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2014 (6) TMI 316 - ITAT HYDERABADValidity of reopening of assessment u/s 147 of the Act Held that:- The AO has rightly reopened the assessment and the action of the CIT(A) in confirming the same is also proper thus, there is no infirmity in the issue of notice u/s 148 of the Act Relying upon Ess Kay Engineering Co. (P) Ltd. Vs. CIT [1997 (7) TMI 114 - SUPREME Court] - the reopening initiated by the AO is upheld Decided against Assessee. Disallowance of expenditure incurred for license fee for the use of SAP in the company and other communication expenditure Held that:- As it is one time expenditure and grant of licence is tied up to the payment made by the user, the same shall be allowed as revenue expenditure -CIT(A) has rightly came to a conclusion that expenditure is revenue in nature but that of deferred revenue - The expenditure is revenue in nature and AO has rightly considered as such at the time of original assessment thus, the order of the CIT(A) is modified - AO is directed to allow entire expenditure as claimed Decided partly in favour of Assessee. Disallowance of the claim u/s 35(2AB) of the Act Held that:- The statutory formalities for getting approval u/s 35(2AB) are that application in Form No. 3CK and 3CL are to be submitted and an order of approval has to be obtained in Form No. 3CM from the prescribed authority - the assessee has not furnished Form No. 3CM for claiming weighted deduction u/s 35(2AB) - The AO has allowed this claim earlier without examining the allowability in the absence of certificates - there is justification for reopening of assessment thus, the order of the CIT(A) is set aside and the matter is remitted back to the AO with a direction to allow weighted deduction u/s 35(2AB) as and when the assessee receives the approval under Form No. 3CM from the prescribed authority Decided in favour of Assessee. Disallowance made u/s 35(1)(ii) of the Act - Claim made for weighted deduction Held that:- The assessee filed list of payments i.e. payees list consisting of various Universities and Institutions for purpose of testing and sample note for approval from Central Rice Research Institute, Cuttack has been produced revenue contented that the directions should be given to verify whether approval has been in accordance with the guidelines prescribed in Rules 5C and 5D or notified by the Central Government on proviso to Clause (2) thus, the matter is remitted back to the AO to grant weighted deduction after verifying whether the approval has been obtained by the Universities/Institutions to whom payments have been made. Disallowance u/s 80HHC of the Act Held that:- CIT(A) was of the view that deemed export sales are duly certified by the concerned agencies and fully documented they are to be treated as part of the export turnover there was no infirmity in the order of the CIT(A) thus, the AO is directed AO to modify the calculation u/s 80 HHC after including the deemed export sales as part of export turnover. Claim of bad debts Held that:- Following TRF Ltd. V. CIT, [2010 (2) TMI 211 - SUPREME COURT] - after the amendment of section 36(1)(vii) of the Act, w.e.f. April 1, 1989, in order to obtain a deduction in relation to bad debts, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable, it is enough if the bad debt is written off as irrecoverable in the accounts of the assessee Decided against Revenue.
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