B. Ramakotaiah, Accountant Member

1. This appeal by assessee is filed against the order of the Assessing Officer (AO), Deputy Commissioner of Income Tax, Circle-2(1), Tirupati u/s.144C of the Income Tax Act [Act] read with the directions from Dispute Resolution Panel [DRP], Hyderabad u/s.144C(5) dt.25-11-2013. Assessee is contesting various additions made under transfer pricing provisions and disallowances made under the corporate tax issues.

2. Briefly stated, assessee is engaged in the business of production and sale of Portland cement and has cement manufacturing facilities in Sitapuram and Yerraguntla in AP. As seen from the order of Transfer Pricing Officer [TPO], Italcementi Group made its debut in India in January, 2001 through partial acquisition of 2.1 million tonne Yerraguntla Cement Plant in Andhra Pradesh. This investment was initially made through 50:50 joint venture with K.K.Birla Group in the Financial Year [FY] 2000-01. Assessee, Zuari Cement Ltd., was hived off from Zuari Industries Ltd., and was operating between 2001 to 2006 as a joint venture company. In May, 2006, Italcementi Group acquired full control of assessee through Ciments Francais S.A., as immediate holding company. While assessee-company was in joint venture, it acquired another company Sri Vishnu Cement Limited [SVCL], whose 1.3 million tonne plant is situated at Sitapuram in Andhra Pradesh as a sick company. After acquiring the company by infusion of fresh capital and technology, the said company was turned around, which was operating as a subsidiary company of assessee-company. Pursuant to the scheme of amalgamation sanctioned by the Honble High Court of Andhra Pradesh on 29-06-2007, SVCL stood merged with assessee-company w.e.f. 01-01-2007. The TPO acknowledges that from a modest 0.5 million tonne capacity in 1995, Zuari has grown to a 3.5 million tonne capacity today. During the year, assessee filed return of income admitting total income of Rs.389.75 Crores, the return was taken for scrutiny and eventually the final assessment was completed assessing total income at Rs.485,23,81,680/-, consequent to various additions as under:

(Rs.)

TP adjustments94,30,82,932

Disallowance of Community

Development Expenses76,36,096

Disallowance of giveaways14,06,559

Disallowance of Contribution to Zuari School13,43,496





3. In the appeal preferred before us, assessee has raised 16 grounds and various sub-grounds. Ground No.1 & 2 are general in nature. While Ground No.3 & 4 are with reference to the method being adopted by the TPO for TP analysis, Ground No.5 to 12 are on various payments made to Associated Enterprises [AEs] which were considered under TP analysis. Therefore, Ground No.2 to 12 pertain to TP issues. Under the corporate tax adjustments Ground No.13, 14 & 15 are on the three disallowances listed above. Ground No.16 pertains to levy of interest u/s.234B & 234C. In the course of present proceedings, assessee has raised an additional ground. Pursuant to the scheme of amalgamation sanctioned by the Andhra Pradesh High Court on 29-06-2007, the additional ground is on claim of depreciation on the goodwill amounting to Rs.17,991.99 Lakhs, that arose as a result of the amalgamation. This issue is considered at a later part of order. Before adverting to the TP issues, it would be better to decide the corporate tax issues first.

Corporate Tax Issues:

4. As briefly stated, there are three expenditures which were disallowed by AO being contested by assessee in this appeal, whereas other disallowances made by AO are not objected. Among them, the first one is disallowance of Community Development Expenses of Rs.76,36,096/- being contested in Ground No.13.

4.1 Assessee-company had incurred expenses of the above amount towards special activities like medical camps, installing water bores and bore-wells and carrying out infrastructure development in villages etc. AO disallowed the entire expenditure on the reason that:

(a)The expenditures were not supported by any concrete evidence;

(b)The business necessity was also not proved beyond doubt;

(c)Identity of payee was not established.





