IN INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI, [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER] . I.T.A. No.591 Mds 2012. Assessment years : 2006-07. Sundram Fasteners Limited, Vs. Additional Commissioner of 98-A, 7th floor, Dr. Income Tax, Radhakrishnan Salai, Company Range VI, Mylapore, Chennai 600 034. Chennai 600 004. . I.T.A. Nos.1165 & 1166 Mds 2013. Assessment years : 2007-08 & 2008-2009 Sundram Fasteners Limited, Vs. Assistant Commissioner of 98-A, 7th floor, Dr. Income Tax, Radhakrishnan Salai, Company Range VI(4) Mylapore, Chennai 600 034. Chennai 600 004. . I.T.A. Nos.675 Mds 2012, 1171 & 1172 Mds 2013. Assessment years : 2006-07, 2007-08 & 2008-2009 Assistant Commissioner of Vs. Sundram Fasteners Limited, Income Tax, 98-A, 7th floor, Dr. Radhakrishnan Company Range VI(4) Salai, Chennai 600 034. Mylapore, Chennai 600 004. [PAN AAACS 8779D] ( Appellant) ( Respondent) Assessee by : Shri. R. Vijayaraghavan, Adv. Department by : Dr. Milind Madhukar Bhusani, CIT. :- 2 -: ITA Nos.591 & 675 12, 1165, 1166, 1171 & 1172 13. Date of Hearing : 15-09-2016 Date of Pronouncement : 30-09-2016 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER These are appeals and cross appeals filed by assessee and Revenue respectively for assessment years 2006-07, 2007-08 and 2008-2009 directed against orders of Commissioner of Income Tax (Appeals) for impugned assessment years. Cross appeals of assessee and Revenue for assessment year 2006-2007 are taken up first for disposal in that order. 2. Assessee in its appeal has taken altogether thirteen grounds of which Grounds No. 1 & 13 are general in nature needing no specific adjudication. 3. Through its Ground Nos.2 to 4, assessee is aggrieved by disallowance of software expenditure of 15,61,995 -. 4. ld. Counsel for assessee submitted that software which were acquired by assessee did not result in any enduring benefit to it. As per ld. Authorised Representative these were payments for renewing software licenses and for antivirus for :- 3 -: ITA Nos.591 & 675 12, 1165, 1166, 1171 & 1172 13. disaster recovery system and for internet usage tracker. ld. Authorised Representative submitted that ld. Assessing Officer erroneously held it to be acquisition of capital asset and disallowed claim. As per ld. Authorised Representative, ld. Commissioner of Income Tax (Appeals) confirmed treatment without properly appreciating facts relying on judgment of Hon ble Delhi High Court in case of CIT vs. Asahi India Safety Glass (346 ITR 329). ld. Authorised Representative submitted that expenditure incurred for acquiring software which did not give enduring benefit could only be considered as Revenue expenditure. 5. Per contra, ld. DR strongly supported orders of authorities below. 6. We have considered rival contentions and perused orders of authorities below. It is not disputed by Revenue that type of software acquired had maximum life of two to three years only. These were not system software but application software. In view of judgment of Hon ble Delhi High Court in case of Asahi India Safety Glass (supra) we are of opinion that claim had to be allowed. We therefore, delete disallowance of 15,61,995 - 7. Ground Nos. 2 to 4 stand allowed. :- 4 -: ITA Nos.591 & 675 12, 1165, 1166, 1171 & 1172 13. 8. Vide its ground Nos. 5 to 8, grievance raised by assessee is that upfront lease rent of 5,96,80,000 - was disallowed by lower authorities as capital expenditure. 9. ld. Counsel for assessee submitted that above lease rent advance was paid for obtaining leasehold land at Mahindra SEZ Chennai. As per ld. Authorised Representative payment of lease advance gave it right over land for 99 years for setting up manufacturing facility. ld. Authorised Representative submitted that lower authorities erroneously considered it to be capital outgo for reason that commercial production from manufacturing facility setup in leased land started only in September, 2007. As per ld. Authorised Representative ld. Commissioner of Income Tax (Appeals) had confirmed findings of ld. Assessing Officer without expressing any specific reasons why he was rejecting contention taken by assessee. As per ld. Authorised Representative by virtue of judgment of jurisdictional High Court in cases of CIT vs. Gemini Arts Pvt. Ltd. 254 ITR 201 and CIT vs. Rane (Madras) Ltd 293 ITR 459 such lease advance payment could only be considered as Revenue in nature. 