fresh show-cause notice. The objections field by the assessee were considered by the TPO however, the same were rejected for the reasons mentioned by the TPO at page 5 of his order. 3.3 The TPO found the margin shown by the assessee in manufacturing segment and CAD segment are acceptable vis-a-vis the comparables and he proceeded to adjust the margin to determine ALP only in 'others' segment that resulted in an upward adjustment of Rs. 36,93,828. Thus, it can be seen that the assessee was given due opportunity, benchmarking done after due analysis and the TPO had justifications for the action he has taken. 3.4 Hence, considering the above, the objections of the assessee cannot be accepted.’ The order by the TPO being confirmed thus, the assessee is in appeal.
We have heard the parties, and perused the material on record. The company's operations predominantly relate to manufacture and trade of mechanical seals and couplings (Manufacturing and related services). The assessee provides Computer Aided Design (CAD) and drawing services (CAD Services) to the John Crane group companies. It also manufactures electrical components, namely, connectors and surge suppressors, providing related services (Others). The primary reporting disclosures for business segments, as envisaged in Accounting Standard (AS) 17 on Segment Reporting, are complied with, disclosing all the three segments. How could, then, we wonder, connectors & surge suppressors, falling under ‘Others’, be considered as part of the manufacturing division. A reportable segment under AS 17 includes a business segment, which is by definition a distinguishable component of an enterprise,
5 & 785/Mds/2016 (AY 2011-12) John Crane Sealing Systems India Pvt. Ltd. engaged in providing an individual product or service, or group of related products and services, and is subject to risks and returns that are different from those of other business segments. Being electrical components, stated to be supplied to power plants, a different class of customers, how could they be equated with mechanical seals and couplings, i.e., used in engineering industry. The incongruity – the difference between the engineering and electrical industry being apparent and, in fact, admitted inasmuch as the two segments are reported separately under the segmental reporting, is further accentuated by the fact that the electrical products and services are in the initial phase of their launch, bearing, as stated, additional costs, primarily for selling and marketing. The assessee has also not been able to furnish any cogent reason toward regarding the ‘Others’ division, reported separately under the segmental reporting, pertaining to a different industry, separately for TP (analysis) purposes. The product category is decidedly different. The ld. Authorized Representative (AR) also could not, on being questioned pointedly in the matter, furnish any satisfactory reply during hearing. We, accordingly, find no reason for the ‘Others’ division being benchmarked separately. Be that as it may, without doubt, the scale of operations, which takes time to stabilize, impacts the profits adversely in the initial stages in-as-much as the overhead costs may not get fully absorbed at lower volumes, resulting in a higher proportion of such costs (to turnover). In fact, such expenditure may also be on a higher side in the initial phase, i.e., in absolute terms. We, therefore, only consider it proper that the TNM method, on which basis the profit (margin) on this segment has also been tested (by the TPO), is done by averaging the results of the comparables over a period of three years, ending with the relevant year. That is, by taking the 3-year weighted average for each comparable. Spreading the comparison over a larger period would operate more fairly in-as- much as it could cause to even out the fluctuations over time, decreasing the imbalances and differences (between the comparables and the tested party) that 6 & 785/Mds/2016 (AY 2011-12) John Crane Sealing Systems India Pvt. Ltd. may arise on account of variation in sales, which are bound to obtain with time, or for differences due to operating at different phases of the economic cycle. It may be, we are conscious, that the assessee’s own results (for this division) may not obtain for three years. However, it needs to be appreciated that we are advocating a 3 year time period for comparison so as to provide a broader framework to bring forth a more representative figure of the profit ratio in the said industry, considering that the assessee is in the initial phase of launch of the said products, entailing a higher proportion of over-head costs vis-a-vis sales. It is, after all, nobody’s case that the said industry is either suffering from contraction (under-utilization), or otherwise reporting downturn or losses. The burden to furnish and present the data before the AO/TPO is on the assessee, which the Revenue shall verify, issuing definite findings of fact. To this limited extent, the matter is therefore restored back. We may also clarify that where the data (qua comparables) is not available for three years, as where it is not available in the public domain, a shorter period may be substituted, the purport being to arrive at as representative a PLI (of the comparables) as possible. We decide accordingly.
