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2016 (8) TMI 1309 - AT - Income TaxNature of expenditure - expenditure to acquire know-how - revenue or capital expenditure - Held that:- Referring to direction has been followed by the Tribunal in the AY 2003-04 also. Now, it has been informed by the Ld. Senior Counsel that in pursuance of the Tribunal order, the AO after detailed examination has allowed this expenditure as revenue expenditure. Even in the latest assessment order, no such disallowance has been made. Thus, this issue stands covered in favour of the assessee by the final finding arrived at in the earlier years by the AO and accordingly, we direct the AO that on similar lines, the expenditures aggregating to ₹ 41,68,896/- made to various parties, which has been disputed before us should be allowed as ‘revenue expenditure’. Accordingly, ground no.1 to 1.4 is treated as allowed. Disallowance u/s 14A - Held that:- So far as enhancement made by the Ld. CIT(A) in the disallowance made under section 14A by invoking Rule 8D, the same is not maintainable, because, now it is settled law by the Hon’ble Jurisdictional High Court in Godrej & Boyce Manufacturing Co. Ltd. vs. CIT [2010 (8) TMI 77 - BOMBAY HIGH COURT], that Rule 8D is applicable from assessment year 2008-09 and from the earlier years. So far as quantum of disallowance is concerned, it has to be seen that on the facts whether some reasonable disallowance is called for or not. Looking to the facts and circumstances of the case, we find that the Tribunal in the earlier years has upheld the disallowance of 5% of the dividend income, therefore, following the same precedence, we also hold that, disallowance under section 14A should be restricted to 5% of the dividend income. Disallowance of payment on account of registration of patents being capital in nature - Held that:- Tribunal in the AY 2000-01 had set aside similar issue to the file of the AO to decide the issue after considering the material on record as well as agreement under the head “intellectual property rights”. In pursuance of said direction, the AO has allowed the said expenditure as revenue expenditure passed under section 143(3) / 254. Thus, following the earlier years’ precedence, which is applicable on the facts of the present year also, we direct the AO to allow the same as revenue expenditure in line with earlier years. Disallowance of travelling and motor car expenses by treating the same for non-business and personal in nature - Held that:- We find that, assessee is a corporate entity and the expenditure debited are in the nature of travelling and motor car expenses which are, admittedly for the employees of the assessee company. Once the expenditure are incurred by the employees then, so far as company is concerned, it cannot be held that it is in personal in nature or non-business-purpose. Thus, we do not find any merit in any such ad-hoc disallowance on such ground. The AO is accordingly is directed to delete the said disallowance. Disallowance being 10% of the expenditure incurred on printing and stationery, business meetings and conferences etc - non business purposes - Held that:- We find no reason to upheld such ad-hoc disallowance, firstly, expenditure on printing, stationery, on business meetings /conferences and for selection and training of employees cannot be held for non-business purpose, especially for the company like assessee nor it can be held that, they do not have any nexus with the business of the assessee. These are routine and regular business expenditure in a corporate setup, who are carrying out full-fledged business activities; secondly, what is absence of nexus between the expenses and the business has not been specified by the AO, therefore, on this reasoning such disallowance cannot be upheld. Accordingly, we direct the AO to delete the ad-hoc disallowance
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