10. Per contra, ld. Departmental Representative relying on judgment dated 4th December, 2006 of Apex Court in :- 5 -: ITA Nos.591 & 675 12, 1165, 1166, 1171 & 1172 13. Enterprising Enterprises vs. DCIT 293 ITR 437(SC) submitted that payment for acquiring leasehold rights was capital expenditure. 11. We have considered rival contentions and perused orders of authorities below. It is not disputed that by virtue of upfront lease rent of 5,96,80,000 - paid, assessee had obtained lease right for 99 years over 14.92 acres of land. Assessee has started manufacturing facility over said land in September, 2007. No doubt, jurisdictional High Court in case of Gemini Arts Pvt. Ltd (supra) relied on by ld. Authorised Representative had held that lumpsum lease rent payments, which gave no other advantage than relief from paying annual rent, could not be considered as capital outgo but only as Revenue expenditure, allowable in year in which it was paid. above judgment is dated 1st August, 2001. In case of Rane (Madras) Ltd (supra) their lordship had held that expenditure incurred for setting up new factory which resulted in extension of existing unit could only be considered as Revenue expenditure. We find that judgment in case of Gemini Arts Pvt. Ltd (supra) was pronounced much earlier to judgment of Hon ble Apex Court in case of Enterprising Enterprises (supra). In last mentioned case, Hon ble Apex Court had clearly held that irrespective of whether lease money was paid as slumpsum or installment it was nothing but capital expenditure. As for reliance :- 6 -: ITA Nos.591 & 675 12, 1165, 1166, 1171 & 1172 13. placed by ld. Authorised Representative on Rane (Madra) Ltd (supra) issue there was nature of expenditure incurred for setting up new factory which was extension of existing unit. Here on other hand, facts show that assessee had obtained leasehold right for 99 years over land which was definitely in nature of acquisition of capital asset. Therefore, we are of opinion that disallowance was righty done by lower authorities. No interference is required. Ground Nos. 5 to 8 of assessee stand dismissed. 12. Vide its ground Nos. 9 to 12, grievance raised by assessee is on failure on ld. Assessing Officer to give credit for TDS and TCS claimed in Return of income. 13. We are of opinion that whether claim for tax credit was correctly made by assessee is issue need to be examined afresh by ld. Assessing Officer. If assessee is able to show evidence for TDS TCS of 28,81,980 -, ld. Assessing Officer is directed to give such credit. Accordingly, ground Nos. 9 to 12 of assessee is treated as allowed for statistical purpose. :- 7 -: ITA Nos.591 & 675 12, 1165, 1166, 1171 & 1172 13. 14. In result, appeal of assessee in ITA No.591 Mds 2012 of assessment year 2006-07 is partly allowed for statistical purpose. 15. Now, we take up appeal of Revenue in ITA No.675 Mds 2012 of assessment year 2006-2007:- Revenue has altogether raised five grounds of which ground No.1 & 5 are general in nature needing no specific adjudication. 16. Vides its ground No.2, grievance of Revenue is that ld. Commissioner of Income Tax (Appeals) restricted disallowance u s.14A of Act to 2% of dividend income. 17. Before us, ld. Departmental Representative submitted that original disallowance made by ld. Assessing Officer was 27,46,264 - applying Rule 8D of Act. Further as per ld. Departmental Representative ld. Commissioner of Income Tax (Appeals) unfairly curtailed disallowance to 2% of exempted income. 18. Per contra, ld. Authorised Representative relied on judgment of Hon ble Bombay High Court in case of Godrej and Boyce Mfg. Co. Ltd vs. DCIT and another 328 ITR 81. :- 8 -: ITA Nos.591 & 675 12, 1165, 1166, 1171 & 1172 13. 19. We have considered rival contentions and perused orders of authorities below. By virtue of judgment of Bombay High Court in case of Godrej and Boyce Mfg. Co. Ltd (supra) Rule 8D cannot be applied for impugned assessment year. However, Sec.14A of Act was very much there in statute for impugned assessment year. Hence, disallowance under said section could be made dehorse rules. Co-ordinate Benches of Tribunal are taking consistent view that disallowance of 2% of exempt income would suffice for years were Rule 8D were not applicable. Hence, we find no error in order of ld. Commissioner of Income Tax (Appeals) in restricting disallowance 2% of dividend income claimed by assessee as exempt. Accordingly, we dismiss ground No.2 of Revenue. 