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2015 (7) TMI 76

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..... ature of the expense. An assessee cannot be denied a claim for deduction which is otherwise tenable in law on the ground that the assessee had treated it differently in its books. The observation of the Supreme court in the case of Kedar Nath Jute Manufacturing Co. Ltd. vs CIT (1971 (8) TMI 10 - SUPREME Court) puts this beyond doubt and hold whether the assessee is entitled to a particular deduction or not will depend on the provision of law relating thereto and not on the view which the assessee might take of his rights nor can the existence or absence of entries in the books of accounts be decisive or conclusive in the matter - Decided in favour of assessee. Addition u/s 14A - CIT(A)deleted the addition - Held that:- No expenditure in the form of interest on other expenditure for earning of exempt income was pointed out by A.O. It is an established law that for making disallowance u/s 14A finding of fact with respect to incurring of expenditure is a pre-requisite which has not been done in this case. We find that Ld. CIT(A)'s finding are exhaustive and detailed and we do not find any infirmity in the same.- Decided in favour of assessee. Repair and maintenance expenditure d .....

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..... ion 142(1) wherein inter alia, the assessee is required to furnish the requisite information/detail etc. in the prescribed manner and in such form. 2. At the outset, Ld. A.R. invited our attention to the order of Tribunal passed on 19.12.2014 in the case of assessee itself for Assessment Year 2008-09 and submitted that first two grounds of appeal were covered in favour of assessee by the above said order. 3. Ld. D.R. though contested the grounds of appeal and relied upon assessment order but conceded that the above grounds were covered against revenue by the order of Tribunal in I.T.A. No. 5536/Del/2013 in order dated 19.12.2014. Ld. D.R. invited our attention to ground No.4 and submitted that A.O. during assessment proceedings the A.O. requested to the assessee to submit information on account of repair maintenance in the prescribed form but the assessee did not furnish the complete information and left the crucial columns blank and therefore the A.O. had rightly disallowed the claim of assessee for repairs and maintenance as assessee had not submitted the complete information. Regarding ground No.3, Ld. D.R. relied upon the assessment order. 4. Ld. A.R. on the other h .....

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..... f the tribunal order and the same are reproduced below: 7. We have heard both the counsel and perused the records. As regards Ground No. 1 is concerned, the Revenue has challenged the impugned Order of the Ld. CIT(A) in deleting the disallowance of ₹ 55,70,045/- on account of trade mark fee by holding that it was a revenue expenditure and without considering that right to use the trade mark acquired by the assessee was an intangible asset as defined u/s. 32 of the I.T. Act. After hearing both the parties on the issue in dispute as well as after going through the orders passed by the Revenue Authorities alongwith order dated 11.7.2011 passed by the Hon'ble Jurisdictional High Court in the case of CIT vs. G4S Securities System (India) Pvt. Ltd. in ITA Nos. 1943/Del/2010, 763/Del/2011 765/Del/2011 763/2011 wherein the Hon'ble High Court has adjudicated the matter as under:- 6. We have heard the learned counsel for the parties and perused the record. 7. At the outset it may be noted that it was following agreement dated 20.06.2002 between Group 4 Falck A/S, Denmark and Group 4 Holding Pvt. Ltd., that a further sub license agreement was entered into by Group .....

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..... ITR 55, it was held that the question regarding capital or revenue expenditure depends on the terms of agreement in each case. In the case of CIT Vs. Gujarat Carbon Ltd., 254 ITR 294, it was held that the payment of revenue under the agreement was directly relatable to services which were in the revenue field and were allowable as revenue expenditure. In the case of Goodyear (I) Ltd. Vs. ITO 73 ITD 189(Delhi), the assessee had not acquired ownership right of technical knowhow but transfer of use of licenses. There was no advantage of enduring nature and hence it was held to be a case of revenue expenditure. In the case of Travancore Sugar and Chemicals Ltd. 62 ITR 566 (SC) it was held that whenever a payment is based on a percentage of turnover or profits, it necessarily has no relation to the capital value of the asset, because it cannot be known at the time of the agreement what the turnover or profits will be over a period of years. In another case reported as DCIT Vs. Swaraj Engines Ltd. (2002) 124 Taxman 188, the Tribunal held, revenue payment is allowable as revenue expenditure, since it is related to sales and that it is paid for better conduct, efficiency and improvement o .....

