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2016 (2) TMI 230 - AT - Income TaxDisallowance u/s 14A - Held that:- Disallowance u/s.14A r.w. Rule 8D should not exceed the exempt income. The Mumbai Bench in its order sustained the disallowance on applicability of provisions of sec.14A r.w. Rule 8D. However, the alternative claim of the assessee was that disallowance if at all should be made, it should be restricted to exempt income earned and not beyond that. Accordingly, the AO is directed to look at this issue on this angle and decide it afresh in the light of the above decision of the Mumbai Bench of the Tribunal in the case of M/s Daga Global Chemicals Pvt. Ltd vs ACIT.[2015 (1) TMI 1204 - ITAT MUMBAI ] Disallowance of payment made to Registrar of Companies - Held that:- By placing reliance on the judgment of Supreme Court in the case of Punjab State Industrial Development Corpn Ltd vs CIT, [1996 (12) TMI 6 - SUPREME Court ], wherein held that the fees paid to the Registrar of Companies for expansion of the capital base of a company is directly related to the capital expenditure incurred by the company and although incidentally that would certainly help in profit making, it still retains the character of capital expenditure since the expenditure is directly related to the expansion of the capital base of the company. Following the above judgment of the Supreme Court, we dismiss the ground raised by the assessee.- Decided against assessee Retention money payable - Held that:- The provision for payment made by the assessee towards sub-contract is allowable expenditure as the assessee recognized the revenue from the said contract as income in the assessment year under consideration. Further, we make it clear that the assessee cannot claim the same expenditure on actual payment basis, otherwise it amounts to double deduction – one on the basis of accrual and another on the basis of actual payment. Hence, we direct the Assessing Officer to allow this retention money payment only on accrual basis and not on actual payment basis. With these observations, we remit this issue to the file of the Assessing Officer for quantification. Disallowance u/s 37(1) of the Act towards payment of trade licence fee - Held that:- This issue came up for consideration before the Tribunal in assessee’s own case for assessment year 2006-07 decided the issue in favour of the assessee by observing that the payment made to M/s Samruddhi Holdings is an allowable expenditure u/s 37 of the Act and thereby annulled the revisional order of the CIT dated 27.10.2010 passed u/s 263 of the Act. Being so, in our opinion, the expenditure incurred by the assessee is a revenue expenditure and to be allowed accordingly. - Decided in favour of assessee Disallowance of additional depreciation - CIT(A) deleted the addition - Held that:- The findings of the CIT(A) is justified and the contention of the Revenue is not sustainable in view of the judgment of the jurisdictional High Court in the case of CIT vs VTM Ltd, [2009 (9) TMI 35 - MADRAS HIGH COURT ], wherein held that the assessee which was a manufacturer of textile goods when set up a windmill was entitled to additional depreciation. - Decided in favour of assessee Disallowance of purchase of auto cad - CIT(A) deleted the addition - Held that:- As seen from the order of the CIT(A), the Autocad software is an application software. It helps in speeding up the process and to conduct the part of a business in a more efficient and better manner. The benefits of this software are accrued on day to-day running of the business but do not in any way give an enduring benefit. Though the software could be used for more than one year, that itself cannot be a reason for treating the expenditure incurred on application software as capital expenditure. In our opinion, the judgment of the jurisdictional High Court in the case of Southern Roadways Ltd. (2007 (6) TMI 193 - MADRAS HIGH COURT ) is squarely applicable to the facts of this case and the expenditure incurred on application software is only a revenue expenditure and it is to be allowed. Being so, we confirm the order of the CIT(A)- Decided in favour of assessee Corporate finance, industry research, preparing corporate strategy - Treatment to expenditure as capital expenditure or revenue - Held that:- In the present case, the assessee incurred expenditure towards corporate finance, industry research, preparing corporate strategy and growth for bringing out a business plan which gives enduring benefit to the assessee and therefore, the expenditure is not for a particular assessment year as such it cannot be neither a revenue expenditure or deferred revenue expenditure. The benefits of the expenditure are enduring in nature. In our opinion, the judgment of Supreme Court in the case of Brooke Bond India Ltd (1997 (2) TMI 11 - SUPREME Court ) is directly applicable to the facts of the case. Accordingly, we have no hesitation to hold that the Assessing Officer is justified in treating the expenditure as capital expenditure - Decided against assessee Disallowance u/s 14A - Held that:- Assessing Officer is directed to disallow 2% of the dividend income as expenditure
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