20. Vide its ground No. 3, grievance raised by Revenue is that ld. Commissioner of Income Tax (Appeals) deleted disallowance of notional interest working out to 2,70,52,088 -, as relatable to interest free loans granted by assessee to its subsidiary. 21. Before us, ld. Departmental Representative submitted that assessee could not show commercial expediency for loans given to its subsidiaries. As per ld. Departmental Representative, :- 9 -: ITA Nos.591 & 675 12, 1165, 1166, 1171 & 1172 13. assessee had borrowed 43,860 - lakhs of which it had given free interest loan of 3,379 - lakhs. Ld. Departmental Representative submitted that interest of 2,958 - lakhs was paid by assessee on loans taken by it. As per ld. Departmental Representative amount of interest free loans were utilized by Sundaram Fasteners Investment Ltd (SFIL) which in turn gave loans to certain other companies. Thus, as per ld. Departmental Representative assessee could not demonstrate how loans given were commercially expedient. 22. Per contra, ld. Authorised Representative supported orders of Commissioner of Income Tax (Appeals) and submitted that by virtue of judgment of Apex Court in case of S.A. Builders Ltd vs. CIT (A) and Another (2007) 288 ITR 1(SC) loans given to subsidiary were always deemed commercial expedient. According to him, M s. SFIL was making investments and giving inter corporate loans to its subsidiaries in China since assessee could not directly invest in subsidiary in China. Further, as per ld. Authorised Representative in Revenue s appeal for assessment year 2005-06, same issue had come up before and Tribunal in ITA No.1011 Mds 2011 vide order dated 15.07.2016 deleted such interest disallowance. :- 10 -: ITA Nos.591 & 675 12, 1165, 1166, 1171 & 1172 13. 23. We have considered rival contentions and perused orders of authorities below. No doubt issue was decided in favour of assessee by this Tribunal for assessment year 2005- 06 on Revenue appeal. However, in said order, assessee could demonstrate that amounts loaned to subsidiary companies was much less than its net worth. As for as reliance placed by assessee on judgment of Apex Court in case of S.A. Builders Ltd (supra), lordship had remitted matter back to Tribunal for enquiry whether interest loans were given to sister concern was as measure of commercial expediency. Their lordship took view that once nexus was established between expenditure and purpose of business, which need not necessary be business of assessee itself, Revenue could not disallow claim assuming what was reasonable. Considering, facts and circumstances of case, we are of opinion that lower authorities failed to verify whether loans given by assessee to its subsidiaries were commercially expedient. amount that were given as loans was not stagnant. Therefore, we set aside order of lower authorities and remit issue regarding allowability of pro-rata interest on interest free loans granted to subsidiaries, back to file of ld. Assessing Officer for consideration of fresh in accordance with law. Ground No.3 of Revenue is allowed for statistical purpose. :- 11 -: ITA Nos.591 & 675 12, 1165, 1166, 1171 & 1172 13. 24. Vide its ground No.4, ground raised by Revenue is that ld. Commissioner of Income Tax (Appeals) deleted disallowance of 3,04,36,000 - made by ld. Assessing Officer for want of deduction tax of source relying on Sec. 40(a)(ia) of Act. 25. ld. Departmental Representative submitted that export commissions paid to Non Resident Agents fell within ambit of Sec. 195(1) of Act. As per ld. Departmental Representative if assessee was of opinion that there was no need for deducting tax at source then it should have obtained certificate from ld. Assessing Officer as stipulated u s.195(2) of Act. Further, as per ld. Departmental Representative by virtue of explanation added below Sec. 9 of Act through Finance Act, 2010 with retrospective effect from 01.06.1976 there was no requirement of residency of Non Resident or place of business or business connection in India, nor it was necessary for non resident to render services in India 26. Per contra, ld. Authorised Representative submitted that Non Resident person to whom sale commission was paid was canvassing sales for assessee abroad and no part of their services were rendered in India. As per ld. Authorised Representative non- resident agent was providing warehousing services in foreign soil. :- 12 -: ITA Nos.591 & 675 12, 1165, 1166, 1171 & 1172 13. According to him no part of income could arise in India since non- resident was doing business exclusively outside India. 