Corporate Tax Matters The first issue in corporate taxation segment is the assessee’s claim for �. 5. 14,03,176/- toward loss on outstanding derivative contracts, i.e., in respect of foreign exchange assets. The same has been disallowed by the Revenue as notional and speculative in nature. The reliance on the decision in the case of CIT v. Woodward Governor India (P.) Ltd. [2009] 312 ITR 254 (SC) by the assessee has been met, finding the said decision as distinguishable in-as-much as the same is not with regard to restatement of forward contract at the end of the financial year.
We have heard the parties, and perused the material on record.
7 & 785/Mds/2016 (AY 2011-12) John Crane Sealing Systems India Pvt. Ltd. The assessee’s case is based on Accounting Standard (AS) 11 issued by ICAI, notified u/s. 211(3C) of the Companies Act, 1956. Support is also drawn from the decision in Woodward Governor India (P.) Ltd. (supra). The basis of the Revenue’s denial of the claim is that the loss is notional, besides being speculative in nature. The loss, as stated, has been incurred by the assessee in hedging the foreign exchange risk on account of fluctuation in exchange rate in respect of its receivables, being denominated in foreign currency. Now, clearly, the cost of hedging the exchange rate fluctuation risk in respect of a current (trading) asset or liability is revenue in nature, i.e., is on revenue account. AS-11 prescribes amortizing the said hedging cost or, as the case may be, gain, over the period of the contract, i.e., (ordinarily) till the time the corresponding asset is realized or the liability is discharged. There is nothing ‘unrealized’ about the loss in-as-much as the assessee has incurred the hedging cost, incurring a liability in its respect. Further, as the amount to be realized, or required to discharge the liability, stands crystallized by virtue of the hedging contract, there is no need to mark the foreign exchange asset (or liability) to market. It is only in respect of such assets/liabilities, contracted in foreign currency, which are ‘open’ as on the balance sheet date, i.e., have not been ‘closed’ by contracting a fixed exchange rate by entering into a forward contract, so that the value of the same that may be realized, or required to discharge the same, in terms of the reporting currency (INR, in the instant case), is uncertain, that the same would require being restated at the current value as at the valuation (balance sheet) date. We, therefore, have no hesitation in holding that the loss, to the extent it is on the cost of hedging the exposure on customer receivables, is an allowable expense, allowable on proportionate basis, i.e., up to the time elapsed up to the balance sheet date. The balance cost relates to following year/s and, accordingly, shall stand to be claimed (offered as income) for that year. This, of course, has to be followed contract-wise. This would also be in consonance with the mercantile method of accounting.
8 & 785/Mds/2016 (AY 2011-12) John Crane Sealing Systems India Pvt. Ltd. We have explained that the amount that the assessee shall receive (or is liable to pay) at a future date is fixed, having sold (bought) the foreign currency at the forward rate, the value (in reporting currency) of the foreign exchange asset/liability gets crystallised, obviating the need to restate the same (say, receivables), so hedged, on the basis of foreign exchange rate as on the balance sheet date (as, e.g., 31.03.2011). The loss/gain, if any, on such restatement has therefore to be ignored. The assessee may though restate the foreign exchange asset/liability, since crystallised, at the forward rate contracted, again, spreading the gain/loss that may arise on this account over the period of the forward contract. There is, again, nothing unrealized about such loss/gain in-as-much as the difference between the rate booked and that contracted is bound to be paid or, as the case may be, received by assessee at the end of the contract period. Of course, this would apply only to the assets hedged by entering into a forward contract, and not that which are not so. The cost/gain on such (un-hedged) assets/liabilities, in-so-far as they are on revenue account, i.e., in relation to trading assets or liabilities, would be liable to be allowed as deduction or, as the case may be, included as income for the relevant year. We may not dwell further on this the aspect of the matter inasmuch as the impugned sum arises out of a forward contract, and that in fact is the basis for the Revenue to distinguish the decision in Woodward Governor India (P.) Ltd. (supra). We decide accordingly.