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..... ety Glass Ltd. in ITA NOS. 1110/2006 1111/2006 wherein the Hon'ble High Court has adjudicated the matter as under:- 8. Having heard the learned counsel for the parties, what has emerged on facts as found by the authorities below is as follows: The assessee is in the business of manufacturing safety glass which is used in automobiles. Thus the main source of income of the assessee is from the said activity. The assessee appears to have entered into an agreement with Arthur Anderson Associates in the financial year 1996-97 (assessment year 1997-98) for installation of a software application for assistance in areas related to financial accounting, inventory and purchase. It has emerged that an offer was made in respect of such a software application by Arthur Anderson Associates, which find a reflection in a letter dated 25.06.1996. The said agreement between the assessee and Arthur Anderson Associates also required the assessee to enter into a back-to-back agreement with Oracle. The reasons perhaps being that the software application supplied by the Aurthor Anderson Associates worked on oracle application. It is precisely for this reason that Arthur Anderson Assoc .....

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..... cases which deal with technology and software application, which do not in any manner supplant the source of income or added to the fixed capital of the assessee. [See Alembic Chemical Works Co. Ltd. vs CIT (1989) 177 ITR 377; CIT vs J.K. Synthetics (2009) 309 ITR 371 at page 412 and CIT Vs. Indian Visit.com (supra)]. 9.1. This is the approach which the Supreme Court has applied even in cases where there is a once for all or a lump sum payment. What is to be seen in the facts of this case, as already noticed by us hereinabove, that the assessing officer as a matter of fact has returned a finding that the expenditure undertaken was for overhauling the accountancy of the assessee and to efficiently train the accounting staff of the assessee. The Tribunal, which is decidedly the final fact finding authority has after noticing the material on record observed that the expenditure was incurred under various sub-heads, which included licence fee, annual technical support fee, professional charges, data entry operator charges, training charges and travelling expenses. The final figure was a consolidation of expenses incurred under these sub-heads. The Tribunal, in our view, and rightly .....

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..... he operating system which controls the working of the computer; while the other being applications such as word processing programs, spread sheets and data base which perform the tasks for which people use computers. Besides these there are two other categories of software, these being: network software and language software. The network software enables groups of computers to communicate with each other, while language software provides with tools required to write programmes. (See Microsoft Computer Dictionary, 5th Edition Software at page 489). 12. The aforesaid would show that what the assessee acquired through Arthur Anderson and Associates was an application software which, enabled it to execute tasks in the field of accounting, purchases and inventory maintenance. The fact that the application software would have to be updated from time to time based on the requirements of the assessee in the context of the advancement of its business and/or its diversification, if any; the changes brought about due to statutory amendments by law or by professional bodies like the Institute of Chartered Accountants of India, which are given the responsibility of conceiving and formulati .....

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..... ed. 7.3 In view of above, we are of the considered view that above issue is exactly the similar to the issue involved in the present appeal and covered by the aforesaid decision. Hence, respectfully following the above precedent, we decide the issue in dispute in favor of the Assessee and against the Revenue. 8. We find that similar payment has been made in the present year also therefore, respectfully following the earlier order on similar addition we dismiss ground No.2 of Revenue's appeal. 9. As regards ground No.3 in respect of addition u/s 14A and Ld. CIT(A) deleted the same by holding as under: 5. Regarding the Ground No.5 relating to disallowance of ₹ 5,070 under section 14A of the Act, the Ld AR was aggrieved that the AO made the disallowance without appreciating that neither any expenditure was incurred (on exempt income) nor any exempt income was received during the year. The Ld Counsel submitted that the Appellant had acquired shares of Eicher Motors Limited on 24 March 2008 relating to AY 2008-09, which stood at ₹ 9,46,080 in the Schedule 5 of the financial statements of the year under appeal. In this regard, it was submitted that the Appe .....

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..... he appellant had already capitalized ₹ 11.87 Crores is also evident by the Tax Audit Report, which was placed on record during the proceedings. I observe that the AO desired further information regarding repair and replacement expenditure in a format spanning 26 columns. In response to this, the appellant had furnished necessary details except that 1-2 columns were not filled up on the ground that such information is not maintained. The appellant had also furnished relevant Bills/Invoices. However, the AO took an adverse view of the fact of appellant not having provided information on 1-2 columns. In my view the AD could have been more judicious and examined the issues on merit in the light of evidences placed before him including bills/invoices. Such an information is not a statutory requirement for allowing claim of repair maintenance expenses. I find that the aforesaid expenditure was incurred to preserve and maintain the existing machinery, which was malfunctioning and thus demanded repairs/replacement to bring the efficiency of the machine, to the level of original performance and no new advantage or assets can be held to have come into existence as a result of such ex .....

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