27. We have considered rival contentions and perused orders of authorities below. We find ld. Commissioner of Income Tax (Appeals) had relied on judgment of GE Technology Centre vs. CIT (327 ITR 456) (SC) for giving relief to assessee and had extensively extracted relevant paras of judgment. ld. Commissioner of Income Tax (Appeals) held that Sec. 195(2) of Act, applied only for composite payments. Here on other hand, commission was paid to foreign agent for services rendered outside India. It is true that by virtue of Explanation to Section 9, substituted by Finance Act, 2010 with retrospective effect, it was not necessary for non-resident to have place of business or business connection in India for being fastened with tax liability in India. However, said Explanation applies only to income by way of interest, income by way of Royalty and income by way of fees for technical services. There is no case for Revenue that earning of foreign agent fell in any of these three categories. In such situation, we are of opinion that agent having rendered services only outside India, assessee was required to deduct tax at source on payments made to them. We do not find any reason to interfere with order of ld. Commissioner :- 13 -: ITA Nos.591 & 675 12, 1165, 1166, 1171 & 1172 13. of Income Tax (Appeals). Ground No.4 of Revenue stand dismissed. 28. In result, appeal of Revenue in ITA No.675 Mds 2012 is partly allowed for statistical purpose. 29. Now, we take up assessee appeal in ITA No.1166 Mds 2013, of assessment year 2008-2009:- assessee in its appeal has taken altogether seven grounds of which Ground Nos. 1 & 7 are general in nature needing no specific adjudication. 30. In Ground No.2, assessee is aggrieved by disallowance of software expenditure of 51,82,081 -. 31. We find that similar issue was raised by assessee in its appeal for assessment year 2006-2007 also. Software purchased and payment was made for relevant previous year were also similar. It consisted of application software and user licenses. For reasons by us at para 6, we are of opinion that ld. Commissioner of Income Tax (Appeals) was justified in allowing claim. ground No. 2 is therefore treated as allowed. 32. Vide ground No.3, grievance raised by assessee is on disallowance of additional depreciation. :- 14 -: ITA Nos.591 & 675 12, 1165, 1166, 1171 & 1172 13. 33. Before us, ld. Authorised Representative submitted additional depreciation of 99,57,900 - claimed by assessee was disallowed by ld. Assessing Officer on ground that such depreciation was admissible only in year in which new plant and machinery was put to use. As per ld. Authorised Representative, ld. Commissioner of Income Tax (Appeals) erroneously confirmed this view of ld. Assessing Officer disregarding arguments of assessee that machinery on which additional depreciation was claimed was acquired during second half of financial year 2006-07 and therefore balance of additional depreciation which was restricted to 50% of eligible amount had to be allowed in impugned assessment year. In support of this, ld. Authorised Representative placed reliance on judgment of Karnataka High Court in case of CIT vs. Rittal India Pvt. Ltd 380 ITR 428. 34. Per contra, ld. DR strongly supported orders of authorities below. 35. We have considered rival contentions and perused orders of authorities below. There is no dispute, that additional depreciation claimed by assessee was balance of what remained out of such depreciation claimed in immediate preceding year. There is also no dispute that such claim was restricted to :- 15 -: ITA Nos.591 & 675 12, 1165, 1166, 1171 & 1172 13. 