4.2 It was submitted that above expenditure has been incurred for the welfare of the employees and people in nearby villages and these are part of corporate social responsibility expenditure of the company. It was submitted that assessee employs employees from nearby villages and these expenditures are necessary to retain such employees and motivate them to work with the company for a longer term by providing necessary amenities in the villages. These expenditures are essential for smooth operations and are incurred wholly and exclusively for the purpose of business. It was further submitted that assessee has maintained proper bills and documentation in support of the expenditures and AO has incorrectly disregarded sample voucher copies submitted. Assessee places reliance on the following judicial precedents wherein it has been held that expenditure incurred on various corporate social responsibility is allowed as business expenditure.

i.CITv. Madras Refineries Ltd. [2004] 266 ITR 170/138 Taxman 261 (Mad.)

ii.CITv. Jayendrakumar Hiralal [2010] 327 ITR 147 (Guj.)

iii.CITv. Karnataka Financial Corpn. [2010] 326 ITR 355 (Kar.)

iv.CITv. Infosys Technologies Ltd. [2014] 360 ITR 714 /223 Taxman 469 /43 taxmann.com 251 (Kar.)





Assessee also relied on various ITAT decisions in support of the contention.

4.3 DRP however, accepted that this expenditure was incurred for the purpose of business which should be allowed u/s.37(1) of the Act. However, since AO has observed that no bills and vouchers were produced before him, it directed assessee to produce Books of Accounts including bills and vouchers and AO is directed to decide the issue on the basis of examination of the Books of Accounts.

4.4 As seen from the order, AO has examined few of the vouchers and came to conclusion that it does not contain proper invoices or vouchers and payee details are not available and in one case, even the amount of Rs.5 Lakhs was paid to Kadapa Ratnalu Trust. AO was of the opinion that the Trust was not recognized u/s.12AA. What is required to be examined by AO is whether amount was spent by assessee for providing necessary facilities to the villages/villagers under the corporate social responsibility concept. It is not proper to disallow the entire amount on the basis of non-availability of few vouchers even though assessee has provided evidence by way of ledger accounts and payment details. AO does not have any right to disallow the amount stating that business necessity was also not proved beyond doubt. This issue was also decided by the DRP, so AO cannot again come to the same point which was held in favour of assessee. In view of this, we in the interest of justice, restore the issue to the file of AO to examine the vouchers only along with other Books of Accounts and other details to verify whether the expenditure was spent for the purpose of corporate social responsibility of assessee-company which was allowed as a business expenditure u/s.37(1) by the DRP itself. The ground is considered allowed for statistical purposes.

Giveaways:

5. The next item of disallowance is giveaways to the tune of Rs.14,06,559/-. Under this head, AO disallowed an amount of Rs.14,06,559/- stating that this expenditure was not warranted and had no nexus with the business and not supported by concrete evidence and also no identity of receivers. We are unable to understand the above four reasons given by AO. If we pursue the orders, it is very clear that expenditure was incurred for purchase of gifts to advocates marriages, purchase of coolers gifted to Joint Director (Mines), purchase of gifts to M.V.Mysoora Reddys sons marriage function, purchase of silver plate gifted to Inspector of Factories, purchase of gifts to Railway employees, purchase of gift for ESI official daughters marriage, purchase of gifts to other Govt. employees etc. Except the purchase of gold coins from Corporation Bank, Bangalore on 16-02-2008 for Rs.3,85,166/- vide Invoice No.120 for which no details were furnished, rest of the expenditure has same identity etc. Since the business necessity was already decided by the DRP, AOs duty is only to examine the vouchers. In our opinion, except the amount of Rs.3,85,166/- for which details were not available, rest of the expenditure cannot be disallowed on the reasons stated by AO. We therefore, direct the AO to allow the expenditure, except the amount of Rs.3,85,166/-. This ground is partly allowed.

Contribution to Zuari School:

6. The last item is the expenditure incurred in the nature of contribution to Zuari School amounting to Rs.13,43,496/-. As per the copy of the MOU entered between assessee and DAV College Trust and management society, New Delhi, assessee-company was required to reimburse the expenditure on running the school after deducting the income realized as fees etc., from the students. AO, however, noticed that school was not defined in the MOU and disallowed the expenditure stating that there is no clarity in the MOU itself. We were surprised about the reasoning given by the AO. He was directed by the DRP only to examine the necessary vouchers, AO should not question the wisdom of the DRP in allowing the expenditure u/s.37(1), subject to verification of the availability of vouchers. In our opinion, AO exceeded his jurisdiction in examining the MOU itself. Not only that, assessee also made contributions to another school at Sitapuram. This was being contributed earlier by SVCL which was later merged with assessee-company. In both the places of Yerraguntla and Sitapuram, the school is being run mainly for the benefit of employees. Since, the DRP already decided to allow the expenditure u/s.37(1) and assessee furnished the vouchers, the reasons assigned by AO to disallow the expenditure cannot be accepted. We direct the AO to allow the expenditure. In the result, this ground is allowed.

