The court emphasized the importance of the AO satisfying himself with regard to the amount offered for disallowance by the assessee under Section 14A of the Act and highlighted the statutory conditions in Section 32 of the Act for claiming depreciation.

JUDGMENT

Rajiv Shakdher, J.: (Oral)

1. This appeal concerns AY 2013-14.

1.1. This appeal filed by the appellant/revenue concerns Assessment Year (AY) 2013-14 and impugns a common order dated 31.07.2020 passed by the Income Tax Appellate Tribunal [in short, "Tribunal"]. The order dated 31.07.2020, thus, concerns the following AYs: AY 2010-11, AY 2011-12, AY 2012-13, AY 2013-14 (the AY in issue) and AY 2014-15,

1.2. Pertinently, via this order, as noticed above, the Tribunal has disposed of appeals concerning other AYs also, appeals concerning these AYs are listed on our board today as well.

2. Mr Abhishek Maratha, senior standing counsel, who appears on behalf of the appellant/revenue, informs us that the following issues arise for consideration:

(i) First, whether the Tribunal was correct in sustaining the deletion of addition made on account of disallowance of license fee amounting to Rs.1,17,83,98,395/-?

(ii) Second, whether the Tribunal was right in sustaining the view of the Commissioner of Income Tax (Appeals) [in short, "CIT(A)"] in reducing disallowance under Section 14A of the Act from Rs.33,42,193/- to Rs.20,13,989/-?

(iii) Third, whether the Tribunal was right in sustaining the deletion made by CIT(A) concerning addition of Rs.4,50,01,287/- made by the AO, on account of disallowance of depreciation on account of energy saving and pollution control devices?

3. Mr Maratha does not dispute that the first issue is covered by the judgment of this Court dated 11.05.2011, rendered in ITA 662/2005, titled Commissioner of Income Tax vs. M/s Nestle India Ltd..

4. Likewise, insofar as the second issue is concerned, Mr Maratha also concedes that this issue is covered by the judgments rendered by Coordinate Benches of this Court in HT Media Ltd. vs. Principal Commissioner of Income Tax IV, New Delhi, (2017) 399 ITR 576 (Delhi) and Coforge Ltd. vs. ACIT, (2021) 436 ITR 546 (Delhi).

4.1. Insofar as the judgment in HT Media is concerned, inter alia, it requires the AO, while dealing with the issue involving disallowance under Section 14A of the Act, read with Rule 8D of the Income Tax Rules 1962 [in short, "Rules"], to satisfy himself, inter alia, with regard to the amount offered for disallowance by the assessee under Section 14A of the Act.

5. Insofar as the judgment in Coforge Ltd. is concerned [See paragraphs 12.5 to 13.2], the Tribunal, in the impugned order, with regard to the aspect pertaining to satisfaction concerning the AY in issue and other concerned AYs, has stated the following:

6.0.1 We also note that although the Ld. CIT-DR has submitted that the issue of recording the satisfaction has to be examined ever year and that there is no res-judicata in Income Tax proceedings, all the same, a perusal of the Asst. orders for the years under appeal shows that the Assessing Officer has made identical observations in all the years under appeal and in all the years the factum of recording of satisfaction is completely absent. We also note that the assessee had made suo moto disallowances in the years under appeal as under:

6.0.2 The above suo moto [sic: suo motu] disallowances were not commented upon by the Assessing Officer but were completely disregarded and no satisfaction for not accepting the suo moto disallowances was recorded by the AO. The Ld. AR has also submitted that the disallowances may be restricted to the suo moto [sic: suo motu] disallowance offered by the assessee company. Therefore, we sustain the disallowance u/s 14A, as offered by the assessee company for the previous years under appeal as under:

6.0.3 Accordingly, the ground raised by the assessee stands allowed and grounds raised by the Department are dismissed with respect to disallowance u/s 14A in all the five years under consideration.

5.1.