50% of eligible amount for use less than 180 days. issue whether such additional depreciation to extent not allowed due to restriction placed on account of usage for period less than 180 days could be allowed in succeeding year had come up for hearing before Jurisdictional High Court in case of Rittal India Pvt. Ltd (supra), and Hon ble High Court had held in favour of assessee. Accordingly, we are of opinion that claim of additional depreciation of 99,57,900 - has to be allowed. Disallowance of claim is deleted. Ground 3 of assessee is allowed. 36. Through ground No.4, assessee is aggrieved by levy of interest u s.234D of Act. 37. Before us, ld. Authorised Representative submitted that such interest should be computed on tax that remained payable from date of grant of refund to date of regular assessment. As per ld. Authorised Representative interest could not be charged on interest allowed to assessee u s.244(A) of Act on refund issued. ld. Authorised Representative submitted that similar issue was adjudicated by Tribunal in assessee s own case for assessment year 2003-04 in ITA No.1109 Mds 2011, dated 15.07.2016. :- 16 -: ITA Nos.591 & 675 12, 1165, 1166, 1171 & 1172 13. 38. Per contra, ld. DR strongly supported orders of authorities below. 39. We have considered rival contentions and perused orders of authorities below. We find that similar issue came up before Tribunal in Revenue appeal for assessment year 2003-2004 and relevant part of decision dated 15.07.2016 is reproduced hereunder:- 3. Regarding second issue, relating to levy of interest u s 234D of Act, Ld Counsel for assessee fairly submitted that said issue has to be decided in favour of Revenue in view of subsequent judgment of Hon'ble Madras High Court in case of CIT vs. Infrastructure Development Finance Co. Ltd [2012] 340 ITR 580 ( Mad.), which is relevant for proposition that for applicability of provisions of section 234D, date of assessment is relevant and not year of assessment therefore when once regular assessment is completed after amended proviso of law (i. e 1.6.2003) came into operation assessee is liable to pay interest on refunded amount as contemplated u s 234D of Act. 4. After hearing both parties and on perusal of orders of Revenue Authorities as well as cited judgment of Hon'ble Madras High Court in case of Infrastructure Development Finance Co. Ltd (supra), we are of opinion :- 17 -: ITA Nos.591 & 675 12, 1165, 1166, 1171 & 1172 13. that decision taken by CIT (A) vide para 5.3 of impugned order is required to be reversed on this issue. Considering same, second issue raised by Revenue is decided in favour of assessee and against Revenue . Accordingly, we are of opinion that claim of assessee has to be allowed. ld. Assessing Officer is directed to rework interest levied u s.234D of Act. Ground No.4 is allowed. 40. Vide ground No.5, assessee is aggrieved on disallowance of Long Term Capital Loss on redemption of units of ICICI Venture Capital Fund and vide ground no.6 assessee is aggrieved on disallowance of upfront lease rent of 27,80,596 -. 41. Before us, ld. Counsel for assessee submitted that lower authorities relying on decision of Apex Court in case of Goetze (India) Ltd vs. CIT (2006) 284 ITR 323 refused to consider above claims. As per ld. Authorised Representative long term capital loss was claimed by assessee during course of assessment proceeding through letter dated 5.4.2010 addressed to ld. Assessing Officer. As for upfront lease rent, ld. Authorised Representative submitted it had made claim first time made before Commissioner of Income Tax (Appeals). According to ld. Authorised Representative judgment of Apex Court in case of Goetze (India) Ltd (supra) only :- 18 -: ITA Nos.591 & 675 12, 1165, 1166, 1171 & 1172 13. restricted powers of ld. Assessing Officer and did not impinge on powers of ld. Appellate Authority to give relief. 42. Per contra, ld. DR strongly supported orders of authorities below. 