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2014 (12) TMI 1236 - AT - Income TaxExpenditure pertaining to employee stock purchase scheme disallowed - Held that:- There is no dispute to the fact that the assessee in the impugned assessment year has issued 7590 equity shares to its employees at concessional price of R.100/- each under ESPS against the prevalent market price of ₹ 850/- per share. The difference amount of ₹ 53.92 lakhs has been debited by the assessee company as business expenditure. We find the Bangalore Special Bench of the Tribunal in the case of Biocon Ltd., (2013 (8) TMI 629 - ITAT BANGALORE) while deciding an identical issue has held that discount on issue of Employee Stock Option Plan (ESOP) is allowable as deduction in computing the income under the head “profits and gains of business or profession”. It is on account of an ascertained liability and it cannot be treated as a short capital receipt. While doing so, the Special Bench of the Tribunal has also considered the decision of the Delhi Bench of the Tribunal in the case of Ranbaxy Laboratories Ltd. (2009 (7) TMI 1273 - ITAT DELHI) which has been relied on by the CIT(A) while rejecting the claim of the assessee.Respectfully following the decision of the Bangalore Special Bench of the Tribunal and in absence of any distinguishable features brought to our notice by the Ld. DR, we set-aside the order of the CIT(A) on this issue and direct the AO to allow the claim of expenditure - Decided in favour of assessee Disallowance of Warranty Provision in normal tax computation - Held that:- The Hon’ble Supreme Court in the case of Rotork Controls Pvt. Ltd. (2009 (5) TMI 16 - SUPREME COURT OF INDIA ) has held that when large number of sophisticated goods are manufactured and sold with warranty and the past records show that defects existed in some of the items, the provision made by the assessee for warranty claims on the basis of past experience is an allowable deduction u/s.37. The various decisions relied on by the Ld. Counsel for the assessee also support the case of the assessee. Since the assessee in subsequent years has incurred expenditure against such warranty provision, therefore, we do not find any justification in the order of the CIT(A) restricting the disallowance to ₹ 44,94,000/- which was the amount outstanding as on 31-03-2003,i.e. after a period of 12 months from the end of the accounting year. We accordingly set-aside the order of the CIT(A) on this issue and direct the Assessing Officer to delete the entire disallowance - Decided in favour of assessee Disallowance of Warranty Provision in computation of tax as per the provisions of section 115 JB - MAT - Held that:- CIT(A) while deciding the appeal found that assessee has subsequently incurred an amount of ₹ 65,84,078/- towards stamp duty on adjudication of court order and another ₹ 4,95,610/- towards professional fees. Therefore, he held that an amount of ₹ 70,84,078/- cannot be considered as unascertained contingent liability for which he allowed 1/5th of such expenditure as deduction u/s.35DD. The Ld. Departmental Representative could not controvert the above factual findings given by the Ld.CIT(A). Accordingly, the order of the CIT(A) is upheld on this issue and the ground raised by the Revenue is dismissed. - Decided in favour of assessee Treatment to software expenditure - revenue or capital expenditure - Held that:- The issue stands squarely decided in favour of the assessee by the decision of the Hon’ble Bombay High Court in the case of CIT Vs. Lubrizol India Ltd.(2015 (8) TMI 134 - BOMBAY HIGH COURT) where it has been held that expenses incurred to obtain the application software which has to be upgraded from time to time due to change in technology has to be allowed as revenue expenditure. - Decided in favour of assessee Adhoc additions on account of car expenses, communication expenses, and workman & staff welfare costs - Held that:- We find the issue stands decided in favour of the assessee by the decision of Sayaji Iron and Engineering Company Vs. CIT reported [2001 (7) TMI 70 - GUJARAT High Court ] where it has been held that partial disallowance of expenditure for maintenance of vehicles in case of a private limited company cannot be made. Addition, if any can be made in the hands of the concerned directors as perquisites but cannot be disallowed in the hands of a limited company. - Decided in favour of assessee Unutilized CENVAT credit not be treated as income of the assessee - CIT(A) deleted the disallowance - Held that:- CIT(A) while allowing the claim of the assessee has also followed the decision of Chandigarh Special Bench of the Tribunal in the case of DCIT Vs. Glaxo Smithkline Consumer Health care Ltd. reported in [2007 (7) TMI 334 - ITAT CHANDIGARH ]. Further, the Pune Bench of the Tribunal in assessee’s own case has allowed the issue of unutilized Modvat credit in favour of the assessee for A.Y. 1993-94. The Ld. Departmental Representative could not bring any distinguishable features so as to take a different view than the view taken by the Ld.CIT(A). - Decided in favour of assessee Addition on account of provision for discount on sale - Held that:- Since the Ld. Departmental Representative could not controvert the finding given by the Ld.CIT(A) that as against provision of ₹ 1.09 crores, the assessee has made payment to the tune of ₹ 1.11 crores towards the provision for discount on sales, therefore, under the facts and circumstances of the case, we find no infirmity in the order of the CIT(A) deleting the disallowance made by the AO. - Decided in favour of assessee Addition on account of loss in Foreign Exchange Rate Fluctuation - Held that:- Hon’ble Supreme Court in the case of CIT Vs. Woodward Governor India Pvt. Ltd., reported in [2009 (4) TMI 4 - SUPREME COURT ] has held that losses suffered by the assessee on account of fluctuation in the rate of foreign exchange as on the date of the balance sheet is an item of expenditure u/s.37(1) of the I.T.Act. Considering the fact that loss amounting to ₹ 72,10,000/- was incurred by the assessee on account of foreign exchange rate fluctuation in respect of import and export transactions made during the year we find no infirmity in the order of the CIT(A) allowing the claim of loss of ₹ 72,10,000/- on account of foreign exchange rate fluctuation as a revenue expenditure. - Decided in favour of assessee
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