Transfer Pricing Issues:

7. Assessee being a wholly owned subsidiary of a foreign company, has various transactions with its AEs which were reported as the international transactions in 3CEB report. The TPO noted them in Page 2 of the order and after excluding non-operating items, both revenue and expenditure, arrived at (operating cost/operating revenues) at 27.12%, whereas (operating profits/operating cost) was arrived at 33.37%. Assessee in its 3CEB report claimed Transaction Net Margin Method [TNMM] as the most appropriate method, analysed its transactions and compared two sets of comparable companies. Under the first set of comparables as noted down by TPO in Page 4 of the order, it compared 11 companies which are in cement business whose average operating profit/operating cost was at 18.59% as against assessees operating margin 29.36%. It also had another set of comparables wherein the average net margin on sale was at 21.67% as against assessees margin of 29.36%. Assessees TP study was rejected by TPO stating that just because the operating margin of the taxpayer is comparable with the operating margin of certain comparables, it cannot be said that all the transactions were transacted at Arms Length. Relying on the principle of substance over form as held by Honble Supreme Court in the case of Union of India v. Gosalia Shipping (P.) Ltd. [1978] 113 ITR 307 , AO rejected the method of TNMM, consequently, the TP study conducted by the taxpayer. He also held that aggregation of transactions were not allowed and relied on the decisions of the co-ordinate bench in the case of Star India (P.) Ltd. v. Addl. CIT [2011] 16 taxmann.com 277/[2012] 49 SOT 422 (Mum.) and also UCB India (P.) Ltd. v. Asstt. CIT [2009] 121 ITD 131/30 SOT 95 (Mum.), to come to a conclusion that any transaction that has bearing on profits can be analysed separately. Thereafter, he analysed various international transactions, mostly under the Comparable Uncontrolled Price (CUP) method for analyzing the arms length nature of payments to its AEs. He further held that fees for technical know-how, fees for use of trade mark and fees for procurement etc., are a separate class of transactions, therefore, they have to be analysed separately, as each transaction has a bearing on profits. Accordingly, the transactions entered into by and between the taxpayer and its AEs are considered separately for the purpose of transfer pricing analysis. Ld.TPO noticed that assessee paid an amount of Rs.12,53,26,000/- to Ciments Francais S.A., as technical know-how and research and other service fee. This payment was paid on an agreement dt.02-08-2000 for getting technical know-how for a period of three calendar years from that effect date. As per renewal of clause at 12.2 it is mentioned that agreement was automatically be renewed subject to Government/Statutory approval for a period of one calendar year at a time in support of the transaction. Assessee has furnished a copy of agreement dt.06-06-2007 effective from 01-01-2007 for payment of royalty @ 2% on sales made to outside parties and 1% on sale to group companies. Even though assessee justified the payment, Ld.TPO however, considered that there is no addition of new technical know-how and compared with financial results of Sri Vishnu Cements Ltd., under the CUP method, to hold that there is no justification for payment of royalty. Accordingly he came to the conclusion that there is no need to pay any amount. Not only that, he also compared some external comparables and came to the conclusion that average pay out on account of technical services by those comparable companies was at 0.91% of net sales. Therefore, based on these two internal and external CUP analysis, TPO determined the payable royalty at 0.91% which comes to Rs.10.87 Crores. The additional amount of Rs.1,65,64,219/-was disallowed as an excess payment and was adjusted u/s.92CA.

8. Next item analysed by TPO was with reference to payment of Rs.6,26,62,000/- to Ciments Francais S.A., towards sub-license agreement. Ciments Francais S.A., an affiliated company of Italcementi Group is having sub-license agreement to use the trade mark. As per the agreement, royalty at 1% of net sales of licensed products has to be paid to Ciments Francais S.A., on quarterly basis. AO analysed the same under the CUP method and noticed that there is no need for paying any amount to Italcementi Group for use of trade mark as assessees own trade mark of ZCL was well established. He analysed the evolution of ZCL brand equity and noticed that assessee itself had entered into an agreement with M/s. Jindal Vijayanagar Ltd., for a fixed license of Rs.1,00/- per metric tonne for using the trade mark and accordingly, assessee has received amounts. Therefore, commercial exploitation of the trade mark aided by the marketing and advertising efforts of ZCL, resulted in creation of valuable intangible assets in India. Thereafter, analyzing the benefit test, the TPO came to the conclusion that new trade mark licensed to the tax payer does not have any value and therefore no license fee should be chargeable for its use. Thereafter, he has disallowed the entire amount of sub-license fee paid under the provisions of Section 92CA. Not only that he further analysed the co-branding of ZCL and Italcementi Group and came to the conclusion that Italcementi Group got benefit by piggy riding on ZCL brand, which has tremendous value in the market and therefore, the same requires to be compensated at arms length. He took the 10% of ALP expenses between 2001 and 2008 arrived at the compensation payable to ZCL, for use of its trade mark at Rs.41,60,00,000/- and made the adjustment of the above in the impugned year.