43. We have considered rival contentions and perused orders of authorities below. It is true that assessee did not file revise its return either for claiming long term capital loss or for claiming upfront lease rent. Nevertheless, assessee has filed letter before ld. Assessing Officer making claim for long term capital loss and had filed additional ground before ld.Commissioner of Income Tax (Appeals) for claiming upfront lease rent. ld. Commissioner of Income Tax (Appeals) relying on Apex Court judgment of Goetze India Limited (supra) dismissed both these claim. In our opinion by virtue of judgment of Apex Court in case of National Thermal Power Corporation vs. CIT 229 ITR 383 (SC) Appellate authorities could consider such claims. Hon ble Apex Court in case of Goetze India Limited (supra) only limited powers of ld. Assessing Officer. We are therefore of opinion that ld. Commissioner of Income Tax (Appeals) fell in error in not considering both these grounds on merit. We therefore, set aside order of ld. Commissioner of Income Tax (Appeals) and remit issue regarding :- 19 -: ITA Nos.591 & 675 12, 1165, 1166, 1171 & 1172 13. claim of Long Term Capital Loss and upfront lease rent back to file of ld. Commissioner of Income Tax (Appeals) for consideration fresh in accordance with law. Ground Nos. 5 & 6 are partly allowed for statistical purpose. 44. In result, appeal of assessee in ITA No.1166 Mds 2013 is partly allowed for statistical purpose. 45. We take up appeal of Revenue in ITA No.1172 Mds 2013 for assessment year 2008-2009. Revenue has altogether raised four grounds of which 1 & 4 are general in nature needing no specific adjudication. 46. Vide ground no.2, Revenue is aggrieved on deletion of notional interest of 61,31,769 - attributed to interest free loans given by assessee to its subsidiary SFIL. 47. We find that similar issue has come up before this Tribunal in Revenue s appeal for assessment year 2006-2007. We have held that at para 23 that matter requires afresh consideration by ld. Assessing Officer for verifying commercial expediency. For impugned assessment year also similar direction is given. Ground No. 2 is allowed for statistical purpose. :- 20 -: ITA Nos.591 & 675 12, 1165, 1166, 1171 & 1172 13. 48. Vide ground No.3, Revenue is aggrieved on deletion of disallowance made by ld. Assessing Officer u s.40(a)(ia) of Act for export commission paid to non-resident person. 49. We find that similar issue has been raised by Revenue in its appeal for assessment year 2006-2007. We have at para 27 held that disallowance was rightly deleted by ld. Commissioner of Income Tax (Appeals). fact situation being same, we do not find any reason to interfere with order of Commissioner of Income Tax (Appeals) on this issue for impugned assessment year also. Accordingly, ground no.3 stand dismissed. 50. appeal of Revenue in ITA No.1172 Mds 2013 of assessment year is partly allowed for statistical purpose. 51. Now, we take up Cross-Appeals for assessment year 2007- 2008:- Assessee in its appeal has altogether raised five grounds of which 1 & 5 are general in nature needing no specific adjudication. 52. Vide ground no.2, grievance of assessee is on disallowance of expenditure incurred on software which was confirmed by ld. Commissioner of Income Tax (Appeals). 53. We find that similar ground was raised by assessee in its appeal for assessment year 2006-2007. We have held at para 6 :- 21 -: ITA Nos.591 & 675 12, 1165, 1166, 1171 & 1172 13. that software expenditure being in nature of renewal of license and acquisition of application of software not having life of more than two to three years could only be considered Revenue outgo. Fact situation being same, we delete disallowance of 42,87,180 -. Accordingly, ground no.2 of assessee is deleted. 54. Vide at ground No.3, grievance of assessee is that prior period expenditure of 1,08,868 - was disallowed by ld. Assessing Officer and such disallowance was confirmed by ld. Commissioner of Income Tax (Appeals). 55. Before us, ld. Counsel for assessee submitted that bills for expenditure was received by assessee during previous year relevant to assessment year 2009-2010. Such expenditure as per ld. Authorised Representative was added back in return in said assessment year. Submission of ld. Authorised Representative was that sum was correctly claimed as prior period expenditure during impugned assessment year when it was incurred. Thus, according to him claim was unfavorably disallowed. 56. Per contra, ld. Departmental Representative submitted that assessee was not able to show what type of expenditure was and how bills were raised in succeeding years. According to him, disallowance is rightly made. :- 22 -: ITA Nos.591 & 675 12, 1165, 1166, 1171 & 1172 13. 