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2015 (11) TMI 1858 - AT - Income TaxClaim of amortization of premium paid on purchases of investment - HELD THAT:- In assessee’s own case for the assessment year 2003-04 [2010 (10) TMI 764 - ITAT, MUMBAI] wherein the issue with regard to amortization of premium paid on purchases of investments was allowed in favour of assessee. Amortization of pre-operative expenses - HELD THAT:- As per assessee’s own case for the assessment year 2003-04 [2010 (10) TMI 764 - ITAT, MUMBAI] we confirm the action of the CIT(A) for allowing assessee’s claim for amortization of pre-operative expenses. Addition made on account of profit on sale of investment being chargeable to tax - HELD THAT:- As per assessee’s own case for the assessment year 2003-04 [2010 (10) TMI 764 - ITAT, MUMBAI] the profit on sale of investment in the case of an assessee carrying on general insurance business cannot be brought to tax after the omission of rule 5(b) and as per the Circular cited. Exempting dividend income - HELD THAT:- This issue is also covered by the order of the Hon’ble Bombay High Court in the case of General Insurance Corporation of India [2011 (12) TMI 70 - BOMBAY HIGH COURT] - we do not find any infirmity in the order of CIT(A) exempting the dividend income. Disallowance u/s 14A - HELD THAT:- As relying on M/S. RELIANCE GENERAL INSURANCE CO. LTD. VERSUS. THE DY. COMMISSIONER OF INCOME-TAX [2010 (4) TMI 1076 - ITAT MUMBAI] we do not find any merit in the action of lower authorities for disallowance made u/s.14A, which is not applicable to the Insurance Company. TDS u/s 194C or 194I - payment made to Hotel - HELD THAT:- We have considered rival contentions and found that the payment to Hotel is covered by the provision of Section 194I. Circular No.5 dated 30-7-2002 also supports the contention that while making payment to the Hotel tax is liable to be deducted u/s.194-I. Hon’ble Bombay High Court in the case of East India Hotels Ltd. & Anr. [2009 (3) TMI 8 - BOMBAY HIGH COURT], held that in case of payment to Hotels tax is to be deducted at source as per provisions of Section 194-I and not as per the provisions of Section 194C. Respectfully following the decision of the Hon’ble jurisdictional High Court vis-à-vis the CBDT Circular, as discussed above, we do not find any merit for disallowance of expenses on the plea that payment to Hotel is subject to deduction of tax u/s.194C of the IT Act. Accordingly, the AO is directed to delete the disallowance so made. Nature of expense - expenditure on purchase of hard disk, head sets, RAM etc - revenue or capital expenditure - HELD THAT:- The issue is directly covered by the decision in the case of Southern Roadways Ltd., [2006 (10) TMI 82 - MADRAS HIGH COURT], wherein it was held that expenditure on replacement of machinery and expenditure on upgradation of computer are revenue in nature. In the instant case also the expenditure was incurred for upgradation of the computers by placing its hard disk, RAM etc. Respectfully following the decision of Hon’ble Madras High Court, we do not find any merit in the AO’s action for disallowing the expenditure on purchase of hard disk, head sets, RAM etc. on the plea that the same being capital in nature. Disallowance of expenditure pertaining to purchase of software/renewal of software licence, considering the same to be capital in nature - HELD THAT:- Respectfully following the order of the Tribunal in assessee’s own case, we direct the AO to delete the disallowance made on account of expenditure pertaining to purchase of software, renewal of software licence. TDS u/s 194H - Disallowance of co-insurance fees u/s.40(a)(ia) of the Act for non-deduction of TDS - HELD THAT:- In the present case, the co-insurers were stated to be neither acting as an agent nor acting as broker for and on behalf of the assessee and therefore the payments of co-insurance fees could not be construed as commission as per the Act or in commercial parlance. The AR made detailed submissions to bring out how the provisions of Sec.194H were not applicable in their case. The AR also placed reliance on a number of judicial pronouncements, the ratio of which is not applicable to the facts of this case. Considering totality of facts and circumstances of the case, we are in agreement with the contention of ld. AR that no disallowance is warranted u/s.40(a)(ia) in respect of coinsurance fees paid by assessee.
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