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2016 (4) TMI 1353 - AT - Income TaxDisallowance u/s 14A read with Rule 8D - HELD THAT:- As relying on GODREJ AND BOYCE MFG. CO. LTD. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX AND ANOTHER [2010 (8) TMI 77 - BOMBAY HIGH COURT] no doubt the expenditure incurred to earn the exempt income is liable to be disallowed on reasonable basis by providing the reasonable opportunity to the assessee in accordance with the law specifically in view of the observations made Disallowance of expenditure incurred in respect of reimbursement of property taxes to Precision Component(P) Ltd.(PCPL) - Assessee has drawn support from a letter claimed to have been signed by the assessee and the land lord, which states that the assessee here in should reimburse the property tax - HELD THAT:- The monthly rent paid by the assessee was ₹ 1,16,000/-. The property tax reimbursed by the assessee works out to ₹ 30,63,248/-, which works out to about 26 months of rent. This proportion appears to be highly disproportionate and beyond human conduct and probabilities. A tenant, under normal circumstances would not agree to bear such a high cost. Hence there appears to be merit in view taken by tax authorities. However, we notice that they have taken adverse view without conducting any enquiry. There is merit in assessee contention that the reimbursement of property tax partakes the character of rent only - what is required to be seen is as to whether to aggregate amount of rent plus reimbursements compares well with the earlier years payment. If it does not compare well, then it is the duty of the assessee to justify the payment. This issue required fresh examination at the end of AO. Accordingly we set aside the order of learned CIT(A) on this issue and restore this issue to the file of Assessing Officer for fresh examination. Allowance of the expenditure incurred upon the advertisement and promotion - HELD THAT:- As decided in assessee's own case [2008 (4) TMI 535 - ITAT MUMBAI], [2006 (7) TMI 569 - ITAT MUMBAI] , [2009 (3) TMI 990 - BOMBAY HIGH COURT], [2009 (8) TMI 1246 - BOMBAY HIGH COURT] such expenditure has been treated as revenue expenditure. Accrual of income - commission accrued to the assessee on the date of actual receipt of commission or on the date of payment by the client directly to the principal and not on the raising of invoices - when the commission received by the assessee company is required to be taxed? - HELD THAT:- The assessee company in the assessment year 1997-98 changed his method of accounting to show the said commission on receipt basis. No doubt, the A.O. disallowed the same but the Hon’ble Tribunal in his judgment [2006 (7) TMI 569 - ITAT MUMBAI] found justifiable to tax an amount at the time of receipt and appeal against the said order was dismissed by the Hon’ble Bombay High Court [ 2009 (3) TMI 990 - BOMBAY HIGH COURT] - Decided against revenue Depreciation @ 60% on computer peripherals like rack, printer, port, routers, cord etc. - HELD THAT:- This controversy has been decided by the Tribunal in case filed as DCIT Vs. Datacraft India Ltd. [2010 (7) TMI 642 - ITAT, MUMBAI] and CIT Vs. BSES Rajdhani Powers Ltd. [2010 (8) TMI 58 - DELHI HIGH COURT] as held computer accessories and peripherals cannot be used without the computer. Consequently, as they are the part of the computer system, they are entitled to depreciation at the higher rate of 60% . TP adjustment - determination of arm’s length compensation as per order of the Transfer Pricing Officer(T.P.O) - HELD THAT:- In view of the report of Transfer Pricing Officer no adjustment was made to declare the arm’s length price by the assessee, therefore, in view of the said circumstance no addition on account of transfer pricing adjustment was being made to taxable income declined by the assessee. Nothing came into notice that the findings given by the Assessing Officer as well as learned CIT(A) were wrong against law and fact. Hence this issue is decided in favour of assessee and against the revenue.
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