57. We have considered rival contentions and perused orders of authorities below. claim of assessee that bills for expenditure claimed as prior period was received by assessee only in previous year relevant to assessment year 2009-2010. assessment year 2009-2010 is subsequent to impugned assessment year. If expenditure was incurred in previous year relevant to impugned assessment year, assessee ought have shown it only as provision and not as prior period of expenditure. We are, therefore of opinion that assessee failed to justify its claim, and it was rightly disallowed by lower authorities. Ground No.3 stand dismissed. 58. Vide no. 4, assessee is aggrieved on disallowance of long term capital loss of 90,188 - on redemption of units of ICICI and inclusion of tax free interest income of 1,26,765 - received from UTI. 59. ld. Counsel for assessee submitted that these claim were preferred by assessee for first time before ld. Commissioner of Income Tax (Appeals). As per ld. Authorised Representative, ld. Commissioner of Income Tax (Appeals) relying on judgment of Hon ble Apex Court in case of Goetze (India) Ltd (supra) had refused to consider claim. However, as per ld. Authorised Representative by virtue of judgment of Apex Court in case of :- 23 -: ITA Nos.591 & 675 12, 1165, 1166, 1171 & 1172 13. National Thermal Power Corporation (supra) appellate authority had ample powers to consider such claim. 60. Per contra, ld. DR strongly supported orders of authorities below. 61. We have considered rival contentions and perused orders of authorities below. We find that similar issue has been raised by assessee in its appeal in assessment year 2008-2009. We had held at para 43, that claims had to be considered on merits by ld. Commissioner of Income Tax (Appeals). For impugned assessment year also remit issue relating claim of long term capital loss and claim for exclusion of tax from interest income back to file of ld. Commissioner of Income Tax (Appeals) for consideration afresh in accordance with merits of issue. Accordingly, ground no.4 is allowed for statistical purpose. 62. In result, appeal of assessee in ITA No.1165 Mds 2013 is partly allowed for statistical purpose. 63. Now, we take up Revenue appeal in ITA no.1171 Mds 2013 of assessment year 2007-2008:- Revenue has altogether raised five grounds of which 1 & 5 are general in nature needing no specific adjudication. :- 24 -: ITA Nos.591 & 675 12, 1165, 1166, 1171 & 1172 13. 64. Ground no.2 raised by Revenue is similar to its ground no.2 for assessment year 2006-2007. 65. We have upheld order of ld. Commissioner of Income Tax (Appeals) restricting disallowance to 2% of exempt income. For very same reasons which as mentioned by us at para 19, we are of opinion that ld. Commissioner of Income Tax (Appeals) was justified in restricting addition to 2% of exempt income. Hence ground No.2 of Revenue is dismissed. 66. Ground No.3 raised by Revenue is similar to ground No.3 in its appeal for assessment year 2006-2007. We had remitted issue regarding disallowance of interest expenditure attributable to interest free loans given to its subsidiaries back to file of ld. Assessing Officer for considering commercial expediency at para 23 above. Similar directions are given here also. Ground 3 of Revenue is allowed for statistical purpose. 67. Ground No.4 raised by Revenue is similar to ground No.4 for assessment year 2006-2007. 68. For very same reasons as mentioned by us in para 27 in above in relation to Revenue s appeal for assessment year 2006- 07, we uphold order of ld. Commissioner of Income Tax (Appeals) :- 25 -: ITA Nos.591 & 675 12, 1165, 1166, 1171 & 1172 13. deleting disallowance made u s.40(a)(ia) of Act. Ground 4 raised by Revenue is therefore dismissed. 69. In result, appeals of assessee in ITA Nos.591 Mds 2012, 1165 &1166 Mds 2013 are partly allowed for statistical purpose and and Revenue appeals in ITA Nos.675 2012, 1171 & 1172 2013 are also partly allowed for statistical purpose. Order pronounced on Friday, 30th day of September, 2016, at Chennai. Sd - Sd - ( . . . )) ( . ) (N.R.S. GANESAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER Chennai Dated: 30th September, 2016 KV Copy to: 1. Appellant 3. ( ) CIT(A) 5. DR 2. Respondent 4. CIT 6. GF Sundram Fasteners Limited v. Additional Commissioner of Income-tax, Company Range VI, Chennai