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2015 (11) TMI 543 - AT - Income TaxDisallowance of expenditure incurred by the assessee on repairs, maintenance and miscellaneous expenditure - CIT(A) scaled disallowance down to 15% - Held that:- As find from the remand report is that AO with regard to the repair charges stated that assessee’s claim appeared to be in order except for the differences mentioned by him at para 3 of the remand report. Same opinion has been given by him with respect to other repairs also. Very same view has been taken by him with regard to the miscellaneous expenditure also. Only major lacuna that has been pointed out by the AO is that some of the bills / invoices relate to preceding assessment year. CIT (A) worked out the percentage of difference between figures shown in the ledger entries and the supporting bills and found that difference varied between 1 to 23%. He therefore considered that an addition of 15% would be sufficient to address the deficiencies pointed out by the AO. In the face of the remand report of the AO, reproduced by us above, and the quantum of variation pointed out therein, we are of the opinion that the disallowance of 15% sustained by the CIT (A) was reasonable. - Decided against revenue. Disallowance of depreciation on assets given by assessee under finance lease - CIT(A) allowed the claim - Held that:- AO himself has stated in the assessment order that though assessee termed the lease as financial lease, the terms of the lease did not provide for transfer of ownership to the lessee automatically at the end of the lease. Only reason why the lease was considered to be financial in nature was that the lease period was more or less on par with the life of the assets which were leased out and the renewal of the lease was at the option of the lessee for a nominal rent. However, in our opinion none of these can substitute the clause in the lease agreement which specified that the ownership of the assets continued to be with the assessee. Insurance for the leased products were borne by the assessee. Assessee was the owner and held the title of the assets. Giving an equipment on lease by itself can be considered as a business. We are of the opinion that by virtue of the decision of Hon’ble Apex Court in I. C. D. S (2013 (1) TMI 344 - SUPREME COURT), assessee having capitalised the assets in its books was eligible for claiming depreciation thereon.- Decided against revenue. Disallowance of warranty provisioning done by the assessee - CIT(A) allowed the claim - Held that:- It is an admitted position that the warranty provisioning for the relevant previous year was much higher than that of the preceding year, though the sales of the assessee were more or less of the same scale. Assessee itself in its letter dt.12.01.2005 to the AO had stated that there was change in methodology in computing the warranty cost. None of the lower authorities have verified whether the change in methodology was based on a scientific principle and whether the computation done by the assessee was in accordance with the law laid down by the Hon’ble Apex Court in the case of Rotork Controls India P. Ltd (supra), where assessee was also a party. We are of the opinion that this issue requires a fresh look by the AO. We set aside the orders of authorities below and remit the issue back to the file of the AO for consideration in accordance with law declared by the Hon’ble Apex Court in the case of Rotork Controls India P. Ltd (2009 (5) TMI 16 - SUPREME COURT OF INDIA). - Decided in favour of revenue for statistical purpose. Disallowance u/s 40(a)(i) - default in depositing the tax deducted at source - CIT(A) delted disallowance - Held that:- Hon’ble Delhi High Court in the case of Oracle Software India Ltd (2007 (5) TMI 204 - DELHI High Court) had held that once tax was deducted at source within the relevant previous year, disallowance u/s.40(a)(i) of the Act could not be made on the ground that the remittance thereof was made in the next financial year. We are of the opinion that CIT (A) was justified giving relief to the assessee. - Decided against revenue.
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