9. In addition, TPO also analysed the payments from the intra group services of procurement fee of Rs.7,11,82,000/-. Considering that there is no need for any services, he disallowed the entire amount. Likewise, consultancy fees paid of Rs.38,10,000/- to Bravo Consultancy SPA and Rs.42,10,94,000/- to CTG SPA were also considered and disallowed the same reason and on the basis of the benefit test, in its entirety. Assessees objections were rejected and the above amounts were disallowed. Another disallowance made by the AO was with reference to reimbursement of expenses under various heads totaling to Rs.51,72,995/-. Thus, in all, an amount of Rs.99,64,85,214/- was treated as adjustment u/s. 92CA. Assessee filed various objections before the DRP but more or less concurred with TPO vide its order dt.25-11-2013. Assessee is aggrieved.

10. Assessees objections are multi-fold. Ground No.1 & 2 are general in nature. Ground No. 3 & 4, is the method adopted by the TPO and Ground Nos. 5 to 12 are on various disallowances made by the TPO out of various payments made to AE. Each ground has sub grounds which are more or less in the form of submissions.

11. Ld.AR submitted that TPO erred in rejecting the transfer pricing documentation as well as TNMM as most appropriate method. It was the objection that there is no publicly available information on prices charged in independent transactions which are similar or identical in nature that reflects the characteristics of the services provided by the AEs to the assessee. It was further submitted that neither assessee nor AEs provide similar services under comparable circumstances to any independent third party. Therefore, application of CUP method is not tenable and given the facts of the case will not give reliable results. Assessee relied on the orders of the ITAT in Dy. CIT v. Air Liquide Engineering India (P.) Ltd. [2014] 43 taxmann.com 299/[2015] 152 ITD 157 (Hyd.) and Lumax Industries in [IT Aappeal Nos.7408 and 7641/Mum/2010]. With reference to the T.P. adjustment of Rs.1,65,64,219/- relating to fee paid for technical services, it was contended that SVCL i.e., Sri Vishnu Cements Ltd., was a subsidiary of assessee, as a part of BIFR package from FY.2002-03. Before that, it was independent sick company and having acquired by the company, being sick, no royalty was charged to SVCL during the period 2002-03 to 2006-07 w.e.f. January 2007. The said SVCL was merged with assessee-company under the order of Honble High Court of AP. Therefore, comparing with costs occurred about three years prior to the impugned period, was also not correct. Further, it was contended that TPO has taken a wrong information and ignored certain data in between which comparing annual earnings as can be seen from the table itself extracted in the order. Since TPO has not based his ultimate decision of SVCL, Ld.Counsel also referred to the three companies taken as external comparables, in arriving at 0.91% of royalty rate. It was submitted that the technical fee paid included in their annual report is not the royalty on sales, but expenses like royalty on lime stone, other fees paid to Government authorities which cannot be considered as royalty payment on sales. He referred to the order of the TPO and balance sheet of various companies to submit that the basis itself is not correct. With reference to sub-license fee of Rs.6,26,62,000/-, it was submitted that this agreement was entered in the year 2007 and objected to the method adopted by the TPO stating that the transaction is inextricably linked with the manufacturing operation, thereby aggregation of transaction with application of TNMM as a MAM cannot be ignored. It was further contended that there were no cogent reasons as to why CUP should be adopted and both TPO and DRP erred in determining the ALP at NIL. It was the submission that use of trade mark is a business decision and there are benefits to assessee for use of Italcementi Group trade mark and demonstrated by the support of growth in sales volume over a five year period and increase in customer base in the five years and furnished the copies of evidences furnished to the TPO, in support of the submissions. It was further submitted that a publicly available information analysis was undertaken by assessee on the rate of royalty being charged by licensor to a licensee and that analysis came to the range of 1.93%. Therefore, the payment made by ZCL @ 1% on sale was to be considered as arms length and TPOs determination at NIL cannot be supported, in view of the decision of the Honble High Court of Delhi in the case of CIT v. EKL Appliances Ltd. [2012] 345 ITR 241/209 Taxman 260/24 taxmann.com 199.