The next issue in the assessee’s appeal is in respect of claim for ‘provision for warranty claims’. The assessee extends warranty on its different products, viz. mechanical seals, parts, sealing systems, couplings, coupling parts, connectors, etc. This warranty is for a period of 18 months from the date of supply of the product or 12 months from the date of its commissioning, whichever is earlier. During the warranty period, repair costs, including cost of replacements, are to be borne by the assessee. To cover the said costs, to be 9 & 785/Mds/2016 (AY 2011-12) John Crane Sealing Systems India Pvt. Ltd. incurred in future, being in respect of current year sales, the assessee provides for the same at 1.5% of the total eligible sales (i.e., sales which carry the warranty) made during the year. The said accounting policy, it claims, is in accordance with AS-29 – ‘Provisions, contingent liabilities and contingent assets’, notified u/s. 211(3C) of the Companies Act. Further, reliance is also placed on the decision in Rotork Controls India (P.) Ltd. v. CIT [2009] 314 ITR 62 (SC), wherein the Apex Court upheld the provision for warranty as a deductible expenditure where the following conditions are satisfied: a) there is a present obligation as a result of a past event; b) there is probable outflow of resources for settling an obligation; and c) reliable estimate can be made of the amount of the obligation. All the three conditions are claimed to be satisfied, so that the provision for warranty, as claimed, be allowed. This is the assessee’s case. The movement in the provision for warranty for the current year is as under: (Amount in �.) Year ending March 31, 2011 2010 Opening Provision 6,146,641 6,061,008 Add: Provision made during the year 3,116,597 2,745,931 (Less): Excess provision written back during the period - - --------------------------------- 9,263,238 8,806,939 (Less): Utilised during the period (3,893,037) (2,660,298) --------------------------------- Closing Provision 5,370,201 6,146,641 -------------------------------- The Revenue’s objection is that no analysis, based on empirical evidence, as to how much provision has actually been utilized from year to year, stands made, and the assessee continues to claim a fixed percentage (1.5%) of sales from year to year. Only a provision made on a scientific basis, i.e., which has a strong correlation with that utilized, would qualify to be allowed. The ld. DRP has sought to establish this variation per the following charts:
10 & 785/Mds/2016 (AY 2011-12) John Crane Sealing Systems India Pvt. Ltd. Chart A: How provision should be made: (as % age of sales) Year One Two Three Four Provision 0.50 0.43 0.45 0.41 Actual claim 0.43 0.45 0.41 0.43 Difference 0.07 (0.02) 0.04 (0.02) Cumulative Difference 0.07 0.05 0.09 0.07 Chart B: Assessee’s Method: (as % age of sales) Year One Two Three Four Provision 0.50 0.50 0.50 0.50 Actual claim 0.43 0.45 0.41 0.43 Difference 0.07 0.05 0.09 0.07 Cumulative Difference 0.07 0.12 0.21 0.28 The same has also been represented graphically in its’ order, so that the difference between the provision made and that utilized therefore keeps increasing from year to year, leading to a systematic evasion of tax, as under:
The ld. DRP, accordingly, directed that the difference between the amount of total provision outstanding (i.e., �. 92,63,238/-) and the actual utilization (�. 38,93,037/-) for the current year, be disallowed (added back). The same, i.e., �. 53,70,201/- was accordingly included by the Assessing Officer (AO) in computing the assessee’s business income for the year, so that, aggrieved, the assessee is in appeal.
We have heard the parties, and perused the material on record, giving our careful consideration to the matter. The Revenue, as we understand, has not assailed the need for provisioning in the instant case, which indeed cannot be in-as-much as, without doubt, expenditure on repairs, replacements, etc. is to be, in case of a claim, incurred for the warranty period, extending beyond the current year; rather, even beyond the following year where the sales are made toward the end of the (current) year. The question raised and the doubt expressed by the Revenue is with regard to the quantum of the provision, being made consistently at a constant rate (of 1.5% of sales), i.e., without reference or regard to the claims arising from year to year, resulting in an accumulation of provision, which is at �. 53.70 lacs at the year-end. The provision to be carry forward is only with reference to the sales that would bear the warranty, i.e., for the period after 31.03.2011, with that up to September, 2009 having exhausted their warranty and, thus, no longer covered under the warranty clause. To say, therefore, as does the Revenue, that the entire warranty provision outstanding as at the year-end (31.03.2011) is in excess, is equally wrong. We may, in this regard, exhibit the manner in which the warranty required, even reckoning the same at 1.5%, be computed: Sale (�.) Month WP(1) WP(2) WS PW October, 2009 1000 (say) April, 2011 Upto March, 800 12 2011 (200) After March, 2011 (800) November, 2009 -- -- -- -- -- WP(1) – Warranty period as per 18 month condition WP(2) – Warranty period as per 12 month condition WS – Sales subject to warranty PW – Provision for warranty @ 1.5% This exercise is to be carried up to March, 2011, and would yield, as a result, the provision required to be carried over as on 31.03.2011, the year-end, i.e., even going by the rate at which the provision is being made (1.5%). Whether the said rate is reasonable or not would require a separate exercise, entailing a comparison of the claims maturing over (say) the