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2017 (12) TMI 1732 - ITAT MUMBAIDisallowance of EDP expenses considering the same as capital expenditure - HELD THAT:- In the case of Raychem RPG Ltd [2011 (7) TMI 953 - BOMBAY HIGH COURT] has held that the assessee in that case was manufacturing telecommunication and power cable. Software was not a part of profit making apparatus of the assessee. Therefore, it held the expenditure as revenue expenditure. In the instant case, the assessee-company is engaged in the business of manufacturing, trading and marketing of industrial and automatic lubricants. EDP expenses is not a part of profit making apparatus of the assessee-company - We direct the AO to treat the EDP expenses as revenue expenditure. Thus the 1st ground of appeal is allowed. Disallowance of advertisement expenses - HELD THAT:- We are of the considered view that whether there should be disallowance of advertisement expenses or not requires verification at the level of AO from the primary documents. It cannot be decided at an abstract level treating it as capital expenditure or revenue expenditure. One has to delve into micro details from bills/vouchers. Disallowance by the AO of travelling and conveyance expenses - HELD THAT:- We are of the considered view that whether the expenditure incurred by the assessee for travelling and conveyance is wholly and exclusively for the business purpose or not has not been examined either by the AO or the Ld. CIT(A). It requires verification at the level of the AO from bills/vouchers. Disallowance of interest on housing loan considering the same as non-business expenditure - HELD THAT:- We are of the considered view that this aspect is required to be verified at the level of the AO from the details to be filed by the assessee - we set aside the order of the Ld. CIT(A) and restore the matter to the file of the AO to make a fresh order Penalty u/s 271(1)(c) - disallowance of travelling and conveyance expenses as not incurred wholly and exclusively for the purpose of its business - HELD THAT:- The above addition made by the AO and upheld by the Ld. CIT(A) has been set aside by us. Therefore, the penalty imposed by the AO on the said addition does not survive as held in K.C. Builders vs. ACIT [2004 (1) TMI 7 - SUPREME COURT] Therefore, the penalty is cancelled.
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