11.1 Coming to the alleged transfer of economic value of Zuari trade mark to Italcementi Group trade mark, it was contended that there was no migration of economic value as the Zuari brand was owned by the company and is being used in all the sales. It was further contended that AE has not used Zuari brand anywhere in the world for its operations to get any benefit as alleged by the TPO. Further, it was contended that Italcementi Group trade mark was being used from AY.2006-07 onwards and therefore, AO was wrong in taking the market expenses after that period also. With reference to the incorrect methodology for valuation of Zuari trade mark, it was further contended that transfer of trade mark will not happen year after year and TPO/ DRP has made a similar approach in AY.2008-09 and made the adjustment of Rs.31.74 Crores and in AY.2009-10, the adjustment was Rs.41.60 Crores. Therefore, the action of the TPO/DRP is irrational on the reason that proposing the transfer pricing adjustment for transfer of Zuari trade mark year after has no basis, without appreciating the fact that the transfer can take place only once. With reference to the consultancy fees for manufacturing a new plant, first objection was that the amount was not claimed as expenditure in the P&L A/c and was capitalized. While supporting the payment by way of services being provided by the AE in procuring the equipment for the new plant and also the necessity for taking various procurement services for a fee, it was the submission that TPO erred in ignoring the evidences and determining the ALP at NIL. Likewise, payment of consultancy fee to Bravo Consultancy SPA for use of easy supply portal and the evidences furnished in this regard were totally ignored and wrongly determined the ALP at NIL. Likewise, the Ld.Counsel made detailed submissions on reimbursement of expenses and other various disallowances made by the TPO. Detailed submissions were filed issue- wise.

12. Ld.DR further referred to various observations of the TPO and findings of the DRP to submit that the adjustments made are warranted on the facts of the cases. He supported the orders of the TPO/DRP.

13. We have considered the issue and pursued the evidences on record, including the documents placed on the Paper Books. We are of the opinion that the approach of the TPO is not correct. Even though the payments made by assessee to the AEs are just a fraction of the total turnover of assessee, these transactions are invariably inter-linked to the manufacturing and trading of cement by the assessee-company. Therefore, the approach of the TPO in considering the CUP method for analyzing independent transactions is not fully justifiable. Apart from that, the methodology used in various analysis is also faulty. As far as the royalty payment on sales is concerned, as rightly pointed out by the Ld.Counsel, there are no comparable companies which are offering similar services. The TPOs comparison on transactions of assessee subsidiary company much prior to the year under consideration cannot be justified. Therefore, on that basis itself, the comparison cannot be considered as an internal CUP. Moreover, the need for not charging royalty from SVCL was also explained as the subsidiary company was a sick company and in the process of reviving the company, assessee has not charged any royalty to its subsidiary company. Therefore, on FAR analysis, SVSLs past record with that of present transactions of assessee-company is not correct. Then, coming to external comparables, we were surprised to note that the TPO considered the technical fee payments without analyzing the nature of the payments. In some cases, it is royalty for acquiring the lime stone from Govt., which is not a royalty for getting the technology from foreign AE. There is foreign exchange expenditure also considered as technical know-how fee. A detailed objections of the assessee were not even considered or discussed either by the TPO or by the DRP. Therefore, on the basis of an external CUP ALP of 0.91% itself is not correct. Therefore, the entire exercise undertaken by the TPO on this issue is erroneous and cannot be justified.

