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2017 (2) TMI 1484 - AT - Income TaxRevision u/s 263 - disallowance of royalty and technical fees - AO disallowed 25% of the expenditure as capital expenditure - HELD THAT:- On this disallowance we do not agree with the order of ld CIT to hold that 75% of amount of expenditure allowed by the AO is erroneous and prejudicial to the interest of the revenue. Furthermore, the ld CIT has set aside the issue to the file of Assessing Officer to carry out the full enquiries in the matter. It is also contrary to the principal laid down by the Hon'ble Delhi High Court in CIT Vs. Jyoti Foundation [2001 (11) TMI 48 - GUJARAT HIGH COURT] and DG Housing [2012 (3) TMI 227 - DELHI HIGH COURT]. It can also be not said that there is lack of enquiry on the aspect of allowability of expenditure. The ld Assessing Officer himself raised the query with respect to the allowability of the above expenditure is revenue expenditure, considered the reply of the assessee, thereafter has reached at a conclusion that 25% of the expenditure is capital in nature. Therefore the Ld. assessing officer has examined the expenditure with reference to capital expenditure versus revenue expenditure and its allowability vis a vis quantum also. Therefore, it cannot be said that the view taken by the AO is erroneous. Furthermore, ld CIT has failed to establish what is the error committed by the Assessing Officer. He has merely stated that in the order of the ld Hon'ble High Court in Southern Switchgear [1983 (3) TMI 18 - MADRAS HIGH COURT] there are two other decisions of Hon'ble High Court were referred where 50% and 100% of the expenditure were held to be capital in nature. Therefore, it is clearly discernible that ld CIT is just questioning the estimate made by the Assessing Officer. Therefore, we are not inclined to uphold the order of ld CIT u/s 263 of the Act on this count. Disallowance of 25% model fee holding it as capital in nature - HELD THAT:- The issue of allowability of the model fee has also been examined by the Hon’ble high court in case of the assessee wherein it has been held to be revenue in nature and fully liable to the assessee. During the course of assessment proceedings the Ld. assessing officer has raised the adequate queries on this point which was also replied by the assessee therefore we are not inclined to hold that it is also a case of Lack of Inquiry. Therefore for similar reasons given by us on the issue of royalty and technical guidance fees for this ground also we are not inclined to uphold the order of the Ld. CIT holding that the order of the Ld. Assessing officer is erroneous and prejudicial to the interest of revenue. TDS u/s 195 on export commission - HELD THAT:- AO has made due enquiry in applicability of withholding tax on export commission and when the claim of the assessee is also supported by 2 circulars we do not find any infirmity in the order of the Ld. assessing officer in allowing the export commission to a foreign party when no services have been rendered in India. It is also not the case of the Ld. CIT that income of the agent is chargeable to tax in India when the recipient is resident of Japan. CIT has incorrectly assumed jurisdiction on this issue. Further, the issue has already been decided in favour of the assessee by the coordinate bench in assessment year 2006 – 07 and 2007 – 08 allowing the claim of the assessee of export commission; therefore it cannot be said that the view taken by the Learned assessee officer was erroneous in allowing the claim of the assessee of the export commission. CIT has also not referred to any of the judicial precedents where the export commission has been held to be royalty or fees for technical services none has been brought to our notice by the learned CIT during the course of hearing - Thus not possible to hold that the order of the Ld. assessing officer was erroneous. Therefore we quash the order of the Ld. CIT in assuming jurisdiction under section 263 of the income tax act with respect to allowance of export commission. Double disallowance of depreciation - HELD THAT:- Claim is allowed is related to the assessee in the consequential order dated 26/10/2009 passed under section 143 (3) read with section 263 of the income tax act therefore it is unfair for Ld. CIT to assume jurisdiction under section 263 of the income tax act. Additional depreciation on the computers - HELD THAT:- The query was raised during the course of the assessment proceedings which was replied on 01/12/2006 explaining the fulfillment of conditional for claim of additional depreciation with risk back to various assets. As claimed by the assessee that this issue has been decided in favour of the assessee by dispute resolution panel in its own case for assessment year 2006 – 07 therefore it cannot be said that the claim allowed by the ld. assessing officer is erroneous at all. In view of this we cannot sustain the order of Ld. CIT in assuming jurisdiction under section 263 of the income tax act, as it cannot be said that the order of the Ld. assessing officer in allowing additional depreciation on computers is erroneous as well as prejudicial to the interest of the revenue. - Assessee appeal allowed.
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