last three years with the respective sales, i.e., the sales made during the relevant period for which the claims have been received. We may, again, for the sake of clarity and better understanding, exhibit the same as under: Month Sale Warranty Claims Y1 Y2 Y3 Total April, 2007 1000 (say) 5 2 -- 7 May, 2007 1100 (say) 8 1 -- 9 UptoMarch,’11 Total PS: Y1/Y2/Y3 represent the year of sale, the following year, and the year next. The weighted average for a reasonable long period (3-4 years) could be taken to generate a fairly representative rate of claims of warranty that mature. In view of the foregoing, the matter being factual, we consider it proper to restore this issue back to the file of the AO, to allow the assessee an opportunity to establish the extent to which the provision as on 31.03.2011, on the basis of facts, could be regarded as reasonable. The relevant information being with the assessee, it shall extend full cooperation in the matter, failing which the AO may take draw inferences permissible on the basis of the information available. It is open for the parties to further improvise the working suggested by the tribunal, which are 13 & 785/Mds/2016 (AY 2011-12) John Crane Sealing Systems India Pvt. Ltd. only indicative. Needless to add, the excess would warrant an add-back, which may also be reflect in accounts by a write back of the provision. Before parting, we may further add, without prejudice, that there is nothing amiss in the write-back of an outstanding provision, i.e., where it exceeds the amount claimed as provision for the relevant year. This is as a provision is, by definition, an approximation, and is accordingly to be revisited each year in light of the obtaining facts and informed estimates dictated thereby. The provision to be made (or reversed) each year is the additional amount, if any, that may be required to discharge the obligation arising out of transactions up to the relevant year. That would therefore cover a case where no further provision is required, as where the provision already made is sufficient, or even in excess, in which latter case, it shall require being written back to that extent. We decide accordingly.
Grounds 1, 3 to 5, 8, 10 to 13 of the assessee’s appeals were not pressed, and have therefore been omitted for adjudication.
Revenue’s Appeal 10. The same is delayed by a period of 32 days, the reason for which is stated per an affidavit dated 03.06.2016 by the concerned Assessing Officer, filing the appeal memo (Form-36). Considering the entirety of the facts, we are inclined to admit the appeal, condoning the said delay.
The only issue arising in the Revenue’s appeal is with regard to the treatment of the royalty payment made by the assessee. During the course of the assessment proceedings, the AO observed the assessee to have made a lump sum payment of �. 2,68,21,785/- to John Crane UK Ltd. (JCUK) for technical know-how license/s. The same was accordingly regarded by him as an acquisition of an enduring benefit for the purposes of its business and, accordingly, being in the nature of an intangible asset, liable for claim of 14 & 785/Mds/2016 (AY 2011-12) John Crane Sealing Systems India Pvt. Ltd. depreciation @ 25%, i.e., �. 67,05,446/-, which was allowed, effecting thus a net disallowance for the difference, i.e., �. 2,01,16,339/-. The assessee before the ld. DRP claimed that it was neither a case of purchase of a capital asset nor a case of lump sum payment. JCUK had granted non exclusion license for use of its IPs for manufacture and sale/distribution of its licensed products. Under the terms of the agreement, the assessee is liable to pay royalty as a percentage (5.5%) of the net sales of the licensed products manufactured and sold/distributed by the assessee, and which for the relevant year amounts to �. 268.22 lacs. The mere use of the JCUK’s IPs, comprising patents, copy-rights, rights to inventions, trademarks and service marks, know-how, etc., would not amount to acquiring a capital asset. Reliance was placed on a number of decisions listed at para 7.1 of the order u/s. 144C(5) by the ld. DRP. The ld. DRP, on consideration of the same was of the view that the provisions of s. 40(a)(i)/40(a)(ia) of the Act would apply in-as-much as the amount is a royalty, which, in terms of s. 91(vi), had accrued in India. The provision in fact had been amended retrospectively (w.e.f. 01.06.1976) by Finance Act, 2010. The matter was accordingly restored back to the file of the AO with the following directions: ‘7.1.3 In view of above, the AO is directed to verify whether the assessee has complied with the requirements of the provision of section 194J of the IT Act as regards payment of royalty and to take appropriate action under section 40(a)(i) in case of non-compliance of the said provision.’ Aggrieved, the Revenue is in appeal, raising the following grounds: ‘1. The order of the Dispute Resolution Panel is contrary to the Law and facts of the case. 2.1 The DRP ought to have appreciated that as per the agreement assessee has made a lump sum payment to M/s. John Crane UK which had enduring benefit out of the royalty payment. 2.2 The DRP ought to have appreciated the decision of the Hon'ble Supreme court in the case of M/s. Southern Switch Gear Ltd. (232 ITR 359). 2.3 The DRP ought to have appreciated the fact that in the assessee’s
15 & 785/Mds/2016 (AY 2011-12) John Crane Sealing Systems India Pvt. Ltd. own case for earlier assessment years the CIT(A) had treated 25% of royalty payments as Capital in nature and the balance as revenue. 3. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned DRP be set aside and that of the Assessing Officer be restored.’
