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2018 (12) TMI 1805 - AT - Income TaxDifference in issue price of ESOPs partakes the character of share premium and the shortfall is akin to short receipt of premium and hence not an allowable item of expenditure - HELD THAT:- ESOP are in the nature of business expenditure and it takes the characteristic of staff welfare and the shares are issued to the employees to work in the best interest of the assessee. These shares are allotted through SEBI guidelines and expenditure is in the nature of Revenue expenditure and claimed deduction and ld. Authorised Representative supported his arguments with decision of Jurisdictional High Court in the case of CIT vs. PVP Ventures Ltd [2012 (7) TMI 696 - MADRAS HIGH COURT] wherein it held that staff welfare expenditure incurred by the assessee in respect of Employees Staff Option Plan as per SEBI guidelines is an ascertained liability and is allowable as expenditure in computation of income. Considering the jurisdictional High Court decision, we uphold the order of Commissioner of Income Tax (Appeals) and allow the expenditure. The ground of the Revenue is dismissed. Unearned income - AR contention that unearned income as per sec. 145(2) in respect of any class of income to be disclosed and notified in the Central Government by Official Gazette - HELD THAT:- Revenue earned by the assessee from software and consultancy services was recognized on delivery of goods / services, that as per the existing scheme, M/s. Satyam Education Services Limited was assigned the responsibility to 'sign off’ on completion of the project in the case of all customers, that the assessee-company was following the AS 9 prescribed by the Institute which was in conformity with the provisions of section 145(2) of the Act. The assessee was regularly following the 'project completion method, which is a recognized method. The completion of each project is determined by 'sign off’. There is nothing on record to show that there was any inconsistency in this regard. The CIT(A) found that the deferred income amounting to ₹ 39,68,208 was carried forward and was duly taken into account in the next assessment year. In the circumstances, therefore, we see no reason to interfere with the conclusions reached by the CIT(A) - CIT(A) has rightly deleted the addition under the head "unearned income”. The mere submission on the part of Revenue that the same has not attained finality is no ground in itself for not placing reliance upon the same. TDS u/s 195 - disallowance u/s 40(a)(ia) of Networking costs - assessee is in the business of providing digital certificates-based authentication service for website and corporates/individuals and also providing IP / VPN services, for which it has paid the networking costs to the service providers like Bharti Airtel Ltd., BSNL etc. for the usage of internet bandwidth services - HELD THAT:- Transactions in respect of which the impugned payments were made was purely on account of services and there is no transfer of right to use the goods. In the result, it is held that the Assessing Officer was not justified in treating the payment as royalty and invoking the provisions of sec. 195 for both the assessment years. Consequently, the impugned order u/s, 195 r.w.s. 201(1) and 201(1A) Disallowance u/s 14A - HELD THAT:- Since, the assessee has not earned any exempt income, no disallowance can be made u/s. 14A and hence, we do not find any merit in the grounds of Revenue’s appeal. See M/S. REDINGTON (INDIA) LTD. [2017 (1) TMI 318 - MADRAS HIGH COURT] and M/S. CHETTINAD LOGISTICS PVT. LTD. [2017 (4) TMI 298 - MADRAS HIGH COURT] Set off of brought forward unabsorbed depreciation for assessment year 2001-02 against the income for assessment year 2010-11 - HELD THAT:- Since the issue is decided by BRITISH MOTOR CAR CO. [2018 (1) TMI 547 - DELHI HIGH COURT] wherein held unabsorbed depreciation that was carried forward up to assessment year 2001-02 would be carried forward to assessment year 2002-03 and become part thereof and it would be governed by provisions of section 32(2) as amended by Finance Act, 2001 and would be available for carry forward and set off against profits and gains of subsequent years without any limit whatsoever - Decided in favour of assessee.
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