Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (7) TMI 49 - AT - Income TaxDisallowance u/s. 14A r.w. Rule 8D - Held that:- Though the expenditure incurred by the assessee got the benefit to the assessee for more than one year that expenditure itself cannot be called/treated as capital expenditure on the simple reason that it does not bring into existence any new asset in the field of capital or in other words no new asset was developed by incurring that expenditure and even the accounting treatment given by the assessee cannot be conclusive to treat expenditure as capital. In this case, expenditure for the purposes of access to data relating to business of the assessee so as to increase the ‘Business’ of the assessee. This expenditure stands incurred for the purpose of running the business. It is not per se capital in nature. By incurring this expenditure, it cannot be said that any capital asset stands acquired by the assessee and it was incurred for the purpose of running the business and such nature of expenditure cannot be said that resulted in enduring benefit. As the expenditure has not resulted in capital asset, so has to be recorded as expenditure in capital field. It should be noted that the assessee had to incur this kind of expenditure year after year so as to be in business subsequently even the advantage secured from earlier expenditure would get dissipated. Further, we place reliance on the judgment of Supreme Court in the case of Alembic Chemical Works vs. CIT (1989 (3) TMI 5 - SUPREME Court ) wherein held that just because an expenditure is debited in books towards the business being competitive and prudence and conservatism being fundamental accounting assumptions, capitalization of such expenses or ascribing lasting abiding value to such expenses, could only be done on sound footing and cogent basis. Thus, in our opinion the expenditure cannot be attributed to capital expenditure.Being so, taking consistent view, we are of the opinion that expenditure is to be allowed as revenue expenditure only. - Decided in favour of assessee. Addition relating to expenditure incurred for exempt income while computing the book profit u/s.115JB - Held that:- Disallowance made u/s.14A r.w. Rule 8D cannot be added while computing book profit u/s.115JB of the Act that the disallowance is only disallowance for the purpose of computing taxable income of the assessee in the normal course. There is no provision in the Act to add these kind of disallowance while computing book profit u/s.115JB and it cannot change the book profit on this count. Therefore even if there is an addition in view of provision u/s.14A r.w.Rule 8D, that cannot be added back to compute the book profit u/s.115JB.- Decided in favour of assessee.
|