14. Leave alone that amount, even the sub license fee for the use of trade mark is also faulty. Under the guise of TPO provisions, the TPO cannot determine the ALP at NIL as held by the Honble Delhi High Court in the case of EKL Applicances Ltd., (supra). Therefore, rejecting the entire payment without there being any analysis on the CUP method cannot be accepted. In the guise of analyzing the transactions in the CUP method, the TPO has not brought any evidence on record to reject the 1% payment made to Italcementi Group. Moreover, while determining the price at NIL on the issue, the TPO surprisingly holds that assessee has transferred its Zuari Brand to Italcementi Group. We are unable to understand this logic. Italcementi Group never obtained, acquired or used Zuari Brand anywhere in the world, so that this cannot be considered for Transfer Pricing analysis. It is the Italcementi Group brand which is used by assessee-company. The TPOs analysis of AMP expenses are also not correct. Even though Italcementi Group was being used from earlier years, AMP expenses of current year also included in this, which is not correct. Moreover, Italcementi Group itself is a 50% shareholder in the assessee-company from the beginning. Therefore, it cannot be stated that Zuari Cements is exclusive brand owner of the Birla Group in exclusion of Italcementi Group. The entire approach by the TPO is biased and cannot be justified on the facts of the case. Therefore, we are not in a position to uphold any of the contentions raised by TPO in his order. Likewise, the disallowance of various service fees including reimbursements made by assessee to AE. Since we do not find any valid reason for TPO to disallow these expenditures, we have no other go than to set aside the entire order of the TPO which is based on wrong presumptions and propositions. DRP unfortunately, even though consisted of three senior officers, did not apply its mind to the valid objections raised by assessee. In view of this, without deciding the merits of various issues, we set aside the orders and direct the TPO to re-consider the entire order and analyse them in fresh, first by determining the most appropriate method and then analyzing the transactions under the provisions of the TP. The orders of the TPO/DRP on the TP issues are therefore set aside and the entire issue on TP analysis is restored to the file of AO for fresh consideration. The grounds raised are accordingly allowed for statistical purposes.

Additional Ground:

15. Pursuant to scheme of amalgamation sanctioned by the Honble High Court of A.P. on 29-06-2007, entire business and all assets and liabilities at re-valued values of the erstwhile SVCL stood merged with assessee w.e.f. 01-07-2007. Accordingly it was submitted that Goodwill amounting to Rs.17,991.98 Lakhs arose as a result of amalgamation. Assessee submitted that though Goodwill has been duly recognised in the books of accounts and depreciation on the same was also shown in the books, the depreciation was not considered for the computation of income tax purposes. As there was no legal clarity on the issue of allowability of depreciation of goodwill, the appellant did not claim depreciation on goodwill as a deductible expenditure for computing taxable income. However, the decision of Honble Supreme Court in the case of CIT v. Smifs Securities Ltd. [2012] 348 ITR 302 /210 Taxman 428 /24 taxmann.com 222 has conclusively settled in the issue that depreciation on goodwill is an allowable expenditure for tax purposes. Since the law is settled, assessee has preferred to raise additional ground.

15.1 Assessee relied on various precedents, that of :

i.Jute Corpn. of India Ltd.v. CIT [1991] 187 ITR 688 /[1990] 50 Taxman 85 (SC)

ii.National Thermal Power Co. Ltd.v. CIT [1998] 229 ITR 383 (SC)

iii.CITv. Pruthvi Brokers & Shareholders [2012] 349 ITR 336 /208 Taxman 498 /23 taxmann.com 23 (Bom.)





for the proposition that assessee shall not be debarred in raising additional ground of appeal and there is no provision in the Act placing restriction on the power of Appellate Authority in entertaining the additional ground in appeal.

15.2 We have to accept that judicial principles relied on by assessee are very clear that assessee can raise any additional ground on legal matters, however, rider is that the facts should be available on record. Assessee submitted that the merger took place w.e.f. 01-01-2007 i.e., in A.Y.2007-08. We are considering appeal in AY.2009-10. How, the goodwill arose what is the amount and why assessee has not claimed depreciation and other issues require examination in AY.2007-08. In AY.2009-10, if a depreciation was allowed on an asset which is in the block of assets in earlier year, only consequential depreciation can be allowed. Since assessee is claiming fresh depreciation on the goodwill, which arose in AY.2007-08, we cannot allow the ground in this assessment year. As rightly held by the Honble Supreme Court in the case of S.A. Builders Ltd. v. CIT [2007] 289 ITR 26 /158 Taxman 230 , additional ground cannot be considered, in the absence of any facts on record.

15.3 In view of this, since the issue did not arise in the year under consideration and the facts pertaining to the quantification of the claim are not on record, we cannot entertain the additional ground, just because law on this was settled on legal principles. If at all assessees claim to depreciation was allowed in AY.2007-08, then, assessee can claim consequential depreciation in this assessment year, before the AO, the additional ground is accordingly rejected.

16. In the result, appeal is partly allowed for statistical purposes.