We have heard the parties, and perused the material on record. The assessee’s case; in fact, that of both the parties before us, is that the issue stands covered by the decision by the tribunal for earlier years, i.e., dated 17/11/2016, for AYs. 2008-09 to 2010-11 (in to 1888/Mds /2015), copy of which was placed on record. The tribunal was of the view that the decision by the Hon’ble jurisdictional High Court in Southern Switch Gear Ltd. v. CIT [1984] 148 ITR 272 (Mad) is applicable in the facts and circumstances of the case. Accordingly, 25% of the royalty was treated as capital expenditure, and the balance 75% as on revenue account (refer paras 6.1 to 6.6 of its order). The decision in Southern Switch Gear Ltd. (supra) stands affirmed by the Hon’ble Court in Southern Switch Gear Ltd. v. CIT [1998] 232 ITR 359 (Mad), cited by and relied upon by the Revenue before us. We, accordingly, have no hesitation in, adopting the said decision, clarifying that the AO’s decision in treating the entire royalty payment as capital expenditure would stand confined to only 25% thereof. Similarly, the decision of the ld. DRP, treating the entire amount as revenue, also stands upheld to the extent of 75% thereof. That is, the action of both the AO/DRP stands confirmed in part. The AO shall, consequently, restrict the claim for depreciation with reference to 25% of the impugned sum. For the balance 75%, the decision by the ld. DRP shall hold, so that the applicability or otherwise, in the facts and circumstances the case, of section 40(a)(i), would have to be examined by the AO. We state so inasmuch as we observe no finding by the AO in the matter. The order by the tribunal is also silent on this aspect of the matter, and neither has the assessee disputed the relevant finding by the ld. DRP, either per its appeal or even otherwise before us. Of course, the payment
16 & 785/Mds/2016 (AY 2011-12) John Crane Sealing Systems India Pvt. Ltd. being to a non-resident (JCUK), the same shall have to be examined w.r.t. sec.195, and reference to s. 194J by the ld. DRP is clearly a mistake. We, accordingly, only consider it proper that the matter in respect of the applicability (or otherwise) of section 40(a)(i) in the facts and circumstances case for the balance 75% of the royalty allowed by the assessee to John Crane UK, is restored to the file of the AO for adjudication afresh in accordance with law, and after affording a reasonable opportunity of hearing to the assessee. Lest we be construed as having, in so directing, travelled outside our ambit, draw reference to the following decisions regarding the scope of the powers of the tribunal, rendered in different fact settings: Kapurchand Shrimal v. CIT [1981] 131 ITR 451 (SC); Hukumchand Mills Ltd v. CIT [1967] 63 ITR 232 (SC); CIT v. C.C.C. Holdings [2003] 260 ITR 433 (Mad); CIT v. Indian Express (Madurai) Pvt. Ltd. [1983] 140 ITR 705 (Mad); Thanthi Trust v. Asst. CIT [1999] 238 ITR 117 (Mad); Ahmedabad Electricity Co. Ltd. v. CIT [1993] 199 ITR 351(Bom-FB); Controller of Estate Duty v. R.Brahadeeswaran [1987] 163 ITR 680 (Mad); CIT v. Cellulose Products of India Ltd. [1985] 151 ITR 499 (Guj-FB). We decide accordingly.
In the result, both the assessee’s and Revenue’s appeals are partly allowed. Order pronounced on September 15, 2017 at Chennai.