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2012 (9) TMI 70 - HC - Income TaxDisallowance of deduction u/s 80-IA & 80-IB - SILVASSA unit did not produce or manufacture articles or thing as contemplated under Section 80-IA(iv) - Held that:- The Sales Tax Authorities of Dadra and Nagar Haveli verified the books of accounts and after fulfilling all the conditions imposed, sales tax exemption was given. The Sales Tax Authorities are primarily interested in collecting the sales tax. In the instant case, being fully satisfied by themselves that the assessee has fulfilled all the conditions, the exemption has been given. Hence the contention of the revenue that the assessee has not conducted any business at Silvassa and the assessee has diverted the sales and profit from the other Units cannot be accepted As the software products are different from other commercial products and development of the software can be undertaken in a short span of time, thus disallowance on ground that within 18 days of establishment of new industrial Unit, the assessee has shown the profit of 94.8% for the assessment year 1999- 2000 with an investment of Rs.2,06,000/- on the computers is not acceptable - As for the assessment years 2000-2001 and 2001-2002 also they have shown the turnover of Rs.2,15,41,550/- and Rs.1,82,82,043/-. Hence, it is very difficult to doubt the genuineness of the business activities of the software carried on by the assessee at Silvassa - in favour of assessee Payment made for acquiring the name of ‘VESESH’ and intellectual properties, copy right - capital receipt OR revenue expenditure - Held that:- At any stretch of imagination that amount cannot be treated as revenue expenditure only to get the brand name and restrain M/s.Seshadri Group from doing business with assessee’s customers. The said amount has to be treated as capital expenditure. Hence, the assessee is not entitled for deduction in the litigation expenditure. The order passed by the Appellate Tribunal allowing deduction of Rs.19,00,000/- as revenue expenditure is contrary to law - against assessee.
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