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2015 (8) TMI 40 - ITAT CHENNAIAdjustment of corporate guarantee provided to Associate Enterprises - Held that:- By following the order of the Delhi bench of this Tribunal in Bharti Airtel Ltd (2014 (3) TMI 495 - ITAT DELHI) and the order of this Tribunal in the assessee's own case for assessment year 2009-10 and for the reasons stated therein, we hold that the corporate guarantee given by the assessee to its AEs does not involve any cost to the assessee, therefore, it has no bearing on the profits, income, loss or assets of the assessee and outside the ambit of international transaction to which ALP adjustment has to be made. According, the orders of the lower authorities are set aside and the Assessing Officer is directed to delete the addition - Decided in favour of assessee. Disallowance of trade mark licence fee - Held that:- For the assessment year 2009-10, an identical issue came up before this Tribunal with regard to adjustment of ALP towards payment of trademark licencee fee. This Tribunal found that there is nothing uncommon in assessee's making payment to the use of the trademark to M/s Redington Distribution Pte. Ltd, Singapore. Referring to the judgment of the Apex Court in S.A.Builders (2006 (12) TMI 82 - SUPREME COURT), this Tribunal found that the expenditure is an allowable business expenditure. In view of the order of this Tribunal for the assessment year 2009-10, this Tribunal do not find any reason to interfere in the order of the lower authority. Accordingly, the same is confirmed.- Decided in favour of assessee. Disallowance of depreciation on temporary structure - Held that:- The assessee claims that expenditure was incurred in wooden partitions, plastering, water proofing treatment, installation charges ad flooring charges etc. Though the ld. Counsel says that the expenditure was incurred in the building taken on rent, no material is available on record to suggest that the abovesaid expenditure was incurred on the building taken on lease/rent. Whatever may the nature of the building, the assessee incurred the expenditure on the temporary structure like office cabins, wooden partitions, plastering, water proofing treatment, installation charges, flooring charges etc. These expenditure are for the purpose of making the building fit for use of the business. Therefore, this Tribunal is of the considered opinion that these expenses are to be allowed as revenue expenditure. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to allow deduction of ₹ 1,18,69,510/- as revenue expenditure Disallowance of payment made to Microsoft Corporation u/s 40(a)(i) - Held that:- This Tribunal is of the considered opinion that in the absence of any details with regard to the credit given by the assessee and the so called returns made by the assessee to M/s Microsoft Corporation, the liability of the assessee to deduct tax cannot be decided. Moreover, the copy of the order of the DRP dated 30.9.2010 on which the DRP placed its reliance is not available on record, therefore, this Tribunal is not in a position to decide on what reasons the disallowance was made by the DRP. Accordingly, the orders of the lower authorities are set aside and the issue of disallowance u/s 40(a)(i) of the Act is remitted back to the file of the Assessing Officer. - Decided in favour of assessee for statistical purposes. Disallowance of bad debts written off - Held that:- What is required is that the debt has to be written off in the books of account of the assessee for the previous year as irrecoverable and subject to fulfilling the conditions u/s 36(2)of the Act, the same has to be allowed. It is nobody's case that the debt which was claimed as written off was not included as income in the previous year. Therefore, this Tribunal is of the considered opinion that the lower authorities are not justified in disallowing the claim of the assessee. Accordingly, the order of the lower authorities are set aside and the Assessing Officer is directed to allow the claim of the assessee.- Decided in favour of assessee. Disallowance of expenditure for earning exempt income - Held that:- The total income is nothing but an income assessed under the Income-tax Act, 1961, for the purpose of levy of tax. Sec. 37(1) of the Act provides for allowing the expenditure laid out or expended wholly and exclusively for the purpose of business or profession in computing the income chargeable for taxation. The expenditure incurred by the assessee for the purpose of earning the dividend income or for the purpose of earning profit from the business of the partnership firm or from agricultural income cannot be treated as laid out or expended wholly and exclusively for the purpose of business of the assessee. Therefore, even before introduction of sec. 14A, the expenditure relatable to any incomes which do not form part of the total income cannot be allowed while computing the taxable income under the Income-tax Act, 1961. Therefore, irrespective of the provisions of sec. 14A r.w. Rule 8D, the expenditure claimed by the assessee for earning the exempted income cannot be allowed as deduction for the purpose of computing taxable income. - Decided against assessee.
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