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2014 (9) TMI 1230 - AT - Income TaxAppeal memo before the Ld. CIT(A) not verified by a competent person as defined u/s. 140 r.w.r. 45 of the Income Tax Rules - HELD THAT:- As carefully perused the contents of the affidavit. Undoubtedly under Rule 45(2), the form of appeal to Ld. CIT(A) is to be signed and verified by the person who is authorized to sign the return of income. However, u/s. 140(c) of the Act “ if for any unavoidable reason such Managing Director is not able to sign and verify the return, then the same can be signed any Director thereof”. As the Managing Director was travelling, the appeal memo was signed and verified by the Executive Director (Finance), the same is in accordance with law. We, therefore, do not find any merit in the additional ground taken by the Revenue and is dismissed accordingly. Disallowance u/s. 14A - HELD THAT:- It is the claim of the assessee that the assessee has received dividend from Union Bank of India. The dividend was directly credited to the bank account of the assessee without any effort on the part of t he assessee and therefore the assessee has incurred Nil expenses for earning this dividend income. We find that this issue has been decided by the Hon’ble Bombay High Court in the case of Reliance Industries Ltd. [2009 (4) TMI 516 - BOMBAY HIGH COURT]. Considering all we direct the AO to delete the addition-. Ground No. 3 is accordingly allowed. Disallowance on upgradation of application software - HELD THAT:- As carefully perused the orders of the authorities below. Hon’ble Madras High Court in the case of CIT Vs Sundaram Clayton Ltd. [2008 (6) TMI 327 - MADRAS HIGH COURT], following the decision in the case of Southern Roadways [2006 (10) TMI 82 - MADRAS HIGH COURT] has held that “upgradation of computers thereby enhancing the configuration of the computers for improving their efficiency, but without making any structural alterations is not change of an enduring nature. The expenditure incurred by the assessee had to be treated as revenue expenditure”. In the case in hand, it is the upgradation of software already installed for the smooth and efficient working therefore following the ratio laid down by the Hon’ble Madras High Court (supra), we direct the AO to delete the addition and allow the claim of upgradation of software as revenue expenditure. The AO is also directed to withdraw the depreciation allowed by him while treating the expenditure as capital expenditure. Ground No. 4 with its sub-grounds are accordingly allowed. Disallowance of interest being attributable to capital work-in-progress - HELD THAT:- AO has gone by the presumption that the assessee must have utilized some part of the borrowed capital towards capital work-in-progress. A perusal of the balance sheet of the assessee shows that the assessee has generated cash to the tune of ₹ 34.50 crores as is evident from the cash flow statement appearing on 43 of the Annual statement of account. The total expenditure incurred towards capital work-in-progress is only ₹ 6.45 crores. This clearly show that the assessee was having sufficient own funds. We, therefore, do not find any merit in attributing the interest towards capital work-in-progress. We, accordingly direct the AO to delete the addition. Nature of expenditure - Expenditure on on current repairs of buildings - revenue or capital expenditure - HELD THAT:- The object and purpose of every repair is to improve the bad condition of the building to prevent its further deterioration as far as possible and to keep it wind and water-tight. So long the repair does not bring into existence, an additional advantage or benefit of an enduring nature or change the nature, character or the identity of the building itself, the expenditure has to be considered as revenue expenditure. A perusal of the detail shows that no structural alteration was made to the building and the assessee carried out only repairs which were absolutely necessary to preserve and maintain the building and to prevent its further deterioration. The plastering process may have extended the life of the building, it has not extended the original life of the building nor the original condition of the building. The quantum of expenditure by itself cannot be a determining factor for finding out an expenditure as revenue or capital. Considering the facts in totality, in our considered opinion, the expenditure incurred by the assessee have to be allowed as revenue expenditure, we, accordingly, direct the AO. However, the AO is directed to withdraw depreciation which was allowed by him while treating the expenditure as capital in nature Deduction u/s. 10(B) - disallowance of Power and Fuel expenses - reallocating the expenditure and estimated the disallowance - HELD THAT:- We find that the assessee has filed complete details of unit-wise power consumption for every unit. The assessee has also filed complete month-wise consumption of power for every unit. This is also evident from the reply filed by the assessee during the course of the assessment proceedings which is exhibited hereinabove. The AO has not pointed out any defect in the independent records nor he has given any adverse findings in the details of the power consumption filed by the assessee. It is also not a case of the revenue that the assessee has shown exorbitant profit from the units which are eligible for deduction u/s. 10(B) of the Act. It is also not the case of the Revenue that there is a diversion of expenditure from exempt unit to taxable unit. The reallocation has been made purely on surmises and conjectures. The reallocation has been made on the basis of respective turnovers of eligible and non eligible units which, in our considered opinion, is unwarranted. We, accordingly set aside the findings of the Ld. CIT(A) and direct the AO to delete the addition
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